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 can do well in 2026?
It’s impossible to say with certainty what the stock market will do in the next 12 months. But investors have some pretty clear signs they can pay attention to for clues.
Economic outlook
Different businesses are suited to different economic environments. So a lot of the question of which stocks will do well in 2026 comes down to what the economy will be like.
The early signs aren’t particularly positive – growth’s expected to be slow and unemployment’s set to rise. The good news though, is that inflation is forecast to fall as oil prices drop.
A lot can happen in the next 12 months. But the early indications suggest that businesses that can generate steady cash flows in a relatively tough environment should be attractive.
That points towards companies that don’t target discretionary spending. So promising sectors include consumer defensives, healthcare, real estate, and utilities.
Real estate
One stock that seems to fit the bill is Supermarket Income REIT (LSE:SUPR). The company is a FTSE 250 real estate investment trust (REIT) that leases a portfolio of retail properties.
Supermarkets as an industry should be relatively resilient, even in a challenging economy. People might change where and how often they shop, but they’re unlikely to stop entirely.
With tenants including Aldi and Lidl, as well as Tesco and Sainsbury’s, this should be fine for Supermarket Income REIT. All that matters is that its tenants are able to pay their rent.
For investors, that means a 7.5% annual dividend. And that might be attractive – especially in a tough environment – so I think there’s a decent chance the stock could do well in 2026.
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Long-term investing
I think anyone looking for a UK stock that has a good chance to do well in 2026 should take a look at Supermarket Income REIT. But I’m less convinced when I look further ahead.
Almost two-thirds of the company’s leases have more than 10 years left. That’s good in terms of stability, but it means the chances of meaningful growth over the next decade are minimal.
Furthermore, 71% of the firm’s rent comes from Tesco and Sainsbury’s. This limits the risk of defaults, but it also means it isn’t in a strong position when it comes to negotiating extensions.
Both of these might be positives in an environment where economic growth across the board’s likely to be limited. But in a stronger economy, they’re likely to be obstacles.
Stocks for 2026
Different investors will – rightly – have different ambitions. And I think that means Supermarket Income REIT’s worth considering seriously for some and not others.
I expect the stock to do well in 2026 and provide steady income going forward. But for investors looking for long-term returns, I think there may be better opportunities available.
