A Year On From Lockdown – Pandemic Winners, Losers And Rebounders

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A Year On From Lockdown – Pandemic Winners, Losers And Rebounders
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“As the UK locked down to try and stop the spread of the coronavirus, companies went into hibernation and the FTSE 100 reached its nadir, bottoming out at 4,993.89 on March 23rd after fear took hold of the markets. Although many businesses went into hibernation mode, companies that were geared up for the accelerated shift to digital sales, brought about by the crisis, went on to experience the euphoria of record share price hikes.

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Top-Performing FTSE Companies

STOCK 1 YR (%)
William Hill 641
Tullow Oil 548
Premier Foods 434
AO World 422
Entain 381
888 holdings 336
Ferrexpo 255
Watches of Switzerland Group 252
Royal Mail 249
Mitchells & Butlers 248

As people swapped holidays abroad for staycations and home entertainment, the online betting industry has flourished, becoming arguably the biggest winner from the crisis. William Hill was the top riser on the FTSE amid the rush to place bets. Its advanced digital platform was seen as the jewel in its crown, and it attracted the attention of the casino giant Caesar whose advances were accepted in a £2.9 billion takeover deal. Its shares have risen 641% over the year.

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The transatlantic love affair with UK betting companies continued, with MGM making a bid for Entain. Although that relationship was rebuffed, Entain still saw its share price rise by 381% over the past 12 months. Hot on its heels in terms of share prices rises was 888 Holdings, which owns an array of bingo sites and apps. It was also among the best performing companies in the FTSE, rising by 336% since March 21st 2020.

‘As dining in became the new eating out during the pandemic, the larder of products manufactured by Mr Kipling maker Premier Foods has been in high demand. While consumers stocked up on comfort foods to see them through the long days of lockdown, its share price marched upwards, rising by 434% over the past year. Although shares have come down a little from the January high, there is expectation that sales will be strong as international expansion continues.

As the working from home revolution unfolded, it’s been a major boost for online electrical retailer AO World. It shares have risen by 422% since March last year, as demand for home computers soared. As commuters swapped the canteen and sandwiches on the go for home cooked lunches, orders for new fridges, freezers and ovens also clicked up. Its share price has fallen back since the start of the year, as a hybrid return to the office is expected and there is expectation that some of the surge in sales may have been due to consumers bringing forward purchases.

The rising demand for e-commerce has also boosted the share price of previously unloved stocks like Royal Mail. Parcel volumes were up 30% year-on-year in the three months to the end of 2020 and the company is now launching Sunday delivery services to capitalise on the snowballing momentum gathering pace since November.

The vaccine breakthrough provided a shot of relief, for the stocks worst hit by the pandemic. Cineworld’s share price plunged between February and October as it was forced to lock up movie theatres around the world. But after it grabbed hold of fresh financial lifelines and vaccine rollouts lifted the curtain on a more positive picture, its share price has staged a comeback, rising by 360% since its low.

WH Smith is another significant rebounder. The company had become highly reliant on its convenience shops dotted across the transport network. But this captive market, where shoppers made impulse purchases all but evaporated during the pandemic. Its share price fell 65% reaching a low in mid-May, and after a series of false starts through to the Autumn, it has climbed steadily back up. Since October its share price has almost doubled (up 95%), to the level it was at in September 2019. But it’s not out of the woods yet, and is still 30% below the high it reached in December 2019.

Worst-Performing FTSE Companies

STOCK 1 YR (%)
Babcock -25
Hammerson -19
Hiscox -14
HSBC -14
GSK -11
Pennon -11
Unilever -9
National Grid -8
Rolls-Royce -7
Severn Trent -7
WM Morrison Supermarkets -3

The year has proved extremely tough for the high street, so it’s little surprise that Hammerson with its large portfolio of shopping centres took a real hammering during the pandemic and is one of the FTSE’s worst performers. Even when restrictions eased and retailers threw open the doors once more, the number of shoppers has struggled to bounce back to pre-pandemic levels. However it’s another share price which has begun slowly trudging back up. Since its November low shares have doubled, but they are still 19% below the level they were a year ago and 68% lower than they were on February 21st, before the big slide in the financial markets began.

Since reaching a low on 2nd September, HSBC shares have been on the rebound. It’s still one of the worst FTSE performers over the year, down by 14% since March 21st, but has ground steadily with vaccine breakthroughs adding energy to its progress. There are still ongoing concerns about the low interest rate environment eating into margins but the 34% fall in annual profits was lower than forecast and it’s now planning to expand its investment banking business in the hunt for returns.

Babcock international which is the UK’s second largest defence contractor has seen the steepest share slide in the FTSE over the past year, with sustained recovery proving elusive. Investors’ confidence was knocked in January when it said it could be forced to write down the value of current contracts and has brought in accountants to review its balance sheet and profitability forecasts.

Insurer Hiscox has also been one of the worst performers in the FTSE. Its recovery appeared to be chugging along quite well but was derailed after it said it faced a jump in claims for businesses disrupted by Covid. Pandemic pain is likely to linger for longer with the company admitting it has suffered some brand damage through its legal disputes with customers over the policy wording of its cover."

Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown


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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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