Q2 stock picks – ones to watch

Britain is no nearer to resolving the uncertainty around its exit from the EU after parliament again failed to find an alternative to Prime Minister Theresa May’s deal.

Deal or no deal, no one really knows what will happen to financial markets in the days after the UK leaves the EU – but there are places to hide should they get choppy.

In the weeks approaching the new 31 October deadline (and even after if no deal is reached), it is likely we will see swings in the value of the pound as confidence in the UK economy going forward falters. Should this happen, traders will eye UK listed stocks and look out for bargains.

Will we see some clarity over the next few weeks, potentially unlocking new trading opportunities, or is it best to go on the defensive with your strategy?

To maximise your investment, eToro absorbs the cost of stamp duty on UK stocks (0.5%) whereas with other investment platforms a £10,000 trade in a UK listed company usually incurs a £50 stamp duty charge.

What’s more, eToro will introduce zero commission stocks next month. This means no charges will be added to the raw market spread when trading stocks –  a saving of up to 50% on fees compared with other UK platforms. And eToro charges no quarterly management or administration fees.

Amid this period of political and economic uncertainty, where does value lie?

Check out eToro’s top five stocks to watch in Q2.


Your capital is at risk.

1. ASSOCIATED BRITISH FOODS (ABF.L)

  • At the turn of the year Associated British Foods’ shares were trading at a six-year low following a challenging few months in the retail sector.
  • Associated British Foods’ bakery side, which includes Kingsmill, Allinson and Sunblest, could continue to see ongoing losses.
  • The giant of affordable fashion Primark, which accounts for over half of Associated British Foods’ group profit, enjoyed a better than expected Christmas owing to new store openings with additional expansion on the horizon for the US and Spain.
  • World’s biggest Primark will opens its doors on 11 April in Birmingham, UK.  
  • Interim results released on 24 April.

Analyst consensus*: 70% buy, 26% hold, 4% sell
Average target: 2699p (+12%)
Most bullish target: Barclays 3300p (+37%)
Most bearish target: Macquarie 2100p (-12.8%)

2. AVIVA (AV.L)

  • Aviva experienced a challenging 12 months with prices dropping by 18% in comparison to the FTSE100’s gain of 2%.
  • Will Aviva’s new CEO reduce debt and change financial outlook?  
  • The insurer has reacted to Brexit – Aviva’s price hit its lowest since 2013 the day after the EU Referendum.
  • Will a ‘no deal’ Brexit signal a return to previous lows or can a deal rally this stock back to 2018 highs?  Aviva are due to go ex-dividend on 11 April, paying 20.75p a share which equates to just under 5% of the current price.

Analyst consensus*: 76% buy, 24% hold, 0% sell
Average target: 511p (+25.2%)
Most bullish target: Morningstar 575p (+40.9%)
Most bearish target: BNP Paribas 450p (+10.3%)

3. SSE (SSE.L)

  • The high-yield utility stock weathered the Brexit storm better than others in the industry, and with the outcome far from certain, will SSE with its 7% dividend offer  an attractive and safer place for investors’ cash?
  • For the last few years SSE have gone ex-dividend for their final payment in late July.
  • Preliminary results released 22 May.

Analyst consensus*: 65% buy, 35% hold, 0% sell
Average target: 1300p (+7.9%)
Most bullish target: BNP Paribas 1500p (+24.5%)
Most bearish target: J.P. Morgan 1200p (-0.4%)

4. CATERPILLAR (CAT)

  • The US industrial bellwether is set to benefit from a potential US/China trade deal, with a round of talks scheduled for April — the closest such a deal has been in decades.
  • Strong performance since 2016, piggybacking on the Trump Trade. At their peak, shares more than doubled in value from their November 2016 level, prior to Trump’s election victory.

Analyst consensus*: 60% buy, 33% hold, 7% sell
Average price target: $149.30 (+13.3%)
Most bullish target: Melius Research $206 (+56.4%)
Most bearish target: Macquarie 105p (-20.3%)

5. TESLA (TSLA)

  • The electric vehicle manufacturer is most polarising in terms of analyst consensus with around a third backing buy and sell.
  • Tesla is set to open a factory in China later this year which could play a key catalyst for growth.
  • Recently acquired Maxwell Technologies – the makers of ultracapacitors and dry electrodes – for $218 million in an all-stock deal. The technology could streamline the manufacturing process resulting in a 20% cost reduction.
  • Elon Musk announced all Tesla’s patents are available to the public. Will Musk’s charitable nature spell trouble for the automotive stock or is it a move nodding to a trade secret?

Analyst consensus*: 37% buy, 23% hold, 40% sell
Average price target: $321.10 (+16%)
Most bullish target: Berenberg $500 (+80.7%)
Most bearish target: Barclays $192 (-30.6%)


Your capital is at risk.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs.

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 trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

*Prices and rates accurate as of 28.03.19 | Data sourced from Bloomberg

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