Tesco

Source: CMC Markets, 1 November 2018

Will Tesco return to August highs of 266p (+22.6%) or fall to Nov 2017 lows of 175p (-19.4%)?

• Long-term rising channel since 2016, with the latest bounce from channel floor a year ago.
• Shares currently nearing rising support level around 200p.
• Shares -20% from 2018 highs; +12.2% from 2018 lows; +3.9% year-to-date.
• Despite the bearish market, Tesco shares have been showing resilience to the downturn.
• Shares fallen just 2.4% during the January-March correction and were flat during the October correction.
• Brokers are largely positive, with 86% of analysts saying either “Buy” or “Hold”
• Bullish attitude is further supported by 88% of analysts forecasting a higher share price within 12 months.

Broker Consensus: 59% Buy, 27% Hold, 14% Sell
Bullish: Macquarie, Outperform, Target 300p, +38.2% (10 Oct 18)

Average Target: 258p, +19% (1 Nov 18)

Bearish: Exane BNP Paribas, Underperform, Target 205p, -5.5% (12 Oct 18)

Pricing data sourced from Bloomberg on 1 November 2018. Please contact us for a full, up to date rundown.

National Grid

Source: CMC Markets, 1 November 2018

Will National Grid rise to Sep ‘17 highs of 981p (+16.6%) or retreat to Feb lows of 734p (-12.7%)?

• Shares of gas & electricity utility company National Grid have defied the recent bearish trend.
• Instead of falling in October, shares are on a 10% month-long uptrend from September’s 760p lows.
• Shares are just 7% away from 2018 highs, having bounced +13% from 2018 lows; -4% year-to-date.
• National Grid shares have been resilient during the 2018 sell-off, losing just 10% during the January-March correction and gaining +6.3% during the October correction.
• Utility companies, with their high dividend yield (National Grid: 5.7%) and non-cyclical/defensive products, are an attractive investment option during market downtrends.

Broker Consensus: 55% Buy, 45% Hold, 0% Sell
Bullish: Macquarie, Outperform, Target 1050p, +24.9% (27 Sept 18)

Average Target: 926.47p, +10.2% (1 Nov 18)

Bearish: Day by Day, Sell, Target 702p, -16.5% (22 Oct 18)

Pricing data sourced from Bloomberg on 1 November 2018. Please contact us for a full, up to date rundown.

BAE Systems

Source: CMC Markets, 1 November 2018

Will BAE bounce to Summer highs of 680p (+28.8%) or continue to May 2016 lows of 464p (-12.1%)?

• Shares of the defence & aerospace company BAE Systems have fallen off sharply on the back of uncertainty surrounding military exports to Saudi Arabia.
• Saudi business generated 16% of company’s total sales in 2017 and any military export sanctions against the Kingdom could jeopardise the company’s revenue projections. (Source: FT)
• BAE Systems shares are 22.7% below their 2018 highs, now trading just 3.8% away from 2018 lows.
• During the Jan-Mar correction, BAE Systems shares lost just 4.3% (but already -16.7% in October).
• Shares are now approaching 515p support level last seen in July-September 2016.
• Resolution of the US-Saudi standoff could help the shares recover to summer highs around 680p.

Broker Consensus: 74% Buy, 17% Hold, 9% Sell
Bullish: Investec, Buy, Target 820p, +55.3% (3 Aug 18)

Average Target: 684.63p, +29.7% (1 Nov 18)

Bearish: Raymond James, Underperform, Target 500p, -5.3% (17 Oct 18)

Pricing data sourced from Bloomberg on 1 November 2018. Please contact us for a full, up to date rundown.