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I’m a big fan of UK stocks – I think they offer a unique combination of strong businesses and low valuation multiples. But which ones will do well in 2026?
It is impossible to say with certainty what the stock market will do in the next 12 months. But investors have clear signs to look to for clues.
An economic perspective
Different businesses are suited to different economic conditions. So a lot of the question of which stocks will do well in 2026 comes down to what the economy will be like.
Early signs are not good – growth is expected to slow and unemployment to rise. The good news however is that inflation is forecast to moderate as oil prices fall.
A lot can happen in the next 12 months. But early indications suggest that businesses that can generate stable cash flow in a relatively difficult environment should be attractive.
That points to companies that don’t intend to spend discretionary money. So promising sectors include consumer protection, health care, real estate, and utilities.
Real estate
One stock that seems to fit the bill Supermarket Income REIT (LSE:SUPR). Company i FTSE 250 A real estate investment trust (REIT) that leases a portfolio of retail properties.
Supermarkets as an industry must be resilient, even in a challenging economy. People may change where and how often they shop, but they are unlikely to stop altogether.
With employers including Aldi and Lidl, as well Tesco again Places to stay in Sainsburythis should be fine for Supermarket Income REIT. The important thing is that its tenants are able to pay the rent.
For investors, that means an annual dividend of 7.5%. And that could be attractive — especially in a tough environment — so I think there’s a good chance the stock could do well in 2026.
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Investing for the long term
I think anyone looking for a UK stock with a good chance of doing well in 2026 should look at Supermarket Income REIT. But I’m not so sure looking ahead.
About two-thirds of the company’s leases have more than 10 years remaining. That’s good for stability, but it means the chances of meaningful growth over the next decade are slim.
In addition, 71% of the firm’s rent comes from Tesco and Sainsbury’s. This reduces the risk of default, but it also means that it is not in a strong position when it comes to dialog extensions.
Both of these may be good in an environment where economic growth across the board may be limited. But in a strong economy, there may be obstacles.
Stocks for 2026
Different investors will have different desires – rightly so. And I think that means Supermarket Income REIT should be seriously considered by some and not by others.
I expect the stock to perform well in 2026 and provide steady income. But for investors looking for long-term returns, I think there may be better opportunities available.
