3 UK Stocks to Watch as 2023 Draws to a Close

Year-end is when many investors review their portfolios, and stocks benefit from some Christmas cheer. Here are a few UK stocks that might be of particular interest.

Riding the Christmas Wave

Around Christmas time, investors are likely looking at what stocks can benefit the most over the coming year. But the holiday season can benefit some stocks in particular, thanks to last-minute shopping for gifts or buying groceries for the festivities.

The date is so important for UK grocers that they have special, post-Christmas trading updates to inform investors what happened. Below are a couple of stocks that might stand out during the season.

Diageo, the wine and spirits company has been under pressure this year as it issued profit warnings and saw its premium brand segment impacted by the cost-of-living crisis. Shares are trading down over 20% at a PE of 17.4x. With inflation in the UK showing substantial improvement, there might be some justification for management's optimism that trading will improve next year. Analysts point to Christmas sales results being critical in restoring confidence in the company that was hurt by slow sales of its premium Mexican drinks.

Marks & Spencer has been the UK grocer that has managed to best deal with the cost-of-living crisis, with analysts citing its more affluent clientele. This has allowed its share price to more than double this year, and the CEO is also looking to target further growth in the coming months. M&S has managed to generate savings in the current environment to convert the occasional shoppers typical for Christmas into regular shoppers to increase its market share. M&S trades at a PE ratio of 13.6 and recently restored its dividend.

Ceres Power is not a Christmas-specific stock but has the potential for growth as the world looks to decarbonise. Fuel cell technology is seen as a potential driver of a cleaner future. The market is expected to grow by almost 10x in the current decade. Ceres recently reported sales growing at 17%, though it has yet to turn a profit. However, it used £15.5M in cash in the first half of the year and still has £161M on hand, which means it has a potential runway of up to 5 years before taping markets. The company is hopeful it will secure an imminent increase in revenue.

Diageo Bottom In?

Diageo's stock price shows continued downward pressure but may have ended a flag pattern at 2750 as it failed to accelerate lower. The first objective for bulls could be met at 3280 but requires reclaiming 3K in the short term first. If not, more downsides would be possible, laying eyes on 2650 and 2500.

Source: SpreadX / DIAGEO

Key Takeaways

Diageo and Marks & Spencer are two UK stocks that could benefit from higher Christmas sales this year. Diageo's premium spirits brands have suffered from the cost of living crisis, but Christmas sales will be critical to restore confidence.

On the other hand, Marks & Spencer has managed inflation better due to its more affluent customer base and is looking to convert more occasional shoppers into regulars. Separately, fuel cell technology company Ceres Power still has plenty of cash reserves and could see increased revenue from further deals. The fuel cell market is expected to grow significantly in the current decade as the world looks to decarbonise.