My Top 4 Stock Picks for 2026
Merry Christmas and a Happy New Year! I thought i would have a go with my top 4 picks for 2026.
Dear Reader,
Merry Christmas and a Happy New Year 🎄
As many Substack writers like to do at this time of year, I thought I’d join in with a set of stock predictions for 2026. For me, this tradition goes back much further to the days when The Telegraph used to run its stock-picking competition, often sponsored by big financial institutions like AJ Bell.
I still remember entering for the first time and finishing in the top 10, which I was quietly very proud of. The stock that did most of the heavy lifting for me back then was FTSE 100 giant Babcock. First place came with the added bonus of having an article written about you and your stock picks… one can only dream.
As we close out 2025, I thought it would be fun to revisit that idea and put a few names on the table, companies I believe could perform well over the year ahead. As always, these are my personal views, shared for discussion and interest only, and not investment advice.
Let’s get into it.
B&M European Value Retail SA
Share price: £1.66 (29/12/2025)
Sector: Retial
P/E: 6.71
B&M European Value Retail (BME) is one of the UK’s leading discount retailers, operating a network of over 700 stores across the UK and France. Known for its value-focused offering, the business thrives when consumers are cost-conscious, making it a naturally defensive play during periods of economic uncertainty.
After a challenging period marked by rising costs, flat UK like-for-like sales, and a recent earnings revision, B&M now trades at discounted levels, offering a potentially attractive entry point for investors. The company is pursuing a turnaround strategy, focused on pricing, product range simplification, and improving availability, all of which could set the stage for a recovery in 2026.
Positives
Ongoing revenue growth — Group revenue rose ~4% in the first half of FY26, driven by new store openings and expanded operations in both the UK and France.
Value‑retail appeal remains strong — As a discount retailer, B&M is well‑placed to benefit from cost‑conscious consumer trends, particularly if economic pressures persist.
Turnaround strategy in motion — The “Back to B&M Basics” plan is being rolled out, focusing on improved pricing, simplified product ranges and better on‑shelf availability to support future like‑for‑like growth.
Analyst support/base case upside — Several brokers still rate the stock as a moderate buy, and average targets imply significant upside from current levels.
Deeply discounted valuation — After a steep share price decline this year, valuation models suggest the stock may be trading well below intrinsic value, potentially offering attractive upside for investors.
Negatives
Profitability headwinds — Adjusted EBITDA for the first half of FY26 fell sharply (down ~30%), reflecting cost pressures and softer UK like‑for‑like sales.
Earnings guidance trimmed — B&M has reduced its FY26 EBITDA outlook following a freight cost accounting adjustment, which weighed on investor confidence.
Leadership and execution uncertainty — The CFO has departed and an interim successor appointed, which adds transitional risk at a critical stage for the turnaround.
Dividend reset and lower payout — Interim dividend was cut, potentially deterring income‑focused investors.
Weak share price trend — Shares remain well below 52‑week highs, trading with significant volatility and low liquidity, reflecting ongoing market scepticism.
Bytes Technology Group PLC
Share price: £3.59 (29/12/2025)
Sector: Information Technology (IT)
P/E: 16.82
Bytes Technology Group is one of the UK’s leading software, cloud, security and IT services providers, helping organisations adopt modern digital platforms and secure infrastructures. The company has built a broad client base across private and public sectors and benefits from structural demand in enterprise cloud adoption, cybersecurity, and AI‑related services. Despite recent share price weakness driven by profit and trading challenges, the business continues to invest in growth, execute share buybacks and maintain dividends, making Bytes an intriguing stock for 2026, especially if operational headwinds ease.
Positives
Structural demand in tech services: Bytes operates in high‑growth segments including cloud, cybersecurity and AI‑related IT solutions — areas with long‑term secular demand.
Record gross invoiced income: The group exceeded £2 billion in gross invoiced income in FY25, a meaningful milestone and indication of scale.
Share buyback support: A substantial £25 m share repurchase programme is underway, with hundreds of thousands of shares cancelled a move that can support the share price and EPS over time.
Dividend continuity: Bytes continues to pay and modestly increase dividends, helping maintain income appeal.
Strong cash position: Cash reserves remain healthy, providing flexibility through cyclical pressures.
Investor interest: Institutional support is evidenced by growing stakes from major investors, signalling confidence in Bytes’ long‑term strategy.
Negatives
Recent profit and share price pressure: Shares have been weak following an earnings update showing a drop in operating profit, partly due to changes in major vendor (Microsoft) incentive structures and reorganisation costs.
Macroeconomic and trading headwinds: The company has acknowledged a challenging macro environment, with some customer buying decisions deferred and corporate sales restructuring taking longer than expected.
Operating profit contraction: Half‑year results showed operating profit down ~7%, even as revenue grew, which highlights margin pressure.
Execution and transition risk: The company is in a period of structural transition from legacy incentive models to new cloud and services models which brings uncertainty and execution risk.
Valuation volatility: Byte’s share price has been volatile, reflecting market uncertainty rather than fundamentals alone, which can make timing and sentiment important factors for investors.
Primary Health Properties PLC
Share price: 98 p (29/12/2025)
Sector: Real Estate Investment Trust (REIT)
P/E: 15.14
Primary Health Properties (PHP) is not a flashy stock, but it is a highly predictable one. The company owns a portfolio of GP surgeries, dental practices and community health centres across the UK and Ireland, the kind of infrastructure that quietly underpins the healthcare system regardless of the economic backdrop. With long leases, near-full occupancy and rents largely supported by public funding, PHP sits firmly at the defensive end of the property market.
After a difficult period for UK REITs, PHP now finds itself trading at a depressed valuation despite the essential nature of its assets and the resilience of its income.
Positives
Attractive income: Dividend yield of c. 7.2%, paid quarterly, well ahead of UK equities and gilts.
Defensive asset base: Owns GP surgeries, dental practices and community health centres, non-discretionary property with structural demand.
Government-backed rents: The vast majority of income is ultimately funded by the NHS or public bodies, reducing tenant risk.
Long leases & high occupancy: Occupancy close to 99% with long average lease lengths, supporting predictable cash flows.
Valuation support: Shares trade close to five-year lows and at a discount to NAV, leaving room for a re-rating if REIT sentiment improves.
Rate tailwind potential: Any stabilisation or decline in interest rates into 2026 would be supportive for highly geared property companies.
Negatives
High leverage: Loan-to-value in the high-40% range leaves less balance-sheet flexibility than some peers.
Interest rate sensitivity: Financing costs remain a key risk; higher-for-longer rates would limit earnings growth.
Limited growth upside: PHP is an income-led investment, capital growth is likely to be steady rather than spectacular.
Policy risk: While government backing is a strength, reliance on NHS funding exposes the business to long-term political and budgetary decisions.
HICL PLC
Share price: £1.15 (29/12/2025)
Sector: Real Estate Investment Trust (REIT)
P/E: 18.81
HICL PLC is one of the UK’s largest listed infrastructure investment companies, specialising in long-term, inflation-linked assets such as public-private partnership (PPP) projects in transport, health, education and other essential services. Its portfolio is designed to deliver stable, predictable income derived from long-dated contracts with public sector counterparts very much a defensive theme in the broader equity market.
Over recent years, HICL has been active in reshaping its portfolio through disposals, share buybacks and a strategic tilt toward assets with longer lives and stronger growth characteristics. Net asset value per share has grown and dividend cash cover has improved, supporting the board’s guidance for progressive dividends into FY26 and FY27.
Positives
Defensive, essential assets: Exposure to transport, healthcare, education and other core public infrastructure with long-term contracts.
Government-backed revenues: Cash flows are largely linked to public sector counterparties, providing strong income visibility.
Inflation linkage: A significant proportion of revenues are either explicitly or implicitly inflation-linked, supporting real returns.
Attractive yield: Dividend yield of around 6–7%, with guidance for progressive dividends over the medium term.
Standalone strategy supported: The recent shareholder vote rejected the merger with TRIG, showing confidence in HICL’s independent growth and protecting existing NAV value.
Long asset lives: Portfolio weighted towards long-dated concessions, which suits income-focused investors with a longer time horizon.
Negatives
Interest rate sensitivity: Like all infrastructure funds, higher discount rates have weighed on NAV and share price performance.
Complex valuation assumptions: NAV relies on long-term assumptions around inflation, discount rates and asset performance.
Limited capital upside: Returns are primarily income-driven; strong share price growth is unlikely without a broader sector re-rating.
Political and regulatory risk: Dependence on public sector contracts exposes HICL to long-term policy changes.
Persistent NAV discount: Shares still trade at a discount, though the rejection of the TRIG merger has slightly narrowed it.
Thanks for reading!,
Ollz.
The information provided in this article is for informational purposes only and reflects my personal opinions and analyses. It should not be considered financial advice or a recommendation to buy or sell any securities. Investing in the stock market involves risks, and past performance is not indicative of future results. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. I do not assume any responsibility for any financial losses or consequences that may arise from reliance on the information provided herein.