One year on: Best and worst stocks since COVID struck

Lucy Harley-McKeown
·5-min read
The UK equity market had sunk 33.8% on 23 March 2020 since the start of the year. Photo: Toby Melville/Reuters
The UK equity market had sunk 33.8% on 23 March 2020 since the start of the year. Photo: Toby Melville/Reuters

Tuesday morning marks two big milestones for the UK. It is now 12 months since the UK first announced coronavirus lockdowns, as well as a year on from London stock market hitting its lowest point from the "coronavirus crash."

According to Tilney Investment Management Services, on the 23 March 2020, the UK equity market had sunk 33.8% since the start of the year (capital-only, excluding dividends). The US S&P 500 index (^GSPC) also hit its nadir on the same day, down 30.8% in since the start of the year in local currency terms.

"The irony is that a year on, with progress being made on vaccinations and increasingly upbeat forecasts about an economic rebound, markets are growing nervous about what moves the Fed might make in due course if the US economy overheats and inflation rears its head," said Tilney analysts in an email.

"The last year is reminder that when the news is terrible and markets are down, it is invariably a great time to invest, but also that the relationship between the economy and stock market is not straightforward."

A tumultuous year for the FTSE 100. Chart: Yahoo Finance UK
A tumultuous year for the FTSE 100. Chart: Yahoo Finance UK

FTSE winners and losers

Among a list of top-performing FTSE companies, as monitored by Hargreaves Lansdown over the past year, was betting company William Hill (WMH.L).

"As people swapped holidays abroad for staycations and home entertainment, the online betting industry has flourished, becoming arguably the biggest winner from the crisis," said Susannah Streeter, senior analyst at Hargreaves Lansdown.

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 £2.9bn takeover deal. Its shares have risen 641% over the year.

From September onwards, it seems to have been plain sailing for shareholders in William Hill. Chart: Yahoo Finance UK
From September onwards, it seems to have been plain sailing for shareholders in William Hill. Chart: Yahoo Finance UK

Entain (ENT.L) and 888 Holdings (888.L) were also top performers in the group, demonstrating how investing in gambling has paid off for some.

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As dining in became the new eating out during the pandemic, the larder of products manufactured by Mr Kipling maker Premier Foods (PFD.L) has also 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, according to Hargreaves Lansdown. Although shares have come down a little from the January high, there is expectation that sales will be strong as international expansion continues.

Meanwhile, postal mail has seen a bump, with Royal Mail (RMG.L) enjoying a 249% increase over the last 12 months.

"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," said Streeter.

The worst performer over the last year was defence contractor Babcock (BAB.L), while travel stocks such as Rolls-Royce (RR.L) also took a knock.

Insurer Hiscox (HSX.L) and HSBC (HSBA.L) have both retreated by 14% since this time last year. Hiscox was knocked when it said it faced a surge in claims from businesses impacted by COVID, while HSBC still faces ongoing concerns about the low interest rate environment eating into margins. One bright spot for the bank was the fact that a 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.

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UK and US-focussed investment funds and trusts

According to analysts at Interactive Investor, alongside choice stocks, US and UK-focussed funds and investment trusts have excelled over the past 12 months on from the 23 March to 15 March 2021.

They found that US focussed funds account for four of the top 10 best performers including fund heavyweight Baillie Gifford American Fund (returning 130% over the period).

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But it was Premier Miton UK Smaller Companies Fund which topped the charts — up 180%. Marlborough Nano Cap Growth Fund (121%), another UK Smaller Companies fund, also made the top 10 list, according to the calculations.

Legg Mason Royce US Small Cap Opportunity ranks in second position (158%) and Junior Gold (145%) in third.

UK-centric portfolios also featured in the top 10 among investment trusts: Chelverton UK Dividend Trust (157%); Miton UK Microcap Trust (156%) and Aberforth Split Level Income Trust (120%).

Teodor Dilov, fund analyst at interactive investor, said: “One of the more remarkable stories is the reversal of fortunes of the UK market.

"UK equities have experienced somewhat of a revival over the past 12 months, albeit from the market low, with greater certainty over Brexit following the UK/EU trade deal and the Bank of England tipping the UK economy to claw back almost all the ground lost during the Covid-19 pandemic over the next year.

“Far from the bleak outlook of yesteryear, the Bank of England’s forecast reflects a marked change of tone for the UK economy – further bolstered by the arrival of coronavirus and the UK’s rapid roll-out rate. That said, only eternal optimists would want to overlook potential bumps in the road."

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