British bank HSBC has revealed a list of stocks in the U.K. it says are a “must-see” — regardless of how market conditions pan out over the rest of the year. The companies were selected based on factors such as price, growth prospects and value. “[Our analysts have selected] stocks where we think there is a strong chance the assumptions that underpin the current share price – ‘what is in the price?’ – will change and have an impact on valuation and the current share price,” the banks team of analysts detailed in a Sept.7 note. Value stocks For those seeking “fundamentally cheap [stocks] with limited risk and/or high yield,” HSBC listed value stocks. Its picks include automated food packaging company Hilton Food , for its defensive business model with “predictable cash flow, high barriers to entry and growth opportunities existing from business and recent acquisitions which have yet to deliver full synergies.” Hilton Food’s shares are trading 31% below historical averages, according to the bank, “implying a strong value opportunity.” The analysts have a buy call on the stock at £1,050 ($1,312.06), over 50% upside from its £687 close on Sept. 7. HSBC also likes specialist engineering company IMI , saying its “margins look set to reach 20%” from around 14% in 2019 to around 17-18% currently. The bank forecasts the company will have £1 billion in free cash flow in the next three years, allowing for significant deleveraging and the possibility of share buybacks next year. The analysts’ price target of £2,130 pounds gives the stock a 44% upside from its close on Sept. 7. Meanwhile, the bank upgraded its call on price comparison platform MoneySupermarket.Com Group to buy, sticking with the price target of £305 British pounds, or around 22% potential upside. “The group has a highly cash generative, asset light business model with aggregate free-cash-flows for the next three years at around 24% of the current market cap,” the analysts noted. Misunderstood stocks HSBC also has a category called “misunderstood” stocks, capturing “companies or business models we think are misunderstood and therefore at the wrong price”. Coats — which manufactures threads and components for apparel and footwear — was one such pick for the analysts. They said its share price has “not broken out of its previous trading range’ despite strategies undertaken since early 2022 to upgrade the group’s prospects.” The bank has a buy call on the company at a price target of £110, or 44.5% upside. Two other companies featured under this category were sales and support services provider DCC and video game operator Keywords Studios . Both companies are “buys” for HSBC, with target prices of £6,800 and £2,915 – or 55.1% and 87.7% — upside respectively. — — CNBC’s Michael Bloom contributed to this report.
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