They say the build-up to Christmas begins earlier each year but, in truth, it always seems to swing into top forex picks about now. The summer holidays are over, the kids are back at school and thoughts turn to the office Christmas party. But the team at UBS are one step ahead, and have already decided which shares they think will thrive in 2018. Seventeen analysts were asked to flesh out their most – and least-preferred ideas around key themes which they think “will either come to fruition in 2018 or will be widely discussed”.
There are 45 stocks from across Europe on the ‘buy’ list and 36 sells, and UK equities feature heavily, accounting for a third of the most-favoured and a quarter of the least-favoured. UBS’s thinking behind its 85p price target. The other banks backed by analyst Jason Napier are listed on the continent, including Sabadell. European company earnings have seen no growth in the past six years. However, 2017 looks set to deliver 12. UBS reckons this structural turn in the profit cycle will continue into 2018 and beyond.
We believe this is sustainable,” says UBS. In our hunt for global yield, Europe looks like a compelling choice. Below, we pick out a few key buys and round up the least favoured from UBS’s list. The online shopping behemoth’s acquisition of Whole Foods could pose a big risk for food retailers here. In the days following the announcement, supermarket shares fell sharply.
However, while UBS sees the former book store having some influence on the grocery market, “on a mid-term view, we see limited impact”. We’re unlikely to see an “end-of-days” store roll-out some have predicted from Amazon and, as Amazon’s e-commerce model does not lower cost-to-serve in groceries, “price, historically its biggest weapon, is neutralised”. Away from the grocery side, “Sainsbury’s now one of a rare breed of UK brick-and-mortar retailers actually seeing growth in clothing,” explains analyst Daniel Ekstein. Sir Martin Sorrell told investors his forecast for net sales growth in 2017 would be lower than previously estimated. WPP said all regions except the UK, Latin America and central and eastern Europe showed lower revenues than the prior year in July and all sectors were down. However, UBS thinks that the recent step-down in media spend is temporary, noting that it will need to inflect in order for consumer brands to stay relevant and meet analyst expectations for organic growth.
After the update, analyst Richard Eary re-iterated his ‘buy’ rating, albeit with a reduced 1,900p target. Earnings per share The amount of profit a company manages to make per ordinary share, expressed in pence. The figure is reached by dividing pre-tax profits by the number of shares in issue. A and simplification of the business model.
The broker reckons US production will reach 11 million barrels per day by December 2018. As the largest single source of supply growth over 2011-15 and the largest single source of decline in 2016, investors are understandably focused on the US. Having missed the 1990s industry consolidation, the BG deal was long overdue,” he says. This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise.
The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. Has the emerging market rally fizzled out? A telecoms buy for the contrarian investor?