Top investment banks forecast that Europe will be a good place to invest in 2016. The European stock market outperformed that of both the United States and emerging markets in 2015, and analysts expect its performance to continue. Therefore, it is important to understand the top stocks listed in the various European markets. The following is a list of the best equities on the London Stock Exchange for 2016.

Pearson PLC

Pearson PLC is a British publishing and education company headquartered in London, England. It is a multinational corporation and is considered the largest book publisher in the world. It has a listing on the New York Stock Exchange, in addition to its listing on the London Stock Exchange, denoted with a separate ticker, (NYSE: PSO).

Pearson earns roughly 60% of its revenue in U.S dollars (USD), making it a strong business when the USD to British pound exchange rate favors the dollar. The year 2015 saw good exchange rates for the USD, and analysts expect this trend to continue in 2016. Additionally, the company is making positive strides toward a digital strategy that allows it to adapt to the changing publishing industry. The stock is currently considered undervalued.

Galliford Try PLC

Galliford Try PLC is a British construction company with headquarters in London, England. It is listed on the London Stock Exchange and is also part of the FTSE 250 Index. The company's stock hit a five-year high in September 2015 before falling in price. Since its price hike and associated decline, the company has signed numerous construction contracts in the education and defense sectors. This has caused its share price to begin increasing again. Early 2016 could be a great entry point.

The only negative point to Galliford Try's prospects is that its home-building business has declined in recent years. However, The Independent reports the company is expected to turn this part of its business around, due to its construction operations in the affordable homes sector. The company's expected growth in 2016 and the sharp decline in its share price at the end of 2015 has left it undervalued.

Tesco PLC

Tesco PLC is a British grocery chain and merchandise retailer headquartered in Welwyn Garden City, Hertfordshire, England. It is the world's third-largest retailer by profits and the second-largest retailer by revenue. It operates over 6,500 stores in 12 countries.

Most of the company's revenue comes from its food goods sales, but it also sells gas and other general merchandise products. It sells all products through multiple channels, such as in large retail stores, in smaller convenience stores and online. Morningstar reports that Tesco is advantageously positioned in Southeast Asia, and has additional growth opportunities in China and India. Further, the company has a reported cost advantage over its competitors, making it an attractive retail investment.


BP PLC, also known as British Petroleum, is one of the world's seven largest oil and gas companies, considered a "supermajor." The company is headquartered in London, England, and has been as high as the sixth-largest oil and gas company in the world based on market cap. It is listed on the New York Stock Exchange and the London Stock Exchange under the same ticker, (NYSE: BP).

The company's stock is not as undervalued as the aforementioned stocks and is susceptible to continued volatility from the low price of oil. However, this provides a good entry point for investors looking for a position in a proven company. If investors are able to weather the low oil prices through the first quarter of 2016, they may be rewarded with increases in prices as production slows in the second half of the year, helping increase BP's share price.