Five shares to watch 2024 – how are they performing so far this year?

Baker Hughes started the year in confident form, reporting that sales in the final quarter of 2023 grew 16% to $6.8bn. The order intake was a little disappointing and this was put down to timing issues for equipment orders, but we think the long-term outlook remains positive. The group's order book still stands at over $33bn, meaning it's well placed to ride out peaks and troughs in demand.

The mid-point of full-year guidance implies sales growth of 7.8% to $27.5bn, with cash profit (EBITDA) predicted to grow 14.2% to $4.3bn. The group’s expecting strong order momentum for its new energy & gas products, and services. In Oilfield Services and Equipment (OFSE), weakness in the US is expected to be only partially offset by stronger demand in international markets.

However, if oil prices hold on to gains made in the first part of the year, this should eventually act as a tailwind for the division.

Baker Hughes remains well placed to take advantage of rapidly evolving changes to our energy mix. The robust balance sheet and strong cash flows give it the financial muscle to invest in growth areas, as well as support ongoing share buybacks and the prospective dividend yield of 2.5%.

Baker Hughes’ attractions are reflected by one of the more demanding valuations in its peer group, meaning the shares are likely to be sensitive to any potential missteps.

Coca-Cola’s full-year results, published in February, revealed a strong finish to 2023. Fourth-quarter organic revenue growth of 12% to $10.8bn was ahead of their own expectations, fuelled by a healthy mix of both price and volume growth.

Despite selling its products in more than 200 countries and territories across the world, we still think there’s plenty of room for further growth. Organic revenue growth is set to slow this year, with the beverage giant forecasting a full-year uplift of 6-7%. But, this looks slightly conservative to us given the group’s strong pricing power and time-tested global pull.

Branding is the group’s key asset, and Coca-Cola isn’t resting on its laurels. Marketing spending’s likely to rise further this year as it aims to keep its portfolio of soft drinks at the forefront of consumers’ minds.

Despite this, we expect profitability to remain at the top end of its peer group this year. Coca-Cola focuses on selling its concentrate syrup, rather than doing the actual manufacturing and bottling itself. That has helped keep a lid on costs at a time when inflationary pressures are high.

Improving free cash flows and falling debt levels support a forward dividend yield of 3.2%. We’re also expecting to see more share buybacks this year, which should make the group’s 8-10% earnings per share (EPS) growth target more achievable. But as always, no shareholder returns are guaranteed.

CVS Group’s valuation has come under significant pressure since the start of the year.

This is in response to the Competition and Market Authority’s (CMA) decision to launch a wider-ranging investigation into the veterinary sector following an initial review. Concerns are centred around pricing, transparency, and over-consolidation, and this has created uncertainty.

We think the market’s reaction has been overblown.

The CMA could force the group to provide more transparency on pricing, which would have a limited effect on the group in our opinion. Initial findings also suggest CVS’ pricing structure is already more competitive than some.

A more serious outcome would be to force CVS to sell some of its practices and/or other services, but this could benefit the group’s valuation. However, until the investigation is complete, we can only speculate on its outcomes.

Longer term, the business remains in a strong spot. The resilience of the vet sector remains intact, and we admire CVS Group’s position. We’re also supportive of the group’s expansion plans in Australia, which opens meaningful growth opportunities. The balance sheet is still in very good health and this helps support the modest 0.9% forward dividend yield.

We think CVS is an excellent business. However, the short-to-medium term could see some bumps in the road and sentiment will continue to be governed by the CMA’s findings.

Greggs reported full-year results in early March and it was another impressive performance. Sales breezed past expectations and it’s starting to get a reputation for overdelivering – one of the reasons shares have outperformed the broader market so far over 2024.

Intent on growing, Greggs aims to surpass 3,000 UK shops while enhancing its multi-channel approach for better service. Digital channels are booming, with delivery sales up 23.6% last year following partnerships with Just Eat and Uber Eats.

Greggs is also extending hours to capture more of the evening market and bolstering its brand to both deepen loyalty and attract new customers.

Greggs is far more than just a treat, and its value offering puts it in a sweet spot with consumers still battling living costs.

Sticking with the lower price point is key, and with cost inflation easing, Greggs is making sure customers feel the benefits too. But that’s likely to be a small drag on sales growth this year compared to last.

Greggs might be geared to growth, but there's also a 2.5% prospective dividend yield and the board just signed off on a special dividend too.

Next up is a trading update in May – where we’ll be hoping to see more of the same but this is never guaranteed.

We’ve been pleased with Lloyds’ performance so far this year.

Fourth-quarter results back at the end of February were decent and a confident medium-term outlook has helped improve sentiment.

Strong underlying profit performance was largely because of the release of credit impairments back into the profit line. This was driven by a better economic outlook and a single-name creditor paying back a hefty chunk of debt.

The main spanner in works comes from the FCA’s investigation into the potential mis-selling of motor finance.

Lloyds has set aside £450mn in preparation for potential fines which was less than some had feared. But there will be questions around how that figure has been chosen and the outcome is largely unknown.

What we do know is that it’s one of the more exposed banks – something to keep an eye on.

There are still several tailwinds yet to play out that could give room for upside beyond the current consensus. Loan default levels remain low and with the return of real wage growth, plus a stabilising housing market, consumers should remain resilient.

At the same time, banks are seeing easing conditions in the mortgage market and what looks to be a peak in terms of consumers shifting to higher-cost savings accounts.

As these tailwinds ease, the power of the structural hedge can come through – the easiest way to picture the hedge is like a bond portfolio. Banks use some of their assets to create a portfolio of bonds and earn a stream of cash flows at a fixed interest rate. As rates in the real world go up and down, the hedge helps limit the impact of rate volatility and smooths earnings. Lloyds remains well placed to benefit from these improving trends.