You may be forgiven for thinking that trading requires abundant capital in order to purchase expensive shares.

However, you may be surprised to learn that the shares of some of the largest companies in the country cost less than your daily coffee. In fact, some of them can be purchased for the change from a fiver. Despite the fact that these companies have the lowest share prices on the index, this by no means that they are the smallest or worst performing; in fact, many of our favourite ‘cheap’ stocks are some of the biggest names going.

This report analyses some of the ‘cheapest’ UK 100 stocks that money can buy. We’ll bring to your attention our top six stocks that cost less than your daily coffee and share not just our own technical analysis, but also the opinions of major global financial institutions. Now is the time to convert your small change into shares.

Markets at highs, but prices still low

Global stock markets have traded at their highest ever levels several times in 2017, with US, European and UK indices all notching fresh record highs in May. However, some UK Index blue-chip companies remain cheap.

Whilst 72% of UK 100 companies are positive in 2017, only 31% - less than half of companies in the green - have reached a fresh all-time high this year, leaving room for further gains to be made by the UK’s blue chip index. Six companies have traded an 18-month low in 2017, while 27 stocks are 20% from their 18-month highs. Given these figures, could we see a post-election rally help the UK Index to fresh all-time highs?

With the UK election over, what now?

The UK’s snap general election ended with a surprising hung parliament. However, Prime Minister Theresa May has acted to negotiate a Conservative-led coalition with Northern Ireland’s DUP. Whilst this quick action removed an element of uncertainty from the equation, the Tories now have a reduced majority heading into Brexit negotiations with the EU. Could this result in a softer Brexit or will May maintain her hard divorce course?

Central banks are re-emerging as an important market catalyst, with upcoming meetings for the US Federal Reserve, Bank of England and Bank of Japan in June. Perhaps more important than the actual policy changes that are made will be the outlook for the rest of 2017. While the Fed is tightening policy by raising interest rates, the others remain some way behind the trend of policy normalisation. Could we see this change in the near future?

Finally, the ‘Trump trade’ is looking as though it may be over, however the US President will still attempt to push through his market-friendly policies at the first opportunity. Aided by his army of former investment bankers in the administration, Trump’s campaign pledges of tax reform, sector deregulation and infrastructure spending will remain close to the top of his agenda. However, will they be passed by the Senate before end-2017?

To find out what our top stock picks that cost less than your morning coffee are, just turn the page!

Lloyds (LLOY)

Unsurprisingly, the UK’s best-loved blue-chip stock is also the UK 100 ’s cheapest. Having been bailed out by the taxpayer in 2008, Lloyds was fully re-privatised in 2017, which has helped shares climb to their highest level since last year’s Brexit vote. Whilst the UK’s snap general election created an uncertain outlook for the UK’s largest mortgage holder, and despite the race being much closer than expected, some of that uncertainty has been abated. As the UK’s Brexit negotiators head to Brussels, can Lloyds rally to fresh post-referendum highs?

Will shares rally to fresh 2017 highs of 73.5p (+3.8%) or pull back towards May lows of 68p (-4.0%)?

• Shares breakout from 70p intersecting resistance after rallying from shallow rising support at 68.5p
• 71% of brokers see upside to the current share price, while 29% see the price falling
• Stochastics recovered from oversold while Momentum negative but approaching zero
• Bullish cross by Directional Indicators

Broker Consensus: 59% Buy, 15% Hold, 26% Sell

Bullish: RBC Capital Markets, Outperform, Target 90p, +27% (2 Jun)

Average Target: 72.5p, +2.4% (8 Jun)

Bearish: Bernstein, Underperform, Target 40p, -45% (26 May)

Pricing and consensus data sourced from Bloomberg on 8 June. Please contact us for a full, up to date rundown.

Tesco (TSCO)

The UK’s largest supermarker by market share, Tesco may not wield the same power that it had before the financial crisis. However, this now means that single share will set you back less than £2 to purchase. The supermarket giant, under the supervision of CEO Dave Lewis, has continued to maintain market share despite the rise of continental discount stores Aldi and Lidl, and has also navigatged a settlement with the SFO over its 2014 accounting scandal. With the trial over and done with, can the supermarket focus what it does best?

Will shares rally to fresh highs of 220p (+21%) or pull back towards August lows of 155p (-15%)?

• Shares in narrowing pattern. Break higher or another leg lower?
• Brokers are split, with just over half expecting the price to rise despite 42% suggesting ‘sell’
• Momentum turned negative; Stochastics approaching oversold
• Directional Indicators diverging bearishly

Broker Consensus: 29% Buy, 29% Hold, 42% Sell

Bullish: HSBC, Buy, Target 260p, +43% (13 Apr)

Average Target: 200p, +10% (8 Jun)

Bearish: Credit Suisse, Underperform, Target 145p, -20% (26 May)

Pricing and consensus data sourced from Bloomberg on 8 June. Please contact us for a full, up to date rundown.

ITV (ITV)

The broadcaster, which has been subject to a number of takeover rumours over the past 12 months, has struggled in to recapture its pre-Brexit highs so far in 2017. In May, the company announced that its CEO Adam Crozier is to step down, shortly followed by forecasts that it expects to see ad revenues decrease in the near future. These announcements have placed shares under some pressure, however the flipside of this means that shares in the TV behemoth can now be purchased for less than £2. Is it worth a buy at these levels?

Will shares rally to fresh 2017 highs of 220p (+19%) or pull back to November lows of 160p (-13%)?

• Having fallen 19% from 2017 highs, ITV shares have found shallow rising support at 183p
• While 16% of brokers see downside to current price, 84% forecast that the price will increase
• Stochastics turned oversold; Relative Strength Index (RSI) recovered from oversold
• Directional Indicators negative but converging bullishly

Broker Consensus: 48% Buy, 39% Hold, 13% Sell

Bullish: Liberum, Buy, Target 340p, +82% (5 Jun)

Average Target: 226.4p, +21% (8 Jun)

Bearish: Societe Generale, Sell, Target 155p, -17% (11 May)

Pricing and consensus data sourced from Bloomberg on 8 June. Please contact us for a full, up to date rundown.

Old Mutual (OML)

The South African financial giant has been on the receiving end of several headline already this year. Recent South African political uncertainty – triggered by the unexpected dismissal of the country’s finance minister – saw its share price fall 7% during a single session in March as the South African Rand depreciated sharply. However, this has been countered by the upcoming listing of its Wealth Management arm, expected to take place by end-2018. Could a positive split help Old Mutual out of its recent 188-205p trading range?

Will shares rally to fresh 2-month highs of 205p (+3.9%) or fall to the channel floor at 188p (-4.6%)?

• Trading in tight 188-205p channel; break out or back to channel floor?
• Over two thirds of brokers see upside to current price while a third forecast downside
• Relative Strength Index (RSI) showing no bias as Stochastics near overbought level
• Directional Indicators positive by converging bearishly

Broker Consensus: 27% Buy, 46% Hold, 27% Sell

Bullish: Renaissance Capital, Buy, Target 262p, +33% (5 Jun)

Average Target: 220.5p, +12% (8 Jun)

Bearish: RBC Capital Markets, Underweight, Target 180p, -8.7% (5 May)

Pricing and consensus data sourced from Bloomberg on 8 June. Please contact us for a full, up to date rundown.

The Accendo Markets Research Offering

Does your current broker’s morning report tell you all you need to know about yesterday’s news? If so, how is it offering you anything more than the plethora of information already available on the internet?

We’re proud that our morning editorial has become a hot commodity in the City, its content quoted daily by the journalists that are writing the news everyone else will be reading later in the day, if not the next. Our morning report tells you what’s driving the market at that moment and what to look out for in the day ahead.

If a company has reported earnings before the market opens, we’ll tell you why the shares are called to open up or down in relation to that announcement.

As well as the Morning Report, signing-up to Accendo Markets Research & Trade Ideas offers you the chance to receive the following publications:

• Another Level: A selection of key level alerts on various stocks.
• Index Focus: A selection of key level alerts on the major indices.
• Trade Alerts: Trading ideas from our analysts. What do they think is likely to move?
• Macro Calendar: Live market-moving data, breaking news as it happens
• Week in Advance: A summary of next week’s key events. Is there a trading opportunity there for you?

To ensure you can act as quickly as possible, you’ll receive an email with a link to the latest publication as soon as it’s released. You can unsubscribe from these emails at any time.

Based on a wealth of experience, gained from both large and small institutions, our Research and Trade Ideas are produced in-house. Our team of dedicated professionals comprises both analysts and traders, drawing upon a wide range of resources and methodologies.

Our aim is to provide you with the manpower and expertise you need to help you clarify, interpret and capitalise on the ever-growing volume of market information.

The journalists don’t pay for it and neither do you, so why not give it a go? You’ve nothing to lose and perhaps a little more to gain… Subscribe Today!

Want to take advantage of the above opportunities right now?

Whether you see UK stocks going up or down for the remainder of the year, tradable opportunities will present themselves regularly. We’re here to help you weed them out and capitalise on them. Accendo Markets can help you increase your profit potential with the use of leveraged instruments such as CFDs, a flexible alternative to traditional shares that is currently exempt from UK stamp duty.

CFDs: Like shares, but more flexible

The example above shows how buying 1,450 shares in British Land @ £6.90 requires an outlay of around £10,000 plus commission (see left-hand box), while the same exposure via a CFD requires about £500 plus commission (see right-hand box). If a trader invests in British Land, one would assume they believe the share price is likely to move in their favour. After considering the ‘worst case scenario’ and assigning funds to cover it, the trader may conclude there’s little point in exposing the full £10,000 to the BLND shares - some of that capital could be put to good use elsewhere in the markets. (Source: IG, Prices indicative)

CFDs are leveraged instruments, but you don’t have to use the leverage

If you had, say, £10,000 to invest in the stock market, you could deposit that amount into a share dealing account and purchase shares in a company. You would pay commission to open the position, 0.5% in stamp duty and the full £10,000 will be tied up in your chosen shares with any profit or loss based on that exposure. The same £10,000 worth of exposure can be secured with a CFD for a fraction of the initial outlay thanks to leverage, with the risk and reward the same as if £10,000 worth of traditional shares were held. But should you not be interested in leverage, you can always treat CFDs like shares. Simply deposit £10,000 into a CFD trading account and take the equivalent CFD position which will tie up just £500 (note that overnight financing costs will still apply). The remaining £9,500 is not tied up, so you can use some of that to take advantage of another short-term opportunity elsewhere, or simply leave it on the account to support any losses. Best of all, using a CFD means you pay no stamp duty!

What’s your view?

Think shares will rise? Take a long position by buying CFDs (buy low, aiming to sell high). Think they’ll fall? Take a short position by selling CFDs (sell high, aiming to buy low). For a more detailed rundown of CFDs, their mechanics, associated costs and some trading scenarios download our ‘Comprehensive Guide to CFDs’ here.

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