UK stocks have had a good year overall, but many have much further to run, according to market analysts.
The FTSE All Share index has made 16.5% in 2021 so far, powered by the biggest names in the country. Indeed, the FTSE 100 index of the 100 largest companies has made 16.9%, while the FTSE 250 mid-cap index has made 14.1%.
The top end of the market is dominated by value stocks, such as the banking groups, oil majors and miners, which have shot up this year as investors have priced in an ongoing global recovery.
However, despite its rise, the FTSE remains below the MSCI ACWI index of global stocks, which has made 21% this year, implying there could be more room to run for the UK market.
Total return of indices in 2021
Source: FE Analytics
Using Tipranks, an online tool that collates analyst recommendations, Trustnet looked at the price target for stocks – which measures how much experts think the shares should be worth relative to their current price.
Go-Ahead, one of the UK’s largest rail operators, had the most potential for gains. At a current share price of 610p, analysts suggested the stock could be worth more than double this level.
The firm behind the Govia Thameslink franchise could however become a takeover target, which would likely be below the target price, but above its current level.
Betting firm 888 Holdings was next. The firm, which is to complete a £2.2bn takeover of rival William Hill next year, could also be worth double its current value. At 301p per share, analysts suggested there was 109% upside in the stock.
Vodafone was another with significant upside. At a current price of 113p, the analysts suggested investors could be undervaluing the company by as much as 52%. The firm was also among the top picks for income investors, which Trustnet covered last week.
Looking at individual sectors, Central Asia Metals was the mining stock with the most upside. According to analysts, the 245p share price was around 20% lower than their targets.
In the consumer goods space, Superdry was next, with a 44.7% uplift expected by analysts. The firm, which has a share price of 273p, has had a reasonable year, up 15%, but there appeared to be more room to run.
Despite the yearly rise, shares have come off in recent months, down almost 40% since their highs in May.
In the financials sector, TP Icap was the top stock, despite falling 30% over the past year. The world’s largest interdealer broker was hit as the costs of the merger between Tullett Prebon and Icap doubled, but analysts were positive on the stock, suggesting there was a 66.9% potential gain for the shares.
In the healthcare sector, Smith & Nephew got top billing, with a target price some 34.1% higher than its current level of £12.30.
Source: Tipranks
The specialist pharmaceutical firm suffered through the pandemic as hip and knee replacements took a backseat to the coronavirus, but providing the latest variant of concern – Omicron – proves to be a blip, and markets can recover, the stock could re-rate.
Elsewhere, Royal Dutch Shell is also oversold, according to analysts. Although shares are up 28.9% over the past year, they remain down from the start of 2020.
The oil sector has been under immense pressure, as Covid-related lockdowns shuttered factories, grounded planes and reduced the number of cars on the road.
Now the oil price has picked up, but despite strong gains this year, the majors are not fully back to par. Analysts suggested the stock could climb another 44.4%, if it were to reach their average target price.