Mum's the word when it comes to selecting shares

Phil Burgess, the outspoken former public policy chief at Telstra, famously said he wouldn't recommend Telstra shares to his mother.

Although Dr Burgess later said the remark was made to highlight that Telstra was "being smothered by regulation", the "mother benchmark" holds some appeal, particularly after recent rough-and-ready years on the sharemarket.

With the official cash rate slashed to 3 per cent and local shares delivering a "Santa rally" this month, hopes are rising that the $67 billion pulled out of stocks by small investors between 2008 and 2011 will make its way back to the market.

But with sharemarket volatility doubling since the start of the financial crisis, it is still a case of buyer beware.

Fairfax Media has spoken to market analysts to find out which shares might pass the test for our nearest and dearest in the new year.

George Boubouras, the head of investment strategy and consulting at UBS Wealth Management, who has a Greek mother and Spanish in-laws, said shopping for mothers required deep pockets. The appropriate shares are defensive, therefore they are expensive.

"If they are approaching pension phase, income certainty is much more relevant," Mr Boubouras said.

"Given cash rates are falling and rates are expected to remain lower for longer, this generally makes investors seek other, riskier, exposures. So a low beta (lower volatile) dividend stock theme that utilises franking can work."

Mr Boubouras's list includes some of this year's big winners: healthcare companies CSL, Cochlear and ResMed, and Telstra.

He also recommends utilities such as AGL and Duet, and gaming companies, if they do not offend your ethics.

Then there are the shares behind everyday purchases or practices: toll road operator Transurban for regular users of CityLink, or Wesfarmers shares for people who shop at Coles supermarkets and Target.

Materials and energy companies should be in the mix too, but bigger is better here: Origin, BHP Billiton and Rio Tinto are recommended.

"Never mid-cap, this is too volatile for mum," he said.

Mr Boubouras does shirk at one tipper's suggestion of Whitehaven Coal. "Most mums don't need a coal play," he said.

That tipper is Mark Fitzgibbon, the managing director of the listed health insurer NIB.

While Whitehaven has rallied recently, due to expectations of a deal with China Shenhua Energy Co, it has had a poor year overall. Its share price is down 28 per cent due to weaker coal prices and the troubles of its famous shareholder, Nathan Tinkler.

But Mr Fitzgibbon said Whitehaven was undervalued.

"I'm a big believer in the long-term coal story," he said.

He is also a fan of funds manager Perpetual, praising its "qualitative investment criteria", and the private hospital operator Ramsay Health Care, which has had a rollicking year.

"[It is] probably fully priced but [it] sails on the sea of private healthcare spending which will continue its GDP-plus growth trajectory," Mr Fitzgibbon said.

Alex Moffatt, the director of stockbrokers Joseph Palmer & Sons, said if you want income go for National Australia Bank and Telstra; if you are after growth, snap up resources, which have had a tricky year.

Other stocks on his "buy" list, some owned by his 81-year-old mother, include the fund manager Challenger and salary packaging provider McMillan Shakespeare.

Silex, which does research into the commercialisation of nuclear energy and solar energy technologies, is "one for the greenies".

And for people looking for an "in" into resources, Mr Moffatt recommends Bougainville Copper, the Papua New Guinea copper, gold and silver miner, which is part owned by Rio Tinto.

Elio D'Amato, the chief executive of fund manager Lincoln Indicators, is cautious on resources stocks for parents but keen on the engineering company Monadelphous. "It declared a pretty positive outlook at its AGM, and its dividend yield is 6.2 per cent, so it's the best of both worlds: growth and dividends," Mr D'Amato said.

With term deposits falling, dividends should be the focus, Mr D'Amato said.

There's the small childcare operator G8 Education - not to be associated with ABC Learning, the listed childcare company that crashed and burnt during the financial crisis.

"This is a good business with a grossed-up dividend forecast of 6.4 per cent," Mr D'Amato said. "And the number of dual-income homes is only going to grow."

Other recommendations for parents are travel group Flight Centre and car sales-cum-property group AP Eagers. Both capitalise on the record number of Australians heading overseas and buying new cars.

Then there's Fleetwood, the caravan manufacturer and seller which likely gets plenty of business from grey nomads. Fleetwood had a grossed-up dividend yield of 8.1 per cent, Mr D'Amato said.