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Home / Special Reports / The Top Stock Picks of 2018

This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.

10 December 2017

The Top Stock Picks of 2018

As we draw to the end of yet another record-breaking year, it’s time to look ahead to what comes next. 2017 took on the torch from where its predecessor left off, providing shocks, scandals and recoveries aplenty.

So, what does 2018 hold? Surely nothing could top the past 24 months of excitement? Think again.

Re-elections, Re-elections, Re-elections

We thought we might have earned a break from going to the polls after a slew of elections and referenda in the past 18 months. However, it looks as though 2018 will see vote counters roused from their day jobs once more. Possibly even multiple times.

In Germany, Chancellor Angela Merkel is yet to form a government after her CDU/CSU party won the most votes in the country’s September Federal Election. Negotiations to form a ‘Jamaica’ coalition broke down, while the opposition SPD party are tentative in brokering a new ‘grand’ coalition – the form of government that has ruled the country since 2013.

Italy is still scheduled to hold elections in early 2018 after Prime Minister Matteo Renzi failed to win a key referendum, while closer to home, the Irish government narrowly avoided elections after the Deputy PM resigned to avoid a no confidence vote.

However, there are still wide-ranging ramifications of the political turmoil unfolding on the Emerald Isle.

Brexit means Brexit. Or does it?

Over eight months since Article 50 was triggered and UK-EU divorce proceedings began, investors are still none the wiser as to exactly what Brexit will ultimately look like once the 2019 deadline arrives.

While many in the UK are ready to talk preferential trade deals, European counterparts seem to be singing from a different hymn sheet entirely.

Most contentiously, the Northern Irish border remains a crucial issue and, while a divorce bill of €45-55bn has been suggested by both sides, this will be subject to negotiation right up until a final deal.

All this before even reaching the hurdles facing the UK and EU in 2018. Assuming the aforementioned issues are solved, next year will see the start of all-important trade talks. Will things run smoothly or might the UK walk away if the EU offers a ‘bad’ deal?

The Federal Reserve of Trump

If you thought Brexit is taking a while to take shape, then spare a thought for US President Donald Trump.

It has taken almost 11 months for the President, to score a major legislative victory, seeing his Tax Reform pass in the Senate after attempts to repeal Obamacare were shot down earlier this year.

Trump’s most influential move of 2017, however, may be his nomination of Federal Reserve Governor Jerome Powell to become the next chair of the Fed.

Breaking many years of precedent, the President did not re-nominate the current head, Janet Yellen, for a second term, instead opting to promote current Fed Governor Powell. Will the former investment banker prove more hawkish than his dovish predecessor?

Page: 01

2017 in Review: A Look at the Numbers

New leadership in Washington saw the record Wall Street closes of 2016 continue into the beginning of 2017, a trend that has continued right through until the final weeks. In the first 11 months of the year, the Dow Jones Industrials Index has notched over 60 record closing highs, the most record closes for the 30-stock index since 1995, while the S&P 500 saw 55 records and the Tech-focused Nasdaq an astonishing 70 record closes.

But it’s not just the US markets that have been propelled higher. Their European counterparts too have joined the act. The UK’s UK 100 overcame a plethora of political events, including a shock snap election resulting in an even more shocking hung parliament, to trade 20 fresh record highs over the course of the year, while the index only fell below 7100 points twice over the entire year. Meanwhile, the German DAX saw 25 record highs in the first 11 months of the year, smashing through both the 12,000 and 13,000 marks for the first time ever.

And while the year may be remembered for the macroeconomic and political stories that emerged, it will also go down in the history books as the year of Bitcoin. The most-recognisable cryptocurrency in circulation has rallied an astronomical 1500% over the course of the year, a rally that even overshadows the 2000 dotcom boom.

Only time will tell if the controversial asset will continue climbing higher, or whether it will prove to be the biggest bubble in financial history, eclipsing the Tulip bubble in 1600s Europe. Which outcome are you backing?

The UK 100 companies that reached record highs

An astonishing 42 of the UK 100 ’s constituents have posted an all-time record high through the first 11 months of 2017, with 11 of those companies notching more than 30 fresh all-time high closes since the end of 2016.

That list includes newer names to some investors, with companies such as Scottish Mortgage Investment Trust (an impressive 60 new record highs), NMC Health (47) and Smurfit Kappa (13), however a plethora of UK Index stalwarts such as Persimmon (35), RELX (35), Unilever (30) and St James’s Place (27) also make the list.

However, there are also several surprises on that list. WPP, having touched its highest ever level in February, has since dived into the bottom five UK Index performers of the year, retreating 32% from its high. It is joined in the bottom 10 UK Index performers by Merlin Entertainments, which saw 10 all-time record closes, and Convatec, the UK 100 newcomer which enjoyed an impressive 31 record closes, the last of which coming on 5 June.

… And Record Lows

At the other end of proceedings, only two companies recorded an all-time record low in the first 11 months of 2017. Mediclinic International wins the award for the most recent record low, having traded an all-time low in November, and is joined by the aforementioned Convatec, which, having last traded a record high in June, fell back to trade at its lowest level since its 2016 IPO in November. Will it return to those Summer highs in 2018?

After carefully analysing the UK 100 , we’ve picked out our top 10 stock picks for 2018. Amongst other things there’s high street banks, a big four supermarket and a coffee chain owner. Which of these do you think is in for a big 2018?

Page: 02

BAE Systems (BA.)

Will BAE Systems return to 2017 highs of 680p (+21%) or fall to 2016 lows of 455p (-19%)?
  • The defence manufacturer may be lower year-to-date, however it has found a duo of support at 540p
  • Will the shares continue to bounce, returning to the channel ceiling?
  • Or will the rally falter, returning to and breaking down from support at 540p?
  • Brokers are positively-biased, with over 80% holding a 12-month price target above the current level
Broker Consensus: 50% Buy, 41% Hold, 9% Sell

Bullish: Vertical Research, Buy, Target 770p, +37% (30 Nov)

Average Target: 649p, +15% (1 Dec)

BearishDay by Day, Sell, Target 442p, -21% (15 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 03

Barclays (BARC)

Will Barclays return to 2015 highs of 290p (+5%) or fall to Brexit lows of 120p (-38%)?
  • The global investment bank has had a mixed 2017, trading within a range for much of the year
  • However, shares are now challenging falling highs resistance
  • Will BARC break out from this falling channel to challenge 2017 highs in the near future?
  • Brokers are positively-biased, with three quarters holding a 12-month price target above current level
Broker Consensus: 48% Buy, 40% Hold, 12% Sell

Bullish: AlphaValue, Buy, Target 264p, +39% (30 Nov)

Average Target: 209p, +10% (1 Dec)

BearishDay by Day, Sell, Target 142.2p, -25% (15 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 04


Will  BT return to late 2016 highs of 400p (+53%) or fall to 2012 lows of 200p (-23%)?
  • The telecoms giant is making a late run at avoiding being a bottom three 2017 UK 100 performer
  • Having sold off for much of the year, shares have found support just shy of the 250p mark
  • Can the bounce continue to take shares back to resistance at Summer 2017 highs of 320p?
  • Brokers are positively-biased, with over 80% holding a 12-month price target above the current level
Broker Consensus: 50% Buy, 38% Hold, 12% Sell

Bullish: Barclays, Overweight, Target 420p, +61% (30 Nov)

Average Target: 336.5p, +29% (1 Dec)

BearishExane BNP Paribas, Underperform, Target 240p, -8.1% (20 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 05


Will  ITV return to Summer highs of 185p (+16%) or fall to September lows of 142p (-11%)?
  • The TV Broadcaster traded a post-Brexit low in 2017 following a spate of poor sales figures
  • However, will a breakout from intersecting resistance at 153p extend back to falling highs resistance?
  • RSI has recovered from oversold, while Momentum has turned positive for the first time since October
  • Brokers are positively-biased, with 85% holding a 12-month price target above the current level
Broker Consensus: 61% Buy, 30% Hold, 9% Sell

Bullish: Liberum, Buy, Target 330p, +106% (27 Nov)

Average Target: 203p, +27% (1 Dec)

BearishMacquarie, Underperform, Target 110p, -31% (20 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 06

Lloyds Banking Group (LLOY)

Will Lloyds return to 2015 highs of 90p (+36%) or fall to post Brexit lows of 47p (-29%)?
  • The High Street Lender has been consistently trading between 62.5p and 64p during 2017
  • Will shares make a major break higher or lower in 2018, registering multi-year highs or lows?
  • Momentum is diverging positively with price, while RSI has recovered from oversold
  • Brokers are positively-biased, with 75% holding a 12-month price target above the current level
Broker Consensus: 61% Buy, 11% Hold, 28% Sell

Bullish: Jefferies, Buy, Target 91p, +37% (29 Nov)

Average Target: 71.65p, +8.2% (1 Dec)

Bearish: Goldman Sachs, Sell, Target 55p, -17% (8 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 07

Morrisons (MRW)

Will Morrisons return to 2013 highs of 310p (+43%) or fall to December 2015 lows of 140p (-35%)?
  • The Big Four Supermarket is trading within a tight range between 210p and 255p
  • Will shares bounce from 2-year support or will they break down to trade 18-month lows?
  • Momentum remains negative although is off its worst levels, while RSI has recovered from oversold
  • Brokers are positively-biased; almost two thirds hold a 12-month price target above current level
Broker Consensus: 16% Buy, 47% Hold, 37% Sell

Bullish: Exane BNP Paribas, Outperform, Target 270p, +25% (13 Nov)

Average Target: 231p, +6.8% (1 Dec)

BearishSociete Generale, Sell, Target 170p, -21% (6 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 08

Rolls-Royce (RR.)

Will Rolls-Royce return to late 2013 highs of 1300p (+53%) or fall to 2016 lows of 500p (-41%)?
  • The Engineer has seen its shares retreat from falling highs resistance just shy of 1000p
  • However, rising lows support from 2016 lows at 825p could offer some respite
  • Will shares bounce from rising lows support or break down to extend sell-off towards 2017 lows
  • Brokers are negative on the stock, with more sells than holds and buys, while target price is split 50/50
Broker Consensus: 17% Buy, 25% Hold, 58% Sell

Bullish: Goldman Sachs, Buy, Target 1208p, +42% (2 Oct)

Average Target: 865p, +1.6% (1 Dec)

BearishInvestec, Sell, Target 630p, -26% (7 Sept)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 09

Shire (SHP)

Will Shire return to 2015 highs of 5900p (+61%) or fall to 2014 lows of 2830p (-23%)?
  • The Pharmaceutical sector giant has been in a consistent downtrend since touching highs in 2016
  • With shares trading at 3-year support just shy of 3500p, will shares reverse this trend?
  • Momentum remains positive, however has retreated from 1-month highs
  • Brokers are positively-biased, with zero brokers holding a ‘Sell’ signal on the stock
Broker Consensus: 78% Buy, 22% Hold, 0% Sell

Bullish: Societe Generale, Buy, Target 8000p, +118% (29 Nov)

Average Target: 5201p, +42% (1 Dec)

Bearish: HSBC, Hold, Target 3800p, +3.7% (21 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 10

Taylor Wimpey (TW.)

Will Taylor Wimpey return to highs of 209p (+7.3%) or fall to Summer lows of 174p (-11%)?
  • The UK Housebuilder has been trading in a shallow uptrend since Summer
  • With shares back at rising lows support at 195p, will TW return to 2017 highs above 205p?
  • Shares are bullishly holding above 200-day moving average, while RSI rallying from November lows
  • Brokers are positively-biased, with three quarters holding a 12-month price target above current level
Broker Consensus: 61% Buy, 33% Hold, 6% Sell

Bullish: Jefferies, Buy, Target 252p, +29% (29 Nov)

Average Target: 207p, +6.3% (1 Dec)

Bearish: Cenkos Securities, Hold, Target 160p, -18% (1 Nov)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 11

Whitbread (WTB)

Will Whitbread return to 2015 highs of 5500p (+54%) or fall to 2013 lows of 2900p (-19%)?
  • The Costa Coffee owner has had a mixed 2017, starting positively before falling 18% from its highs
  • However, the sell-off has stalled after shares have found rising lows support around 3500p
  • Will the bounce continue, returning shares to 2017 highs of 4300p?
  • Brokers are positively-biased, with almost 95% holding a 12-month price target above the current level
Broker Consensus: 36% Buy, 44% Hold, 20% Sell

Bullish: Berenberg, Buy, Target 5000p, +40% (24 Oct)

Average Target: 4100p, +15% (1 Dec)

Bearish: Kepler Chevreux, Reduce, Target 3500p, -2.2% (24 Oct)


Pricing data sourced from Bloomberg on 1 December. Please contact us for a full, up to date rundown.

Page: 12

Want to take advantage of the above opportunities right now?

Whether you see UK Stocks going up or down for the remainder of the year, tradable opportunities will present themselves regularly. We’re here to help you weed them out and capitalise on them. Accendo Markets can help you increase your profit potential with the use of leveraged instruments such as CFDs, a flexible alternative to traditional shares that is currently exempt from UK stamp duty.

CFDs: Like shares, but more flexible

Stockbroking Ticket

CFD Ticket

The example above shows how buying 1,450 shares in British Land @ £6.90 requires an outlay of around £10,000 plus commission (see left-hand box), while the same exposure via a CFD requires about £500 plus commission (see right-hand box). If a trader invests in British Land, one would assume they believe the share price is likely to move in their favour. After considering the ‘worst case scenario’ and assigning funds to cover it, the trader may conclude there’s little point in exposing the full £10,000 to the BLND shares - some of that capital could be put to good use elsewhere in the markets. (Source: IG, Prices indicative)

CFDs are leveraged instruments, but you don’t have to use the leverage

If you had, say, £10,000 to invest in the stock market, you could deposit that amount into a share dealing account and purchase shares in a company. You would pay commission to open the position, 0.5% in stamp duty and the full £10,000 will be tied up in your chosen shares with any profit or loss based on that exposure. The same £10,000 worth of exposure can be secured with a CFD for a fraction of the initial outlay thanks to leverage, with the risk and reward the same as if £10,000 worth of traditional shares were held. But should you not be interested in leverage, you can always treat CFDs like shares. Simply deposit £10,000 into a CFD trading account and take the equivalent CFD position which will tie up just £500 (note that overnight financing costs will still apply). The remaining £9,500 is not tied up, so you can use some of that to take advantage of another short-term opportunity elsewhere, or simply leave it on the account to support any losses. Best of all, using a CFD means you pay no stamp duty!

What’s your view?

Think shares will rise? Take a long position by buying CFDs (buy low, aiming to sell high). Think they’ll fall? Take a short position by selling CFDs (sell high, aiming to buy low). For a more detailed rundown of CFDs, their mechanics, associated costs and some trading scenarios download our ‘Comprehensive Guide to CFDs’ here.

Page: 13

The Accendo Markets Research Offering

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If a company has reported earnings before the market opens, we’ll tell you why the shares are called to open up or down in relation to that announcement.

As well as the Morning Report, signing-up to Accendo Markets Research & Trade Ideas offers you the chance to receive the following publications:

  • Another Level: A selection of key level alerts on various stocks.
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  • Macro Calendar: Live market-moving data, breaking news as it happens
  • Week in Advance: A summary of next week’s key events. Is there a trading opportunity there for you?

To ensure you can act as quickly as possible, you’ll receive an email with a link to the latest publication as soon as it’s released. You can unsubscribe from these emails at any time.

Based on a wealth of experience, gained from both large and small institutions, our Research and Trade Ideas are produced in-house. Our team of dedicated professionals comprises both analysts and traders, drawing upon a wide range of resources and methodologies.

Our aim is to provide you with the manpower and expertise you need to help you clarify, interpret and capitalise on the ever-growing volume of market information.

The journalists don’t pay for it and neither do you, so why not give it a go? You’ve nothing to lose and perhaps a little more to gain… Subscribe Today!

Page: 14


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Page: 15

This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.

Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

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