Look for sectors left behind by the rally rather than those that led the chart

Hi all, I thought I would now explain my investing strategy a bit further. Generally I am a contrarian investor, looking to invest in shares that are undervalued and unloved by the market.

Generally, I back strong companies, which have strong balance sheets, cash flow and dividend growth. At the moment there are many companies who fall into this band, which have also been left behind by the rally. These are very good investments to back if you are a contrarian and want to cycle your money out of investments near their highs (such as miners) and back into shares still near their lows.

Miners and cyclical stocks have been popping higher, since the March 09 lows but this will not last forever, especially in this current economic climate. These are the shares I am particularly looking at:









My favourites in that list are Vodafone and the 2 healthcare companies, Glaxo and Astra. This is because they are Large cap companies, with very strong cashflow and brands. Vodafone I am especially interested in with 5.7% dividend, twice as much as you get in cash with potential for upside, as the market re-rates this share higher.

Then from the chart below, you can see how much they have been left behind in the ftse 100 rally. So you are going against the trend if you back this defensive mega-cap but that is how you make the most returns in the long run. Vodafone particularly has been a very poor investment now for 10 years and that’s why I am buying more and more now, as I believe they will come back into favour. Added to this, you have its defensive qualities, so if there is a stock market correction, they will not be falling 30% like the miners and retailers.