If the forecasts of analysts prove to be correct, three of the shares in my Stocks and Shares ISA will increase in value by a combined 25% in 2026. This assumes an equal investment in each.
I would certainly be happy with that. But how likely is this? Let’s take a closer look.
RELX
Analysts have set a 12-month price target for RELX (LSE:REL) shares that’s 43% higher than today’s (12 December) value.
To try and achieve this, the provider of analytics and decision tools for professionals and businesses is investing heavily in artificial intelligence (AI) to help improve its customer offering. This should also lead to lower costs.
But the technology could be a double-edged sword. AI might enable cheaper competitors to more easily replicate the group’s services. And we’ve seen how devastating cyber security attacks can be.
However, for the time being at least, the group continues to earn a healthy margin and remains an international market leader in many of the segments in which it operates.
When publishing its results for the nine months ended 30 September, the group reported a 7% increase in underlying revenue compared to a year earlier, and an “improving long-term growth trajectory”.
And although I think a 43% share price increase is probably a bit optimistic for such a mature company with a large market share, a look at its historic earnings multiple suggests that its shares are currently undervalued.
On this basis, I think it’s definitely one to consider.
Persimmon
Analysts are forecasting Persimmon’s (LSE:PSN) share price to rise 16% over the next 12 months. I reckon this assumes that the pace of recovery in the housing market, which is showing early signs of picking up, gathers momentum. And I’m hopeful.
Mortgage rates are now at their lowest level since 2022 and most economists are expecting the Bank of England to cut the base rate further over the coming months. The cost of borrowing is a major factor in determining housing demand. Significantly, the group has a lower average selling price than its FTSE 100 peers and remains debt-free so it could grow faster than its rivals.
However, the UK economic outlook could stall progress and post-pandemic construction cost inflation has adversely impacted Persimmon’s margin.
But even if the housebuilder’s share price doesn’t increase in line with the forecasts, there’s always the generous dividend (no guarantees, of course) to offer some comfort. On balance, for both its growth and income prospects, I think Persimmon’s a stock worth considering.
Rolls-Royce
To be honest, I’m less confident about my Rolls-Royce Holdings (LSE:RR.) shares achieving the analysts’ price target than I am about the other two. This is not because I have doubts about the group’s prospects but, rather, its post-pandemic rally means the stock’s now pretty expensive. And with its miserly dividend, income investors will probably look elsewhere.
Although the group’s share price could rise 13% in 2026, I think the biggest drivers of growth are several years away. These include the group’s small modular reactor programme and its intention to return to the narrowbody aircraft engine market. But significant revenue is not anticipated until the 2030s.
However, I’m prepared to wait. That’s why I plan to hold my shares and why others could consider adding them to their own portfolios.
