The largest movers of 2018 – and shares to watch in the year ahead

It has been a difficult year for global stock markets. By the beginning of December 2018, the FTSE All Share was down by more than 10% from the start of the year, and the broader US index, the S&P500, was showing no progress. Stock markets have been in a major uptrend since the end of the financial crisis in 2009, and many of them set fresh all-time highs during 2018. But many factors have shaken investors during the past year.

A significant driver of sentiment has been the strength of the technology sector, which has experienced some wobbles over recent months. Since the summer, there have been worries about the so-called FAANG stocks (Facebook, Amazon, Apple, Netflix, Google), and some sharp drops here have spooked markets. Then there are the various political considerations. In recent months, it has been the threat of a trade war between China and the USA, and while, at the time of writing, the trade war has been put on hold for a few months, it is likely to continue to dominate market opinion in the new year.

Here’s what you could have won…

When it comes to hindsight investing, everyone is Warren Buffet. But let’s take a brief moment to take a look at the largest gainer in the FTSE 350 last year.

Ocado: (+100%)

Online grocery business Ocado (LON:OCDO) was the stand-out top performer amongst large and medium cap companies, up to December 2018. The share price had doubled for the year – and, actually, by July, it had done even better than that. Despite the fall back since then, it has still been a stellar performance for Ocado. Overseas expansion has been a big factor here, particularly a push into the US market. It was a deal here with Kroger that really boosted the price, lifting it more than 40% in one day. The last few months have seen some uneventful trading for the share price, although, for now, the 700p level does appear to be providing support.

Be glad you avoided this one…

Given that the FTSE 350 losers outnumbered winners by more than two to one during 2018, you should pat yourself on the back if your shares ended the year positive. One of the bigger high-profile losers was travel business Thomas Cook Group (LON:TCG).

Thomas Cook Group (–70%)

Remember the scorching summer? Thomas Cook does – and it did the travel business no favours. It led to a fall in demand for last-minute getaways to the sun, with UK holiday makers seeming to prefer Bournemouth to Benidorm. 2018 saw two profit warnings from the business, once again proving the old market adage that the first profit warning is often the sign to get out. The share price fell from 150p in May to as low as 20p in early December. That’s a sizeable drop – but as the year ended, the trend from those highs was still down.

What to watch in 2019

And now for the difficult bit – the crystal ball-gazing for what shares could be market out-performers in 2019.

World stock markets go into 2019 on a difficult footing. There is always uncertainty in markets – it just feels like we have more than is usual at the moment. There is still the threat of a trade war – the USA versus the rest of the world, and of course closer to home there is the “will it or won’t it happen” tug of war over Brexit. And then there are the usual market concerns over whether the rise in the past ten years has just gone far enough – particularly when it comes to the technology behemoths. Bearing all this in mind, I have used a few traditional charting techniques to highlight what I think are some interesting shares for investors to watch.

The solid trenders

Longer term readers of this column will hopefully know my favourite market cliché by now: The trend is your friend.

Markets trend up, down and sideways. To make money, investors need the shares that they purchased to move to a higher price than the price that they bought at. This statement, admittedly, does not tell us anything that we don’t already know, but when it comes to picking the right share, there are many different ways to do so. Even in volatile markets, there are still shares that will carry on plodding upwards – and that’s what my next two chosen selections are based around.


In choosing my selections, I focused on the FTSE350 and adopted the following simple criteria: shares that have risen both over the last 12 months and six months (in other words, shares that have experienced uptrends in both the medium and longer trends). Only 25 shares made the cut, which illustrates what a difficult market it has been for many investors.

Here’s the first selection.

Britvic

December saw the share price of FTSE250 drinks business Britvic (LON:BVIC) do something that many UK shares have failed to achieve for some time: it set fresh all-time highs. Admittedly, this was somewhat short-lived, with investors perhaps using the opportunity to lock-in some gains after a difficult year for the wider market – but it did confirm, from a charting perspective, that the trend was still strong and there was still demand out there from buyers. This latest trend in the Britvic price has now been in place for two years since the December 2016 lows, in the 520p area.

We have a couple of definite reference points to watch if Britvic were to succumb to the wider market weakness. First of all, there is that two-year trendline which comes in around the 730p mark. This trend has done a good job so far in stopping the sell-offs – they ended up being retracements only, before the longer-term trend resumed. In addition to this, the lows in October were set at 740p – once again ahead of that trend line. For now, weakness back towards this 730p/740p zone looks like nothing to be concerned about and would be viewed as just a dip to buy into, under the assumption that the major trend was going to reassert itself.

My second selection is…

Hilton Food Group

With a major trend going back for at least a couple of years now, FTSE250 food producer Hilton Food Group (LON:HFG) set fresh all-time highs back in September 2018. The price has drifted since, but not enough to trouble the longer-term trend.


Once again, there are two obvious levels to watch. The trend line is currently sitting around 850p, which is 7% below the current share price. That is the first level to watch if Hilton Food is to come under more pressure. The expectation here would be for strength to resume ahead of the two-year trend line and the share price to recover, initially targeting a move back to those 1,000p highs. Although, even if the trend line were to break, there is still potential solid support at the 2018 low of 760p, so, once again, there is a zone to watch were the share price to slide from current levels. And at the current price, it still looks like a buying opportunity.

The turnaround play

We all love a bargain – and the call of the counter-trend is a strong one. Many investors end up getting their fingers burnt by trying to call the bottom of a falling share – only to see it plunge further. The previous chart of Thomas Cook is a great example of the dangers of buying into a share because “it can’t possibly go any lower”. But even I would admit that downtrends don’t go on forever – so here’s one selection that investors may want to follow with the potential of it turning its downtrend around.

Centamin

2018 was not a good year for longer-term holders of mining business Centamin (LON:CEY), with the share price losing around a third of its value. But what is interesting for the casual observer is where this weakness has brought the price in relation to its longer trend. You can see from the chart above that a gradual uptrend that started in 2013 accelerated from 2016 – before later giving up a significant portion of those gains. But that slide has brought the shares back to the longer-term trend once again – and so far it is doing what it is supposed to do and stopping any further slides.

It is early days, but the last three months of 2018 were encouraging, with the shares building a base above the trend line, which is in the 80p/90p zone. And any weakness back to that zone will likely bring buyers back in. It could be an interesting year for the shares after a torrid time in 2018.