Stocks to watch during the coronavirus pandemic
In the aftermath of the coronavirus crisis, stock exchanges around the world experienced colossal declines, wiping billions off the value of companies and off pension funds, insurance companies and other institutional investors’ investments.
While many companies have languished in the lowlands of their share price, since then, some have bounced back to historic levels, and others still, barely dropped at all.
The FTSE 100, a list of the 100 largest companies on the London Stock Exchange, that changes as their market capitalisation (the worth of the company) changes, has a selection of companies from various sectors, headquartered all over the world. An analysis of these companies shows which ones have performed well out of the crisis, those which have rebounded to normal levels and which ones might be worth buying now.
Doing well
The companies who have performed well in the aftermath of the coronavirus crash are both thin on the ground and fairly predictable. If you like certainty and don’t want to worry about the value of your stocks dropping in the future, these are the ones likely to be the most stable.
An obvious winning sector in the fight for a vaccine for the coronavirus, in pharmaceuticals, AstraZeneca has reached its highest price ever and Hakima Pharma has also almost topped its own record.
Online food and groceries delivery companies have also been doing well, with Ocado and Just Eat soaring high.
Other high performers include Reckitt Benckiser, a health, hygiene and home products producer and insurance company Admiral Group.
Polymetal international, a gold and silver producer, has performed very well, likely due to the uncertainty of the markets. Typically, when an economic crash occurs, investors think one of the safest assets that won’t drop in value, like companies on stock markets have, is gold. As such, gold producers generally do very well in a crisis, while other mining companies that rely on construction industry demand, do badly.
While you’d expect one of the only group of retailers, supermarkets, to have performed very well, they’re not the London Stock Exchange’s biggest gainers. Morrison’s, Tesco and Sainsbury’s have, however, returned to pre-coronavirus share prices.
Undervalued?
On the other hand, there are many companies that have not returned to their pre-coronavirus share prices. While many may never do so, there are some that could bounce back in the future. Investors which buy these now could reap serious benefits. Based on sector trends, and how some experts think society will look in the future, the following could be some of those bargains.
A number of financial services businesses saw a huge decline in March. This is understandable because a big part of how institutions like Barclays, Lloyds and HSBC make money is through investing in other companies, many of which, have also seen massive declines in the value. However, financial institutions play a vital role in our society, and are unlikely to disappear, as we saw from the previous financial crisis in 2008. As the economic environment stabilises, and we start to get an idea of what the world post Covid-19 will look like, these share prices are likely to rebound. Other companies in this category include Legal & General and Prudential.
While Coca-cola and Diageo, which is primarily an alcohol producer, are suffering due to the lack of bar and restaurant spending, these two are brands have perennial appeal. With a shift towards supermarkets, these companies would see their sales plump up and when (if?) lockdowns end, their share prices might flourish. Another consumer products company that could find itself in this group is Unilever.
Finally, while you’re absolutely right to think airlines have suffered dramatically from this crisis, not all of them are going to go bust. If you’re going to bet on one, and buy shares at an almost unbelievable discount, I’d go for IAG. If the British and Spanish governments are going to bail out one airline, its going to be their flag carriers, British Airways and Iberia respectively, which IAG owns.
The information above does not constitute any form of advice or recommendation by FLO London or the author and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision.
Words by Katharine Hidaglo
