Credit Suisse adds Travis Perkins, Whitbread, Imperial Tobacco and Halma to top picks

Analysts at Credit Suisse reshuffled their deck of top outperformers and underperformers on Thursday.

In its report, the broker summarised analysts' most and least favoured stocks in each sector, which were usually limited to 20% of each one’s coverage universe.

The Swiss broker added 18 new ‘top picks’ (13 Outperforms, 5 Underperforms) and dropped another 24.

Travis Perkins, Whitbread, Imperial Tobacco and shares of safety, health and environmental technology group Halma were the London-listed stocks selected to join the ranks of the former.

The reasons for buying shares in the homebuilder were two-fold, cyclical and structural.

Firstly, the group had broad exposure to all the end markets, Credit Suisse said.

"We see it very much as a proxy for total UK construction activity where we expect decent midterm growth. We also cite TPK as our preferred way to play the Government's desire to materially increase UK housebuilding output."

In structural terms, it was midway through a material investment program launched in 2013 to reinforce its dominant market position and ability to take market share.

Whitbread joined Carnival as one of two top picks in Travel&Leisure.

“It is a high conviction pick for 2016. At its heart, Whitbread is a roll-out story with a 2015-20E space CAGR of 7% for Premier Inn and 8% for Costa,” analysts Tim Ramskill, Ed Birkin and Julia Pennington said.

Regarding Imperial Tobacco, analysts Charlie Mills, Sanjeet Aujla and Molly Eggleton said: “Tobacco stocks look cheap relative to consumer staples, and none more so than Imperial Tobacco. The trading background on tobacco is improving most notably in the developed world and the EU in particular.”

Lastly, management at Halma had a target of doubling the company’s profit over a five-year period (or by 2019) driven by both organic growth and M&A, the broker explained.