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A quick look at which companies have done well since the FTSE 100 was last above 7,400 and which have soiled the bed. There are a few surprises in both camps.
For a brief period today, the FTSE 100 rose above 7,400 and got back roughly to its pre-pandemic level of mid-February 2020.
As one might expect, the recovery since the global economy went to heck in a handbasket has not been even.
No one is going to be surprised that British Airways owner International Consolidated Airlines Group (LSE:IAG) SA has been the worst performer over the period, shedding 60% of its value, nor that aerospace engineers Rolls-Royce Group PLC and Melrose Industries PLC (LSE:MRO, OTC:MLSPF) – both down 36% – are the next worst performers, but Taylor Wimpey PLC (LSE:TW.) the fourth-worst, with a fall of 31%? What’s that about?
Considering how the government continues to bend over backwards to funnel taxpayers’ money into the bank accounts of the directors of housebuilding companies, it is an odd sight to see Taylor Wimpey down in the dumps.
Sector peers Berkeley Group Holdings PLC (-26%), Barratt Developments PLC (LSE:BDEV) (-21%) and Persimmon PLC (LSE:PSN) (-17%) have also lost ground during the pandemic period, as investors begin to focus more on rising raw material costs than Britain’s never-ending house price boom.
But never mind the housebuilders, how about BP PLC (LSE:BP.), down by a quarter since mid-February of last year, despite the price of oil rising above a billion dollars a barrel – or so it seems?
Royal Dutch Shell is also a loser, shedding 12%, reminding us that the big oil companies have only recently started to benefit from soaring oil prices; this time a year ago, people were still worried that oil consumption would take forever to return to pre-pandemic levels.
“A key reason why the FTSE 100 has found it so hard to recover all the lost territory is the type of stocks that have the biggest influence on the index’s performance. The FTSE 100 is market-cap weighted so the largest companies really matter when it comes to how the index moves,” explained Russ Mould, the investment director at AJ Bell.
“Names like HSBC and Unilever are in this camp and they’ve limped along. Royal Dutch Shell is also a big name in the index and its shares only started to move upwards 12 months ago, so it is still playing catch-up,” he added.
“Since the February global market crash, there have still been some impressive recovery stories. The best performer is Royal Mail, up 143% in share price terms since the 21 February 2020 market close. That’s down to the rapid acceleration of people and businesses buying stuff online. Royal Mail has seen a step-change in parcel delivery volumes, and it thinks this will remain and not simply be a one-off pandemic phenomenon.
“The second-best performer is Ashtead which has benefited from the US economic recovery where it rents out construction equipment. Its shares are up 135% over the period,” Mould said.
Other noteworthy names on the up include Scottish Mortgage Investment Trust PLC (LSE:SMT) (SMT), up 133%, and Entain PLC (LSE:ENT), up 130%.
Were we a bit too quick to pronounce the end of SMT’s time as a glamour stock riding its wave of success as a backer of fast-growth companies with disruptive technologies?
Almost certainly.
As for Entain PLC, the gambling giant, it seems to have been open season on UK companies in this sector with US rivals, a few decades late to the gambling liberalisation game, desperate to get hold of the UK bookies’ know-how.
Draft Kings abandoned its pursuit of Entain last month but it would be only a small surprise to see it return with a new bid in six months’ time or sooner if a rival takes a tilt at Entain.
There are many candidates for most anonymous FTSE 100 constituent but Croda International PLC (LSE:CRDA) deserves to be mentioned among the runners and riders but seeing as its share price has doubled since the FTSE 100 was last above 7,400 it perhaps deserves to be better known.
The shares lost around 20% of their value in the initial panic when the coronavirus went from an epidemic to a pandemic but since bottoming out at the end of March 2020 the shares have stormed up from 4,113p to 9,878p on the back of strong demand for lipid systems used in vaccines and therapeutics drugs.
Ah, yes, vaccines.
Regarded by many as a silver bullet by many – not a real bullet, obviously, otherwise, there would not be so many Americans suspicious of them – for protection against viral infections, they have also clearly given a shot in the arm to stock markets as well.
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