The FTSE 100 started December with its worst week in two months as uncertainty over the upcoming general election, as well as trade worries between the US and China continued to bite.
However, retails investors would be better off if they stopped worrying about various political developments and instead concentrated on their long-term investment goals. Therefore today, I’d like to discuss three shares that I’d be ready to invest £1,000 in, as they are likely to do well in 2020.
Diageo
Smirnoff-to-Guinness drinks giant Diageo (LSE:DGE) shares have had a lousy price action since September. This decline has mostly come as President Trump is now extending the US trade was rhetoric to this side of the Atlantic. Investors are uncertain about the potential impact new US tariffs may yet have industry.
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However, the stock is up almost 10% year to date, despite the latest political developments.
London-based DGE is the world’s biggest spirits company. And with its diverse global exposure and brand portfolio, Diageo shares offer long-term growth potential.
There may be few consumer products as recession-proof as alcohol, since people tend to drink in both good and bad times alike. The strong brand names owned by Diageo give management pricing and competitive power within this non-cyclical market.
As we approach the end of the year, when alcohol consumption rises, Diageo may be set to rake in the cash.
The shares are hovering around 3,095p and offering a dividend yield of 2.2%.
Dunelm Group
It is no secret that the UK retail sector had a difficult 2019. However, home and furnishings retailer Dunelm Group (LSE: DNLM) is one stock I am happy to take a closer look at.
Since the opening of the first Dunelm store in 1991, the group has expanded operations as well as the number of stores. Also, about one-fifth of its revenue come from sales online.
In its trading update of 5 November, the board said that the full-year profit before tax would be higher than previous estimates.
Management further added that gross margins have been strong and that operational costs remained in line with expectations.
As a result of all the positive developments, Dunelm shares jumped 20% the next day. Although there may be some profit-taking in the stock soon, I’d regard any drop in price as good opportunity to go long the shares.
In addition to growing profits, the dividend yield of 2.3% makes the group a worthwhile pick for income investors in this festive season.
Tesco
Supermarket chain Tesco (LSE:TSCO) is the third company on my watch list. According to recent market share data from Kantar Worldpanel the group has a 27% share of Britain’s grocery market.
Year-to-date, TSCO share are up about 19%. October’s half-year trading results showed robust earnings and an increase in operating profits to reach almost £1.4bn.
Like-for-like sales in the UK and Ireland increased by 0.1%. Group operating margin reached 4.4%.
Management highlighted plans to double the group’s online capacity and to increase its store opening programme in the UK.
I expect the group to keep the tills ringing in this Christmas season, too.
The retailer is now trading at a trailing price-to-earnings of 16.9. I’d look to be a buyer of Tesco shares, especially if there is any profit-taking in the coming weeks. In the meantime, investors can enjoy the dividend yield of 2.9%.
