Top 4 UK Stocks To Watch for Q3 2021

Although the UK100 is off of its pandemic lows it has lagged other indexes such as the GER30 and SPX500. Nevertheless, there are certainly companies which are performing well with potential upside ahead. In this article we look at 4 companies that either have good fundamental underpinnings, share price momentum, or significant company changes that may unlock shareholder value. Moreover, the following 4 companies are well placed to take advantage of the cyclical recovery that is under way since the 2020 lows following the COVID-19 outbreak:

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AstraZeneca (AZN)

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  • AZN develops and manufactures prescription medicines and pharmaceutical products.
  • Its products are used in various medical areas including oncology, cardiovascular, renal, metabolism, and respiratory.
  • It has also played a pivotal role in the fight against Covid-19, developing the vaccines Covishield and Vaxzevria amongst others.
  • Its vaccine contributed 9% to revenue growth in its latest interim results.
  • Ex vaccine, AZN's revenue was up 9% in H1.
  • The company's new cancer drugs are contributing to the top line and emerging market penetration has become a focus for the more mature drugs e.g. Nexium and Pulmicort.
  • Forward guidance indicates total revenue is expected to increase by a low-twenties percentage, accompanied by a faster growth in core EPS to $5.05-$5.40.
  • The Alexion acquisition is now closed (21 July) but was not included in the financial statements.
  • The acquisition will contribute to economy of scale efficiencies and AZN's global channels will boost Alexion sales.
  • Price has pulled back but is still above its 30-week moving average (black line) and the moving average's direction is positive.
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Glencore (GLEN)

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  • GLEN is an Anglo-Swiss multinational commodity trading and mining company. Operating through its two business segments, Industrial and Marketing, the company produces and markets more than 60 commodities through approximately 150 assets and offices in over 35 countries.
  • As economies recovered from the pandemic low of 2020 and general capacity utilisation improved, GLEN responded positively to the restoration of demand.
  • The 2021 half year showed strong numbers with adjusted EBITDA of $8.7bn. This is an increase of 79% from the previous year comparable.
  • Operating cash flows jumped 98% to $7.3bn (3.7bn).
  • GLEN's share price has responded positively and is above its 30-week moving average.
  • The company has proposed a special dividend of $0.04 per share (in addition to the declared dividend of $0.12 per share) and a $650m share buyback.
  • Given the cyclical nature of the global recovery, GLEN is well positioned and a likely beneficiary of further increases in global aggregate demand and normalisation of central bank policy.

Barclays (BARC)

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  • BARC is a British multinational universal bank. It supports consumers and small businesses through its retails banking services, and larger businesses and institutions through its corporate and investment banking services.
  • BARC's profit after tax for the first half of 2021 was £5bn, up from £1.3bn in the last comparable period. This translates to an attributable profit of £3.8bn (compared with £0.7bn for the 2020 interim period).
  • Other notables for H1 2021 include:

    • Return on equity at 14% (2.5%),
    • Return on tangible equity at 16.4% (2.9%)
  • BARC delivered an impressive EPS of 22.2p compared with 4p for 2020.
  • We note that a capital distribution of 2p per share was declared and BARC intends to pursue a share buyback of up to £500m.
  • Given these numbers, BARC's share price is above its 30-week moving average and the moving average is heading up.
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GlaxoSmithKline (GSK)

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  • GSK is a British multinational pharmaceutical company. It was established in 2000 by a merger of Glaxo Wellcome and SmithKline Beecham.
  • The company's Q1 result for 28 April 2021 were disappointing, mainly due to pandemic disruption.
  • However, Q2 showed a marked improvement and the company has forecast 2021 earnings at the higher end of its guidance range.
  • The company has seen a marked increase in demand for its COVID-19 vaccine booster, especially with regard to the rapid delta variant spread.
  • GSK, and its US partner Vir, will also supply their COVID-19 treatment to the EU.
  • The pharmaceutical company is also spinning off its consumer health business.
  • This should allow for a renewed focus on core operations and an unlocking of potential upside.
  • It's share price is above its 30-week moving average and the moving average has turned up.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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