Barclays has identified a selection of global stocks recommended for investors to consider purchasing before the year’s end, highlighting these as "conviction stock ideas with catalysts." The bank’s portfolio includes six U.K.-based stocks rated as overweight, with an expected average upside potential of 25%. In an equity research note dated October 11, Barclays’ analysts explained their continued overweight rating for U.K. stocks by stating that "hopes for domestic recovery are still present," despite noting a "cautious sentiment" regarding the upcoming October budget. They remarked that U.K. stocks are largely under-owned and appear inexpensive. The FTSE 100’s lack of technology stocks may currently benefit the index, which is tilted towards value and defensive sectors, as the rally broadens. The analysts further suggested that U.K. domestic stocks might gain from "reduced uncertainty and better growth prospects," potentially leading to a decreased risk premium in the medium term.
Among Barclays’ conviction stock ideas, two were highlighted for their potential to offer over 35% upside:
SSP Group
Barclays anticipates the most significant upside for SSP Group, a travel food and beverage operator. The bank describes the stock as having "attractive upside risk from valuation lows" and projects the shares to rise by 46.4% to £2.40 ($3.12) per share within the next year. SSP Group shares are listed on the London Stock Exchange and trade in the U.S. as an American Depositary Receipt (ADR) under the SSPPF-US ticker. This year, shares have decreased by approximately 30.4%. Barclays remains optimistic about SSP’s stock due to its "strong returns from investment over the last two years, including from integrating past acquisitions." The analysts noted, "We believe ongoing actions are in place to drive margin growth (as Europe margins have lagged due to renewals, loss-making German motorways, industrial rail action, and underlying elements), and a new Europe CEO has been hired to spearhead greater focus."
ConvaTec
Another stock considered well-positioned by Barclays is ConvaTec, a company specializing in medical products and technology, which benefits from a balanced growth profile across its business segments. The bank’s analysts stated, "We see upside potential to FY guidance, particularly with the delayed implementation of the LCD and the buffer assumed for this in guidance." They also expressed encouragement regarding management’s confidence in achieving 5-7% growth even in a worst-case scenario, noting continued underlying momentum across its businesses driven by strong launch activities. Shares in ConvaTec are listed on the London Stock Exchange and trade as an ADR in the U.S. under the CNVVF-US ticker. This year, shares have declined nearly 6%. Barclays has set a target price of £3.20 for the stock, implying around 39.1% upside potential.
This report includes contributions from CNBC’s Michael Bloom.
