FTSE risers: UK stocks to watch amid the coronavirus crash
Only a handful of stocks in the FTSE 100 and FTSE 250 are worth more today than they were at the start of the year as the coronavirus outbreak weighs on markets.
The coronavirus outbreak continues to weigh on financial markets and UK stocks have taken a beating, with the FTSE 100 and the FTSE 250 both having lost more than 15% in value since the start of 2020.
Although the vast majority of stocks have lost value this year, there are a handful of stocks that have managed to defy the wider market and seen their share price appreciate. This is either because they are defensive stocks, showing resilience against the economic impact of the coronavirus, or because they have released positive news. Some may join the long list of losers by the end of this week but, although no stock offers guaranteed safety as the sell-off accelerates, some may prove to be a port in a storm for investors.
FTSE 100 risers in 2020
Just four blue-chip stocks were worth more when markets closed on 9 March 2020 than they were at the start of the year:
The gold price briefly hit $1700 an ounce earlier this month as more investors pile into the metal for its safe-haven status as uncertainty plagues the market. As a result, gold producers are showing more resilience than other stocks. Polymetal, which produces gold and silver, recently posted positive annual results for 2019 that showed revenue and earnings both jumped on higher prices. Production is expected to be flat in 2020 while costs should edge down which, if prices hold up, should set the miner up for another solid year.
Utilities also provide defensive qualities, and it is therefore unsurprising that National Grid, which has the unique role of managing the UK’s energy grid, has remained resilient this year and defied the wider market downturn. However, momentum appears to be toward the downside.
Shares of Rentokil are facing downward pressure, but the pest control management firm is still trading higher than it was at the start of the year. Shares rose in the days after its annual 2019 results were released in late February, showing positive top-line growth and a return to profit, which may have provided a cushion to recent decline.
SSE primarily builds and operates energy generation plants with a focus on regulated energy networks and renewable energy. SSE shares gained ground after it released a positive trading update at the end of January, giving it more room to fall. It boasts the defensive qualities of a utility stock but, like National Grid, the sell-off has recently accelerated.
Daejan Holdings shares soared on 21 February when it was revealed the property company had agreed to be taken private by its largest shareholder. The bid was for £80.50 per share, a huge premium to its share price of £51.00 the day before the offer was made. Although the deal is yet to be completed, it means the share price is unlikely to move too far away from the bid price going forward unless the deal collapses for any reason.
Avon Rubber shares have gained over 13% since the start of the year. The company primarily provides equipment likes respiratory masks and ballistic protection gear to the military (but it also sells milking systems to dairy farmers). It said in late January that order intake had continued to grow in both businesses and later said it had won a $21 million contract for its masks with the US Department of Defense and that it was competing for a larger $265 million contract for body armour plates, all of which have helped provide support to the share price to cushion the subsequent fall.
Genus helps farmers grow superior meat and dairy products through genetic modification. Genus shares rose over 15% in the week after it released its interim results on 27 February. Revenue grew by double digits, it posted positive cash flow, posted a profit from a loss the year before, and raised its dividend. However, it has started to give back some of those gains since late last week.
Centamin is mid-cap miner that produces gold from the Sukari mine in Egypt. The miner has recently overhauled its management and is focused on improving the operational efficiency of its mine, and production has already stepped-up as a result. Having produced 480,000 ounces in 2019, it is now aiming to raise output to 510,000-540,000 ounces this year – which should help it reap the benefits of higher gold prices.
The fact Endeavour Mining recently pulled out of a possible takeover demonstrates there is interest in the miner, and Centamin has said it is looking to grow ‘both organically and through accretive mergers and acquisitions (M&A)’ going forward. The gold miner may be a safe haven stock, but there could be trigger moments to send its share price higher if any M&A activity is announced (which could be prompted by any temporary weakness in valuations).
Pennon Group primarily provides water, but it operates a major recycling and waste management operation too. As a utility provider, the stock offers defensive qualities, but its share price has lost considerable value since late last week.
Morgan Sindall shares rallied ahead of the release of its annual results being released on 20 February. The company said last November that it was set to beat expectations, encouraging investors to buy ahead of the earnings being released. Although they were largely positive, shares failed to gain ground post-results and have given back most of the gains it has made this year.
Last on the list is gold miner Fresnillo, which is trading just 0.7% higher than it was at the start of the year. Fresnillo shares began to tank in the week commencing 24 February but bounced back strongly when it released its 2019 annual results. They were poor across the board with production failing to meet expectations, costs rising, and profit suffering a dramatic fall – but these were partly expected by the market. Fresnillo has said it is aiming to improve things this year, hopefully allowing it to reap the benefit of higher prices, which may have helped support its share price. However, it has already showed signs of falling further.
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