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With 2015 a notably volatile year and many a stock now trading at heavily discounted levels, we’re approaching what could be a turning point. As an investor, you’ll know just how much has been happening this year, and how much uncertainty has stalked the markets with the resultant volatility proving difficult for many to navigate. At the same time though, it’s provided the ideal trading conditions for those who have been eyeing market moving events for their short-term effects – these having been particularly prevalent in 2015. Short, sharp market moves.
The news has been the news – there’s little point in over analyzing it here, because you as an investor want to know what to look for in the coming 12-months. Let’s merely summarise, then, the prime drivers that have moved markets in 2015:
Looking forward to 2016, the question becomes: which of the above is set to continue influencing the markets? Greece is still not settled, but is easily eclipsed by the Eurozone vs. US monetary policy issue. A December move on interest rates by the Federal Reserve seems likely. Markets have all but priced it in. With higher interest rates, financials stand to benefit.
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The Chinese stock market is frequently mistaken for the Chinese economy. Importantly, they’re not the same thing! Growth there is probably somewhere between 4% and 6% - we can’t be sure since we can’t be sure that the Chinese numbers aren’t cooked. It may even be 7%. Since China (meaning essentially the commodities market) is still looking rocky, we’ll speculatively consider some emerging-market-sensitive mining stocks that have some of the best recovery potential in the markets. Commodities are interesting – the market is readjusting. There will be a time to get back into commodities, the question is merely: when?
Tensions in the Middle East look set to grow. The wind is already in the sails of defence stocks and with that region producing the majority of the world’s crude oil, we’ve got a challenge to the reverse gear that is global oversupply. Liquefied natural gas (LNG) also looks set to play a greater role in UK energy production.
Volatility can be traded successfully and CFDs give you the investor all the benefits of traditional shares, including the receipt of dividends when holding long positions in equities and indices, while enabling you to speculate in the short term using some of the capital that would otherwise be tied up in shares. To read more on this, see our honest educational piece on CFDs.
In any case, the important thing right now is that not only do we have a couple of potentially exciting drivers moving forward, we’ve also got some very reasonably priced stocks. That’s what makes 2016 a real year of opportunity.
Read on for a non-exhaustive selection of stocks to watch in 2016!
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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. [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width="1/1"][vc_column_text]
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[/vc_column_text][vc_column_text]
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
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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
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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[/vc_column_text][/vc_column][/vc_row]
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These stocks are trending, but they’re also ranging. That means opportunities for both long- and short-term strategies. Especially volatile around results announcements, regulatory scrutiny and global growth issues have also played their part in moving the following shares.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width="1/1"][vc_column_text]
Will shares in Randgold Resources (RRS) rally towards highs of 7750p or pull back towards 1500p?
Broker Consensus: 50% Buy, 42% Hold, 8% Sell
Average 12-month broker target price: 4549p
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Will shares in Barclays (BARC) rally towards highs of 340p or pull back towards 130p?
Broker Consensus: 72% Buy, 21% Hold, 7% Sell
Average 12-month broker target price: 292p[/vc_column_text][vc_column_text]
Will shares in Lloyds Banking Group (LLOY) rally towards highs of 88p or pull back towards 35p?
Broker Consensus: 67% Buy, 20% Hold, 13% Sell
Average 12-month broker target price: 87p
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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?[/vc_column_text][vc_column_text]
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
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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[/vc_column_text][vc_column_text]
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.[/vc_column_text][vc_column_text]
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[/vc_column_text][/vc_column][/vc_row]
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