What a difference a year makes. After the record highs for global markets in 2017, 2018 was decidedly volatile, characterised by big swings as investors tried to navigate their way through mounting uncertainties. Markets on both sides of the Atlantic have fallen this year, with the FTSE 100 falling 12.5% during 2018 and the Dow Jones enduring a wildly volatile year.
In a weak year for stock markets, dominated by concerns over Brexit, trade wars and rising US interest rates, our own picks for 2018 were very disappointing. Between them our 10 tips lost an average of 27.7%.
Among the biggest fallers were the trainers and hoodie retailer Footasylum in a very tough year for high street sales. The firm scaled back plans to open new stores, reported a first-half loss in October, and warned of “difficult trading”.
Another big faller was 888, as our bet that shares in the online casino firm could be boosted by a takeover approach or merger didn’t come off. Allied Minds, Prudential and easyJet were also among our major fallers.
The Gym Group proved to be the exception, with shares rising 24.1% in 2018 as the low-cost gym chain appealed to a growing membership. Its acquisition of easyGym helped to accelerate expansion plans, and average revenue per member per month increased, adding to factors that pleased investors.
The Guardian’s business desk strikes a particularly cautious note in its tips for 2019 – (probably) the year that Britain will leave the EU under circumstances that nobody knows and with implications that nobody fully understands. That said, here our best guesses for the year ahead.
The year could well be one of economic turmoil. If so, investors will rush to store their money in more defensive stocks that are unlikely to be hit too hard by Brexit, trade wars or a global slowdown. A fall in discretionary spending would still affect Diageo, which ended the year at £27.95, but the booze giant also has a good international spread, meaning stronger markets can help offset weaker ones. Let’s face it, if times get tough we may all have good reason to drown our sorrows. Rob Davies
GSK surprised investors by announcing a break-up of the business in December, giving it something it had long been clamouring for. The drugmaker will spin off its Panadol and Sensodyne consumer healthcare unit into a joint venture with Pfizer within three years, retaining majority control. It is the second bold move by chief executive Emma Walmsley, after the acquisition of US cancer specialist Tesaro for a hefty £4bn. The deal shows Walmsley is serious about beefing up GSK’s pharma business, and its new HIV 2-drug regimen and shingles vaccine Shingrix look promising. GSK, at £14.91, has also given assurances on the 2019 dividend. Julia Kollewe
At €7.02, ScottishPower’s giant Spanish-listed owner looks a good bet for 2019. The company’s global push into wind and solar has seen it performing strongly in recent years, and this looks set to continue. In the UK, ScottishPower has exited fossil fuel power and said it will bid in a key government auction for offshore windfarm subsidies. The UK energy price cap will hit its supply business, but that’s a wrinkle in an otherwise attractive prospect. Adam Vaughan
The storm clouds might be gathering for the global economy with Britain at the centre ahead of Brexit, but one potential safe haven for investors could be the industrial warehouse sector. With a growing number of UK companies stockpiling in preparation for possible border delays in the event of a no-deal Brexit, warehouse space is in demand. Consumers are also shifting their shopping online, raising demand for industrial “shed” space to handle internet orders.
Although it’s already had a good few years, Segro, at 588.6p, could benefit further as the biggest warehousing company in the FTSE 100. It also benefits from diversity, with locations outside the UK in Germany, France, Poland and elsewhere across the EU. Richard Partington
BT’s new boss Philip Jansen arrives on 1 February with a mandate to revive the embattled telecoms group. Outgoing chief executive Gavin Patterson has already started the job, having announced 13,000 job cuts over a three-year period as part of a £1.5bn cost-cutting drive. It falls to Jansen to address lingering strategic questions, such as the future of its Openreach subsidiary, after shareholders — and activist investor Greenlight Capital — pushed for a spin off this year. He will also have to decide whether its multibillion pound sports broadcasting rights strategy is a good use of shareholders’ cash. At 238.1p, there could be plenty to get the shares moving. Zoe Wood
Investors in the UK and beyond have reason to be nervous going into 2019, but one company which has a good claim to be better protected than most against Brexit turmoil or the end of an ageing business cycle is Burford Capital. The litigation funder picks juicy court cases it thinks will result in big payouts and backs them with the cash – more than $3bn so far – to hire top barristers. Scale and diversification are key in this game, and Aim-listed Burford, at £16.56, is eyeing an enormous and little-served international market. When the tide goes out some companies are left exposed – and the lawyers (mostly) win. Jasper Jolly
The year brings huge uncertainty but the quest for cleaner air and reduced emissions will surely remain high on the global agenda. Johnson Matthey, the sustainable technologies expert, could be well positioned to benefit. Not only is it a leading maker of catalytic converters at a time when European and Chinese regulators are tightening emission rules, it is also developing materials for the rapidly growing area of electric batteries. The company is not immune to the impact of a no-deal Brexit, but it does benefit from a global footprint and diverse sector spread. In November, the company hiked the interim dividend, signalling confidence in its earning potential. At £27.99, it could be one to watch. Angela Monaghan
Morrisons enjoyed a steady 2018 and has a number of tricks up its sleeve as shoppers uncertain about the impact of Brexit rein in spending. New areas of growth for the supermarket chain including wholesale via Amazon and petrol stations could help to offset competition from the likes of Aldi, Lidl and Tesco. The company is well placed to pick up stores that may have to be offloaded by rivals Asda and Sainsbury’s if their merger goes ahead and the shares, at 213.3p, are also underpinned by rumours of a bid from Amazon. Problems with its deal with McColls and supply difficulties caused by Brexit are potential risks, but the management team seem well prepared to deal with them. Sarah Butler
Video games are a massive global market, with more than 2 billion players supporting an industry that is expected to grow from $138bn (£109bn) this year to $180bn by 2021. Sheffield-based Sumo Group is one of more than 2,200 UK-based games makers hoping to capitalise on that growth. Sumo develops games in partnership with major industry players, such as Sony, Microsoft and Sega, creating products including Little Big Planet 3 for Sony and Sonic and Sega All-Stars. At 118.5p, its shares have climbed more than 3% in 2018 – although it was trading at more than 180p at one point last year – with stockbroker Peel Hunt placing a target of 200p on the Aim-listed business. It is an expanding (if loss-making) business, having made two acquisitions last year, and it is protected by customer contracts that have a duration of between 18 and 48 months. Dan Milmo
Sage Group, at 601.4p, has not bombed since the Brexit vote – although it has recently warned on margins. It is the sort of established company that gives you some kind of confidence that it might not lose you all your money. The accountancy software firm also has a new chief executive, who you assume is trying to make his mark. And it has just announced decent profits, albeit warning about profitability in the future. Not exactly a screaming buy, admittedly. But let’s face it. This is a guessing game, even at the best of times. Simon Goodley