Five top share trades for 2026
A handful of UK companies are tipped to be among Europe’s next set of global champions. City writer Graeme Evans discusses this and why Lloyds is one analyst’s top pick.
3rd December 2025 13:42
by Graeme Evans from interactive investor
A top trade idea for 2026 has highlighted Breedon Group (LSE:BREE), ITM Power (LSE:ITM), NatWest Group (LSE:NWG), RELX (LSE:REL) and Sage Group (The) (LSE:SGE) among a band of “GOTCHA” stocks that could become Europe’s next set of global champions.
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UBS’ acronym, which stands for Global Opportunities for Thematic Champions, refers to firms that are well placed to leverage domestic policy tailwinds to achieve global growth.
Examples where policy is supportive and facilitating international success include defence manufacturers, renewable energy companies and electrification-oriented industrials.
The City firm also references infrastructure, banking and artificial intelligence (AI) productivity specialists.
Its 29-strong “GOTCHA” screen, which includes the Dutch semiconductors firm ASML Holding NV (EURONEXT:ASML) and Danish utility Orsted AS (XETRA:D2G), consists of companies that are growing domestically and internationally and align with at least one of Europe’s top key themes.
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The UK contingent features three FTSE 100 firms in lender NatWest, the Elsevier journals and LexisNexis owner Relx and accounting software business Sage.
Mid-cap construction business Breedon and AIM-listed green hydrogen firm ITM Power also appear on the screen.
UBS said: “Domestic success can often facilitate international growth. This has been the case for some of the largest and most successful companies in the world.
“Europe is no exception although many of the most successful European companies now face intense competitive threats from China, higher energy prices and geopolitical shifts like tariffs, pricing policies and consumer preferences.”
The bank highlighted the positive impact of last year’s Draghi Report, which called on Europe to refocus its competition policy and to facilitate more domestic profitability so that companies can compete effectively internationally.
UBS said: “We believe this shift is under way with EU President Ursula Von der Leyen assembling a European Council and Competition Commission around this report.”
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The bank said renewables stood out among the most compelling opportunities within European renewal and structural investments, supported by over two trillion euros in grid and clean power spending.
It added: “The banking sector is also well-positioned, with robust capital, accelerating loan growth and attractive valuations. These themes are underpinned by fiscal expansion, policy support, and a shift towards domestic demand and investment.”
While the bank’s base case does not forecast that European equities will outperform the US in 2026, it said the balance of risks has shifted positively.
It added: “For the first time in three years, we see genuine upside asymmetry in Europe, driven by cheaper valuations, supportive policy, and the potential for outsized impact from renewed inflows.”
The positive stance is mirrored at Morgan Stanley, which expects EU equities to be pulled into the slipstream of a broadening US recovery in 2026. This is despite continued domestic fiscal challenges and structurally rising China competition.
Banks stay on top of its data-driven sector model for 2026, while it has upgraded utilities and food retail to Overweight and downgraded discretionary retail to Underweight. Lloyds Banking Group (LSE:LLOY) and Centrica (LSE:CNA) feature among its Europe-wide selection of top picks.
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In contrast, Bank of America maintains a negative bias on European equities going into 2026.
It notes the consensus view is bullish going into the new year, with investor cash levels in its Global Fund Manager Survey close to a 20-year low and 96% of respondents to the European version of the survey expecting upside for EU equities over the coming year.
The bank warns that elevated levels of investor optimism could be challenged in a number of ways, such as a weak US labour market, fading global economic indicators, an AI air pocket and credit pressures.
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