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Atlantic Capital Markets have shared with us their five UK Blue Chip share tips to watch in the course of 2022. The UK economy was one of the hardest hit in the course of the pandemic in 2020, but was witness to an impressive come back last year. Inflation is obviously going to be a key factor in the course of this year, but is not expected to derail the British economic recovery.

Global supply chain disruptions and surging energy shortages combined to drive inflation in the UK to its highest level in a decade in November. The Bank of England is widely expected to raise interest rates again in February, making it one of the first major central banks to raise rates, good news for the pound perhaps?

Risks still remain, including a potential resurgence of the Covid virus, which has the potential to put the UK back into lockdown. There are also the effects of Brexit to be considered. Relations between the UK and EU remain strained, and there is still the potential for the trade deal to fall apart.

Top 5 share tips for 2022

#1. DS Smith [LON:SMDS]

The international packaging company provides carboard boxes to e-commerce firms and serves the likes of Amazon and Unilever. The steep drop of its share price in the second half of last year is being attributed to industry-wide problems caused by the pandemic. Atlantic Capital Markets feels the latest trading update was encouraging. Its key markets, including food goods and consumer goods remain strong. Bear in mind consumers are keen to move away from plastics, which plays into the hands of carboard packaging manufacturers.

#2. Rio Tinto [LON:RIO]

The world’s second largest metals and mining corporation produces a wide range of commodities, saw its share price trading 30% lower than its 2021 high, but seems to have reached a floor of around £44. This was partly attributable to the plunge in iron ore, which contributes around 60% of Rio Tinto’s revenues. Metal prices have been collapsing generally due to slowing demand from China, which has massive influence over global metals prices. China is however signalling that it is planning to move towards more supportive fiscal policies this year.

#3. Smith & Nephew [LON:SN]

The British multi-national medical technology company sells it products in over 100 countries, but has seen its share price fall over 20% since its yearly high. It is now trading at around prices last seen during spring 2020 when the pandemic hit. Growth has also been hampered by supply chain issues. It has the potential to stage a strong rebound in 2022. Demand for its products has not evaporated, but has been pushed back, according to Atlantic Capital Markets. Cost cutting means the stock could weather more storms if necessary.

#4. Vodafone [LON:VOD]

The EMEA region telco giant, which is active in both mobile and fixed line telecoms markets, pushed high in the first half of last year, but saw a 25% tumble in its stock price. Investors sold out despite reasonable fundamentals, but its debt pile has been getting more eye catching for all the wrong reasons. Vodafone is seeing revenues rebound and roaming charges are on the rise again as international travel picks up. Customers are also expected to start switching up to the more lucrative 5G contracts.

#5. John Wood Group [LON:WG]

A British engineering and consulting business with its HQ in Scotland, Wood Group has traded down over 40% last year, and was hard hit during the pandemic. It warned in November that annual earnings would be lower than previous due to delays caused by the pandemic. It has also announced a strategic review of its engineering consultancy. This review could pave the way for a sale. Wood Group is also already a global leader in energy transition, an area which is capturing investor attention.

For more detailed analysis of these stock picks, check out this video from Atlantic Capital Markets:


Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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