Why these could be 10 of the most reliable shares for investors in 2023

In a poor period for stock markets, some shares have delivered solid performances for investors all year. Stock screen expert Ben Hobson names them here and identifies those with a positive outlook.

With Christmas just days away, this week it’s time to indulge in a look back at some of the most dependable shares across the market this year.

Any sensible stock-picker will tell you that putting blind faith in seasonal stock market anomalies is not a sound long-term investing strategy.

But in a year when prices came under pressure across the board, you might be interested to hear that one or two of the best-known calendar effects have actually worked quite well.

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After all, at a time when inflation, interest rates and fears of a recession are all rising quickly (and share prices have been falling) even mythical stock market truisms are worth a second look.

One of the best known of these legendary patterns is the old adage to “Sell in May and go away, come back on St Leger's Day”. Or to put that another way…some believe it wise to stay out of the market between May and mid-September, or even the end of October, when stock market returns are supposedly at their lowest.

So how did that work out?

Over the past 12 months, the FTSE All-Share has ranged from a high of 4,296.96 points in February to a low of 3,712.50 in October. That was a drawdown of around -13.6%: a loss that would have been well worth avoiding if you could.

But the All Share is heavily weighted to large-caps so it closely tracks the FTSE 100 index, which has held up well this year. So that mid-year volatility actually masks a reasonable performance for the year as a whole. It would have been very difficult to time any trades in or out of it.

But that wasn’t the case everywhere; small and mid-cap shares have had a much harder time. The AIM market, which is popular among self-directed stock pickers, has been falling all year.

This index of mostly smaller growth stocks has ranged from 1,216.91 points at the start of 2022 to a low of 775.77 in mid-October, a peak to trough move of -36.3%. Between May and the end of October, that decline was -20.5%.

Overall, selling in May and staying out until the autumn could well have saved you from a lot of pain in 2022. And here we get to the second winning seasonal trend this year: the Halloween Effect.

The Halloween Effect is the opposite of the Sell in May anomaly: it follows the trend that markets pick up between November and the end of April.

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Since early October, things have brightened up for the All-Share, as they have for blue-chip indices on both sides of the Atlantic. Hints that inflation might ease next year, and any recession might not be as bad as once feared, have raised hopes.

From the lows in October to early December the All-Share rallied by 11.5% and AIM moved higher by 9.6%.

This is the strategy employed by interactive investor’s head of equity strategy Lee Wild. Now in their ninth year, you can track the monthly performance of Wild’s Winter Portfolios and read Lee’s other articles here.

The early weeks of the Halloween Effect have shown some promise - but it’s early days yet.

No examination of seasonal trends would be complete without a mention of the Santa rally. Traditionally an end-of-year boost for stocks, the Santa rally is historically believed to have been driven by seasonal cheer and tax-driven portfolio adjustments. So far this year we’ve not seen one materialise.

But late rally or not, some shares have been delivering a solid performance for investors all year despite the bearish conditions.

To find them, this week’s seasonal screen looks for FTSE 350 shares that have delivered for their investors all year: performing better than the FTSE All-Share over 12 months, six months and three months.

The screen also looks for:

• Shares with a positive outlook by pinpointing those where earnings are forecast to grow in the year ahead
• Shares that pay a dividend
• The table also shows the forecast PE ratios for these shares to give you an idea about how they are being valued in the market

With the exception of technology, all the main stock market industry sectors are in this list. These shares have all outperformed the All-Share this year - and also offer some strong earnings per share (EPS) growth forecasts to boot.

Marketing and merchandise firm 4imprint Group (LSE:FOUR) leads on a one-year relative price strength basis, making it one of the best-performing FTSE 350 shares this year. It is one of two companies in the consumer discretionary sector to pass these rules - the other being the exhibitions group Informa (LSE:INF).

Both 4imprint and Informa have price/earnings (PEs) above 20x, which tends to be at the pricier end of the value range. But note that both have some of the strongest forecast earnings growth in this list. That suggests that some cyclical businesses are managing to fend off the gloomy economic outlook.

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Defence and aerospace contractor BAE Systems (LSE:BA.) is also a strong contender. A growing order book and the prospect of increased global defence spending in the coming years looks set to boost earnings at the group.

Among the defensive sectors, blue chips take the leading positions, with utilities group Centrica (LSE:CNA), healthcare giant AstraZeneca (LSE:AZN) and tobacco group Imperial Brands (LSE:IMB) all present.

In more cyclical and sensitive sectors, Glencore (LSE:GLEN) and Centamin (LSE:CEY) represent the miners, while utility supplier Telecom Plus (LSE:TEP) and banking group Investec (LSE:INVP) complete the list.

Fingers crossed for a happy new year

For investors looking for reasons to be cheerful this Christmas, it is encouraging to see that outperformance has been achievable in places right across the market in 2022.

In reality of course, the gift we all really want this year is an improving economic outlook. Signs of tempering inflation might just be easing the pressure in parts of the market. More momentum in the weeks to come will likely have less to do with festive goodwill and more to do with hopes that economic grief next year won’t be as bad as feared.

Santa has got his work cut out.

Merry Christmas!