UK stocks have gone nowhere in the past few months. The FTSE 100 index was trading at £8,235 on Tuesday, a few points above last week’s low of £8,167 and 4.12% from its lowest level in August. It remains 2.80% below the highest point this year. This article looks at three popular UK stocks and what to expect: Ocado Group, Lloyds Bank, and BT Group.
Ocado Group | OCDO
Ocado Group is a large technology company that has become a fallen angel over time as its stock has plunged by over 88% from its highest point in September 2020.
This performance happened as the company’s key business faced substantial challenges. Its technology division, where it provides warehouse solutions to other retailers, is not growing and competition is rising, especially from Symbotic. It has also struggled to turn a profit over the years.
The most recent financial results showed that its revenue for the first half of the year rose by 12.6% to £1.5 billion. Its technology solutions rose by 22% while its logistics and retail division grew by 6% and 11%. Its reported loss improved to £154 million from £290 million a year earlier.
In a report on Tuesday, Kantar noted that Ocado Retail’s e-commerce business was showing strong growth in the UK.
Turning to the weekly chart, we see that the Ocado share price has been in a strong sell-off after peaking at 2,912p in 2020, where it formed a double-top pattern. In most periods, this is one of the most bearish chart patterns in the market.
The stock formed a death cross in May 2022 as the 200-day and 50-day Exponential Moving Averages (EMA) made a bearish cross. In most cases, an asset tends to drop more when it forms a death cross pattern.
Ocado has found a strong support along the key level at 347p. Therefore, a drop below this price will lead to more downside as sellers target the key support at 300p.
Ocado chart by TradingView
Lloyds Bank | LLOY
Lloyds Bank, the biggest bank in the UK, has done well in the past few years as it jumped from 19.68p in 2020 to over 50p today. This rally happened as the UK held relatively better than most analysts were expecting.
It also happened as most European banks rallied as well because of high interest rates. In the UK, the Bank of England (BoE) pushed interest rates from near zero during the pandemic to a 16-year high of 5.25%.
In most periods, banks thrive when the base lending increases because of the higher net interest margin they make. In Lloyds’s case, its annual revenue jumped from over £11 billion in 2020 to over £18 billion in the last financial year.
Its profits have also jumped in the past few years, reaching a high of £5.4 billion in the last financial year. The company has also returned dividends and has a dividend yield of 5.06%.
Turning to the weekly chart, we see that the LLOY share price bottomed at 19.68p in 2020 and has been in a strong uptrend since then. It crossed the important resistance point at 48.90p, its highest swing in February 2023 in March this year.
Recently, however, there are signs that the momentum has started to fade as it became clear that the BoE will deliver more interest rate cuts this year. Therefore, in this case, more upside will be confirmed if the stock rises above the key resistance point at 60p.
Lloyds chart by TradingView
BT Group | BT.A
BT Group, the biggest telecom company in the UK, has done well in the past few weeks. These gains started when Carlos Slim, the founder of American Movil and Mexico’s richest man, invested in the company.
Patrick Drahi, the founder of Altice, then sold his stake to the founder of Bharti Airtel. This means that BT is mostly owned by three high-profile telecom giants, including Deutsche Telekom and T-Mobile.
The company is also cutting costs and simplifying its operations, measures that it hopes will make it more profitable.
The BT share price formed a strong double-bottom pattern at 97.42 between 2023 and 2024. In technical analysis, this is one of the most popular bullish signs in the market.
The stock is about to flip the double-bottom’s neckline at 144.65p, its highest level on April 17th. Most importantly, it is about to form a golden cross as the 200-week and 50-week moving averages cross each other.
Therefore, the stock will likely have a bullish breakout in the coming weeks as investors target the next key resistance point at 167p, its highest point in June 2022 and about 18% above the current level. The alternative scenario is where it drops to the 200-week moving average at 128.50p.
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