Where to invest 500 thousand rubles in 2024
When analysts are asked where to invest a certain amount of money, it is considered good form to clarify the client’s risk profile and investment horizon.
Without such an opportunity to interact with the reader, within the framework of this column, let’s categorize attractive types of investments according to different terms and risks, and you, dear reader, will choose the most suitable investment styles for yourself.
Conservative style
This style implies that the investor prefers long-term investments and a small number of transactions with a stable and predictable cash flow with minimal risks. For such investors, especially in the current realities, investments in gold will be interesting. In 2023, gold prices were able to reach a historical high, despite their protective properties. This is happening after a widespread change in the policy of central banks to the accumulation of precious metals in their gold and foreign currency reserves (over 9 months of 2023, central banks bought 14% more gold than last year). A significant reason for this was the situation in 2022, when Russia was deprived of part of its gold and foreign currency reserves overnight. Countries like China have become concerned about this risk and have been buying gold non-stop for the past 12 months. We do not expect a change in the trend, and for 2024 we predict a continued rise in gold prices to $2,300 per troy ounce. By the way, gold is also an excellent insurance against the depreciation of the ruble, since the price is calculated in US dollars.
Also, the “conservative” style, in our opinion, will be interested in bonds with the highest credit rating. Such bonds are traditionally OFZ, the yield to maturity on which now exceeds 12%, depending on the period to maturity. However, we would like to draw investors' attention to bonds that are comparable in risk. Such securities are Sberbank bonds, where the main owner is the state. For example, these bonds with a maturity date of June 2026 offer 13.1% per annum, which allows you to lock in a high rate for a fairly long period, which bank deposits cannot boast of.
Style "golden mean"
This style is suitable for long-term and medium-term investors who are willing to take on slightly larger risks, but also expect to receive returns above “conservatives.” If you choose this style, you can feel like a dividend rentier. This style is best suited to the dividend kings of the stock market - companies that have consistently paid dividends over a large number of years.
On the Russian market, such securities are Lukoil (target 8000 ₽), Sberbank (target 320 ₽), MTS (target 300 ₽). Russia was able to redirect oil flows after the introduction of Western sanctions; the discount on Russian Urals oil will gradually decrease. Moreover, the world's largest agencies, OPEC and IEA, predict record demand for fuel next year.
With the coordinated actions of OPEC, which we observed in the past year, oil prices are unlikely to go down. All this speaks in favor of the stability of LUKOIL’s financial results and the continuation of dividend payments. We expect RUB 1,000 in dividends per share over a 12-month horizon, which is equivalent to a 14.8% dividend yield.
Another representative of the dividend kingdom is Sberbank. In 2023, the Russian banking sector was able to generate record profits of more than 3 trillion rubles. (the record was in 2021 at 2.4 trillion rubles). However, an increase in the key rate poses some risk to the financial results of banks. The Bank of Russia estimated the shortfall in profit next year due to the increase in the amount of 0.6 trillion rubles. However, even in this situation, banks could potentially get financial results better than 2021. Moreover, the head of Sberbank has already stated that he does not expect a decrease in profits in 2024-2025. This means that we can with fairly high confidence expect dividends over the horizon of 2-3 years above 32 rubles. At current prices, this is a yield above 11.8%, and with rising profits, this is an increase in profitability.
“Quick income” style
This style is perfect for investors who are willing to take risks on a short-term investment. By choosing this style, the investor expects a reduction in the Bank of Russia key rate no later than the second quarter of 2024.
When the monetary policy easing cycle (decrease in the key policy) is underway, bank deposits gradually reduce interest rates, capital flows into bonds, which begin to rise in price and thereby show a decrease in profitability. After the rise in bond prices, capital becomes less interested in investing in bonds and chooses riskier instruments—stocks. There are 2 main types of stocks: dividend or growth stories. Dividend chips tend to be less volatile and more suitable for a middle-ground style.
Therefore, in our opinion, growth companies are more suitable for the “quick income” style. These are companies whose revenue is growing rapidly, they are very actively occupying new niches. And if now such companies may look expensive, then after a short period of time, as their financial indicators increase, they will look undervalued.
The IT sector is rich in such stories. After the departure of a considerable number of Western IT suppliers, Russian developers are occupying this niche at an incredible pace. For example, the recently located company Astra, a developer of infrastructure software, increased product shipments by 113% in the first 9 months of 2023. And a decrease in growth rates on the horizon of the year is currently not expected; relevant departments predict the growth of this market by more than 20% until 2027. Our target for paper is 600 ₽.
Another fast-growing company is Ozon (target 3300 ₽). The retail market is undergoing a fundamental shift towards online. And Ozon, as a company at the intersection of IT and retail, is becoming one of the main beneficiaries of this situation. During the year, management revised the forecast for platform turnover (GMV) three times and currently the turnover is expected to double compared to last year. Ozon has big plans to increase its market share to 30% by 2027. In this case, Ozone’s turnover will be more than 5.4 trillion rubles. versus RUB 0.83 trillion. based on the results of 2022.
“This information is for informational purposes only and does not constitute an individual investment recommendation .
