Barclays names its best UK stocks to play the outperforming market
U.K. stocks have been on a tear this year, outperforming their European counterparts and even rivaling their U.S. peers. The FTSE 100 index is up over 14.4% so far over the year-to-date, compared to the pan-European Stoxx 600′ s 9.96% and the S & P 500 ‘s 13.7%. It’s a welcome uplift for a market that typically trails the U.S. It comes as investors grappling with U.S. President Donald Trump’s tariffs regime, policy uncertainty — and now a government shutdown — look elsewhere for opportunities. .FTSE YTD mountain FTSE 100 In a note dated Sept. 30, analysts at Barclays named their “best ideas” in the U.K. mid and small-cap space. IG Group Their picks included trading platform IG Group , which reported a dip in revenue but customer growth last week. The company also acquired Australian cryptocurrency exchange Independent Reserve earlier in September. “With multiple areas of potential upside in different addressable markets, backed by faster product innovation under the new CEO, we are more optimistic about the medium-term upside potential for the group,” wrote Richard Taylor, who heads up U.K. mid and small-cap research at the bank. Shares in IG Group are up around 16% over the past 12 months. Barclays has a target price of £13.50 ($18.16) on the stock, giving it upside of around 27%. Dunelm Home furnishings retailer Dunelm, meanwhile, has “good prospects for market share gains both in store and online,” Taylor wrote. “Trading post re-opening has been encouraging, and whilst we believe homewares is an attractive category, the key is ongoing market share gains,” he added. Shares in Dunelm are down over 2.5% over the past 12 months amid investor concern about a pick-up in consumer sentiment. Barclays has a target price of £13.50 on the stock, representing 25% upside. Rosebank Industries Rosebank Industries, a listed vehicle set up to snap up other businesses under a “buy, improve, sell” model, is also on Barclays’ list. The firm made its first acquisition, of U.S. firm Electrical Components International (ECI), in August for around $1.9 billion. The deal has caught the eye of equity analyst Jonathan Hurn. Looking ahead, Hurn said he expects the company to generate an EBITA (earnings before interest, tax, and amortization) margin of around 20% — above the company’s own guidance. “Based on its subsequent valuation and implied resulting exit price, it should generate at least a c2.4x return on the equity invested at entry,” Hurn said. Rosebank Industries’ shares are over 7.5% higher since it acquired ECI. Barclays has a target price of £4.30 per share, giving it an upside of 27%. Weir Group Scottish multinational Weir Group has gobbled up a few companies this year, most recently U.S. manufacturer Townley Engineering, highlighting activity in the wider corporate M & A landscape and earning it a spot on Barclays’ list. “In our view, Weir ranks as one of the higher quality businesses in mining equipment in terms of business model (high aftermarket revenue mix), leading market position in a consolidated segment and returns,” Hurn wrote. Weir’s aftermarket division sees it supply equipment to its existing customers. “We expect Weir to deliver another year of growth in FY25 supported by aftermarket as well as margin expansion,” Hurn added. Shares in Weir, a FTSE 100 company, are up almost 25% over the past 12 months. Barclays has a target price of £29.50 on the stock, giving it upside of 11%. — CNBC’s Michael Bloom contributed reporting.
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