This year has got off to an excellent start, with the portfolio up around 11% already. Despite such a good start to the year I am, in general, cautious on just how much further the markets can push on. I am not expecting the investing conditions to be as good this year as they were in 2009!

I do think that some individual stocks could really outperform the market and to highlight which ones I am particularly keen on right now I have again entered the StockChallenge.co.uk annual share picking competition. The 5 shares I have chosen that I think will do well over the coming year are:

RC Group (RCG)
Polo Resources (PRL)
Kryso Resources (KYS)
Unitech Corporate Parks (UCP)
Alterian (ALN)

Of course things can’t change radically over the course of the year but for now I think these 5 offer excellent upside, across a range of sectors and geographies.

RC Group (RCG) continues to grow revenues & profits whilst it’s share price lags behind on a lowly rating. I see several opportunities for that to change this year with the resolution of the Nina Wang / Tony Chan legal case being the most obvious. If the share was assigned a standard earnings multiple it could easily double or triple from here & still not look expensive.

Polo Resources (PRL) is my next pick, this is a play on Extract Resources (ASX:EXT) which I expect to be taken out this year at a price considerably higher than its current share price. Polo owns shares in Extract, the value of which is only marginally less than its current market cap. Added to that are its other assets, which I also expect to appreciate in value. Its discount to asset value should be eliminated as it turns those assets into cash if all goes to plan. The share price has the potential to at least double.

Kryso Resources (KYS) is a small cap gold company that is moving towards production over the next couple of years. Valued on the number of Oz’s of gold it has in the ground it looks far too cheap, even given the political & funding issues. If the price of gold remains strong and the up coming feasibility study comes back as expected the share price should move higher over the year, perhaps even to 2 or 3 times its current level.

Next is Unitech Corporate Parks (UCP), I held this one right through last year & reckon it still looks great value here, especially with the commercial property market in India starting to improve. Given UCP’s extreme discount to adjusted NAV (72%) and the probability that they will add value to their projects over the coming year I think the downside is very limited here and the share price could double and it would still be an attractive investment. Management were upbeat in the post result conference call last week, in marked contrast to their commentary over the previous 18 months, and further letting news is expected in the next couple of months. I fully expect the discount to NAV to gradually narrow over the coming year.

Finally is Alterian (ALN), which is one I’ve held in my personal account for a while now. I wanted to have a tech related share to balance to add balance & Alterian won out due to its lower rating versus comparative companies, good earnings growth and its potential to be a takeover target later in the year.

I’m looking forward to coming back to this post at the end of the year to see how it all turned out!