Trailblazers

In this section we’ll have a look at some stocks whose charts suggest a strong trend and good growth potential leading into what should be a positive year. Is there good reason to believe these trends will continue, or could there be scope for a reversal of fortunes? Whatever the outlook, tradable opportunities will present themselves.

NB: All pricing and consensus data in what follows was obtained from Bloomberg on 1 Dec; Full consensus breakdown is available on request. 

BT Group (BT.); Telecommunications

Where next for BT shares?

• BT seen on track for a takeover of EE, which would vastly increase customer base and bolster more grass roots efforts in superfast broadband.
• Short term volatility is likely due to heavy investment and M&A (in the role of predator…).
• Shares are near the average 12-month broker target price.

Will shares in BT Group (BT.) rally towards historic highs of 1400p or fall towards lows of 90p?

Broker Consensus: 48% Buy, 35% Hold, 17% Sell

Average 12-month broker target price: 505p

Direct Line Insurance Group (DLG); Insurance

Where next for DLG shares?

• Direct Line Group and other insurers are essentially plays on US interest rates.
• With the non-life insurance sector heavily invested in short dated fixed income (as opposed to the longer dated bonds preferred by life insurance companies), an imminent US rate hike and subsequent tightening could bolster balance sheets. Even if December fails to materialize, we’re not far off.
• Shares in a steepening uptrend since 2013 and now trading above the average 12-month target price.

Will shares in Direct Line Insurance Group (DLG) maintain their uptrend or fall back towards lows of 190p?

Broker Consensus: 50% Buy, 40% Hold, 10% Sell

Average 12-month broker target price: 383p

Antofagasta (ANTO); Basic Materials

Where next for ANTO shares?

• Copper is showing some resilience in the face of US Dollar headwinds and a perceived Chinese slowdown.
• Time is running out for miners to act in support of commodity prices.
• Strong downtrend since 2011 may have finally met support around 6-year lows of 470p.

Will shares in Anofagasta (ANTO) head back towards highs of 1600p or continue towards lows of 285p?

Broker Consensus: 17% Buy, 54% Hold, 19% Sell

Average 12-month broker target price: 573p

BAE Systems (BA.); Aerospace & Defence

Where next for BA shares?

• Shares have enjoyed a 4 year uptrend, with a recent break below 3.5yr rising support reversed by increased attention on the Middle-East.
• We could be seeing a loss of momentum into year-end, with the potential for BA shares to trade sideways into 2016.

Will shares in BAE Systems (BA.) break above highs of 550p or pull back towards 450p?

Broker Consensus: 17% Buy, 54% Hold, 19% Sell

Average 12-month broker target price: 573p