Rangers

The following stocks are trading in sideways ranges – successions of up- and down-trends, the time components of which vary. Some have been range bound for years with each move lasting a year or more while others have been more recently confined within tight channels. Again, these present both medium and long term opportunities. Will they remain within their current ranges, or are they due a breakout in 2016?

Centrica (CNA); Utilities / Oil & Gas Producers

Where next for CNA shares?

• Shares are trading at the floor of an 8-year range. Commodities have been hit hard in that time and Centrica, being a producer of gas as well as an energy supplier, is party to that also.
• Fossil fuels still due to play a large part in energy production going forward with a reduction in the use of coal being compensated for with liquefied natural gas (LNG).
• Could 2016 see the start of a 2-year rally back towards the channel ceiling, or will LNG fail to save the day for Centrica?

Will shares in Centrica (CNA) rally towards highs of 400p or fall beneath 200p?

Broker Consensus: 52% Buy, 31% Hold, 17% Sell

Average 12-month broker target price: 250p

WM Morrison; Grocers

Where next for MRW shares?

• Shares made a break below the floor of an 18-month sideways range to trade near 12-year lows as the UK’s UK 100 supermarkets fight a price war with discounters.
• With support breached, will shares in MRW now continue south, or are they now oversold and presenting a buy opportunity?

Will shares in WM Morrison (MRW) rally towards highs of 215p or continue to fall towards 12-year lows?

Broker Consensus: 18% Buy, 41% Hold, 41% Sell

Average 12-month broker target price: 172p

Comeback King?

After yet another profits warning in late 2015, Rolls Royce Holdings shares completed a 61% decline from 2013 highs to levels last seen in early 2011. Just as when more roads are built to ease congestion, cars continue to fill them up, could we see increased airport capacity filled with more aircraft? And with the defence sector due a boost in 2016, Rolls Royce Holdings could be one to watch for its recovery potential – perhaps even more so than the UK Index miners.

Rolls Royce Holdings (RR.); Aerospace & Defence

Where next for RR shares?

• Shares sold off hard after late 2015 profits warning.
• UK defence spending may increase, making the recent dip a potential buying opportunity.
• Range could extend further south on a nonetheless poor outlook, with potential for a further 60% downside, while a recovery to late 2014 highs implies over 100% upside.

Will shares in Rolls Royce Holdings (RR) rally back towards highs of 1300p or fall towards 250p?

Broker Consensus: 15% Buy, 52% Hold, 33% Sell

Average 12-month broker target price: 585p