Where to invest – MoneyWeek writers give their tips

MoneyWeek’s investment writers recommend focusing on US small caps in 2025, as they have the potential to outperform larger companies due to Trump’s “America First” agenda. By diversifying your portfolio with about 5% in smaller US companies, you could reduce overall risk while potentially seeing more growth. The Russell 2000 index offers exposure to smaller US companies, with less tech exposure and more potential value in sectors like industrials and materials. In Europe, undervalued companies like Wendel and OSE Immunotherapeutics in France, AmRest in Central Europe, and 4iG in Hungary are worth considering. Games Workshop is a strong global growth story in the tabletop games market, with potential for expansion through film and television adaptations. In Canada, Canadian General Investments offers exposure to successful Canadian companies at a discount to net asset value, with strong historical performance and attractive valuations compared to the US market. CGI is a Canadian investment trust that focuses on running profits rather than distributing them, with its largest holding being Nvidia. The trust also invests in US companies like Apple and Mastercard, as well as Canadian firms like Shopify, TFI, and Canadian Pacific Railway. A significant portion of CGI’s portfolio is in materials and energy, including Franco-Nevada, Cameco, and NexGen. The trust has a history of outperforming the Canadian market and increasing its dividend yield annually. In the aerospace and defence sector, European companies are expected to benefit from increased government spending, with the MSCI Europe Aerospace and Defense index returning 30% in 2024. Copper investors have seen a decline in prices due to a stronger US dollar and increased supply, but the long-term outlook remains positive. Burford Capital is awaiting the outcome of a litigation-funded court case against the Argentinian government, with a potential award of $6.3 billion. Burford (BUR) is expecting a negotiated result at under 100% of the judgment value, but the stock price suggests doubts about the outcome of their case against a sovereign state. Despite this uncertainty, the firm had a record quarter in 2024, generating $310 million in cash receipts. Cordiant Digital Infrastructure (CORD) is trading at a discount to NAV of over 30%, offering long-term investors potential for capital growth with its digital infrastructure investments. Boeing (BA) has seen its stock price plummet due to various issues, but new CEO Kelly Ortberg is working to turn the company around and potentially unlock hidden value for shareholders. Lastly, Warpaint London (W7L) is a cosmetics company experiencing strong growth and expanding its presence both domestically and internationally. DCC (LSE: DCC) is a cheap stock with a forward P/E of 20 and a forward dividend yield of 1.8%, having increased its dividend every year since 2017. James Ward recommends DCC as a high-quality company that is currently undervalued due to a period of lower growth caused by Covid. Management plans to double profits by the end of the decade, with potential for significant value unlocking through selling off businesses and returning cash to shareholders, leading to a strong year for the share price in the future.

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