Stock markets: the Guardian’s tips for 2016

A year that saw leading shares hit new peaks, only to fall to three-year lows mere months later, was always going to be difficult for investors.

Supported by central bank stimulus measures and hopes of a quick end to the Greek crisis, the FTSE 100 hit a record close of 7,103.98 in April. Even then, however, there were concerns about slowing demand from China, the world’s second largest economy, which put metal and oil prices under pressure.

Those fears only grew as the year progressed, and when China unveiled a surprise devaluation of the yuan in August, commodities suffered a real rout and oil slumped to near 11-year lows.

Despite all that, the US Federal Reserve came round to the view that it would soon be time to raise interest rates for the first time in nearly a decade, in the belief the US economy was strong enough to handle dearer borrowing costs despite problems elsewhere in the global economy.

Traders inevitably headed for cover at the prospect of a rate rise, and markets suffered a dreadful December. There was a mini-rally in the run-up to Christmas as the Fed did indeed make its move on rates, which at least relieved the uncertainty, and there was hope of further stimulus measures from China.

By the end of the year the FTSE 100 had recorded an annual fall of 4.9% to 6,242, so it was no surprise that our share tips for 2015 ended in negative territory, although a 5.1% collective loss from our tipsters was worse than the overall market.

There were some notable gainers, however, with International Airlines Group, which owns British Airways, soaring more than 25%, helped by lower fuel costs and a strong trading performance. Aviva also did well, as insurance proved a stable sector.

Unfortunately there were also a couple of very poor performers. AO World lost 44%, hit by a profit warning in February from which it struggled to recover.

My own tip, Software Radio Technology, dropped 21.4% after delays in receiving revenues from some of its newly won contracts, although it said it was confident on the outlook.

As a reminder, the 12-month period we use for these tips is an arbitrary timeframe for tracking shares. In the real world, investors would be likely to cash in any gains or cut their losses at different times of the year, rather than wait until 31 December.

With that in mind, on to this year’s choices. A number of them are backing the UK consumer to keep spending, despite the prospect of an interest rate rise from the Bank of England sometime in 2016.

Nick Fletcher

The dining out market is expected to continue growing, with consumers still feeling the benefits of relatively cheap borrowing and low inflation. Restaurant Group, whose brands include Chiquito, Garfunkel’s and Frankie & Benny’s, is likely to be one beneficiary. Its outlets are in retail and leisure parks, which insulates it from competition on the high street, according to the broker Panmure Gordon, and also gives it access to customers seeking meals before or after a visit to the cinema.

Analysts think it is good at spotting suitable properties for new restaurants, which is just as well given its ambition to double its 495 outlets within 10 years. Some believe it could profitably add a fast casual brand, where food is priced more cheaply and customer turnover is higher, to its existing outlets. Despite thepossible negative impact of the “national living wage”, the shares – now 685p – could have further to go.

Simon Goodley

WPP’s chief executive, Sir Martin Sorrell, has many fans in the City. Watchers of the advertising sector love to tip his firm’s shares and many continue to do so. They reckon the company will continue to buy back stock, while its investment in digital should continue to pay off.

In fact, of the 31 analysts following the stock, according to the financial website Digital Look, 22 are bullish and nine are neutral after the shares added around 16% to £15.63 in 2015. Such a positive consensus among City analysts is often a sell sign, but we’ll risk it and join the Sorrell love-in.

David Hellier

Shares in Cambria Automobiles, the motor dealership, have been climbing steadily of late and currently stand at an all-time high of 80p, up 70% over the 2015. There is reason to think they have much further to go. Annual profits came in 43% ahead of the previous year and above expectations at £7.7m.

Such is the momentum in the business that Zeus Capital, the group’s joint brokers, are upping their earnings forecasts for 2016 and 2017 by 4%. The dealership is favoured by Aston Martin and Land Rover, and the group has a history of buying underperforming dealerships and turning them around.

Gwyn Topham

Every dog has its day, and FirstGroup has been a real dog. Not least since the Aberdeen-based business bought Greyhound, the US coach business, in 2007. First’s share price has hovered around the £1 level for the last two years, but a 2013 rights issue is starting to fade in the memory, the erudite Tim O’Toole is still in post as chief executive, and the group has even won the TransPennine rail franchise – although it is nowhere near as lucrative as the ones that slipped away.

No one should bank their life savings on FirstGroup, but with IAG – last year’s golden tip – now priced in for success, this oversized bus company can surely chug its share price of 107p further uphill.

Terry Macalister

Transport infrastructure is one of George Osborne’s biggest obsessions, led by theHS2 rail project. This is good news for the UK engineering sector. WS Atkins, which has been attracting attention with its award-winning work on the design of Birmingham New Street station, is one of the firms that should be brought in early to draw up plans for new rail, road and school schemes.

Atkins, which reported a 40% increase in half-year profits last month, pays decent dividends, but it has recently beefed up its nuclear division which may put some off its shares, which stand at £16.26.

Sean Farrell

It is probably foolish to back a company whose shares have almost doubled in the last year, but take a look at SuperGroup, the owner of the trendy Superdry brand. Amid frantic price slashing by fashion retailers, the firm’s chief executive, Euan Sutherland, said on 16 December that it was selling almost all of its stock at full price.

That appears to bode well for what will be another tough year on the high street. SuperGroup, which closed the year at £16.46, also has growth options in the US, China and Germany. None of those markets are easy, but Sutherland, a seasoned retailer who joined in November 2014, seems to have the necessary grip on the business.

Graham Ruddick

The discount retailer Poundland, whose shares stand at 207.7p, began 2015 by agreeing a deal to buy 99p Stores, but ended it with concerns over the quality of what it actually bought and whether its glory days of sales growth are over. Shares in Poundland have fallen by more than a third this year, mainly thanks to a profits warning in November linked to the costs of integrating 99p Stores and volatile trading.

The company, however, has an experienced management team in a growing market. It has plans to open hundreds of new stores and is well-placed to take advantage of changing shopping habits.

Sarah Butler

That great high street survivor Dixons Carphone consistently outperformed expectations in 2015, when many other retailers were enduring tough times. The PC World and Currys owner has taken on the online purists Amazon and AO.com, making a virtue out of its stores where shoppers can easily pick up the goods they’ve already chosen online.

In 2015, the group was helped by cost savings from the merger of the head office operations of its two parents – Dixons Group and Carphone Warehouse – and thedemise of its competitor Phones4u. Next year could be helped by Euro 2016 and the Olympics, which are likely to boost TV sales. The combination of PC World, Currys and Carphone into single stores will also enable it to sell off spare stores and improve the look of the remaining ones to give them broader appeal.

The group’s experimental tie-up with the US telecoms firm Sprint is another avenue of growth. It could eventually lead to the opening of 500 US stores. An update is expected in January and the company’s chief executive, Seb James, seemed optimistic about the venture earlier this month. At just over 17 times expected 2016 earnings, the shares at 500p are not super-cheap, but they do offer a 2% yield, which is still better than the interest rate on a high street bank account.

Jill Treanor

The year ended with a report that ITVcould receive a bid from Comcast. The US company, which owns the NBC network, denied the idea, but it helped illustrate the potential for an offer for the UK broadcaster, which Adam Crozier has runsince 2010. The share price was around 58p when he was named as the new chief executive, but has risen to 276.6p. Analysts cite the move away from reliance on advertising revenue, which slumped following the 2008 banking crisis, and the expansion of ITV studios, its production arm.

“The ITV business has been transformed over the last five years and it has become increasingly attractive as a takeover target. Mr Crozier has insisted that it has a very strong future as an independent broadcaster and producer. However, as its studio business in the US continues to grow, it seems that a bid from a significant US media player is getting more and more likely,” according to analysts at the stockbroker Charles Stanley. With the prospect of a special dividend on top, that could make it one to watch.