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We have now completed week two of our King of 34 Recovery Stocks competition and overall, the last week has been a positive one for the financial markets as many countries start to ease or remove their lockdown policies.

Despite Donald Trump’s best efforts to re-ignite a war of words with China and battle the WHO as he deflects blame from his own office for the Coronavirus numbers coming out of the US, investors sentiment remains bullish, for now.

King of 34 Recovery Stock picks

Following the positive trend for the week, our  King of 34 Recovery Stock Competition picks are generally performing well. The top 5 stocks after week 2 are ITM Power (+31.3%), Square (+22.2%), Zoom (+18.8%), Walt Disney (+16.6%) and Huya (+16.3%) with Walt Disney the one change this week, replacing Dexcom in our top five performers.

If you haven’t seen our competition before now, you can read about it here

This week, we will be focusing on the following five stocks, each of which have featured in the business headlines either directly or indirectly: Burberry, Pets at Home, Forterra, Ibstock and Rio Tinto

Back in February, we called Burberry [LON:BRBY] as our Short of the Week. Our rationale at the time was that the impact of the coronavirus on the East Asian markets, including the closure of Burberry’s chain of fashion stores in China, was going to hammer the share price. We were proved correct. On 28th April, having seen the share price rally, we felt the stock had been oversold and added it to our Recovery stocks list. Today saw the fashion retailers’ first big test with full year results to the end of March. The timing of the year end means the group was down a mere 3% for the year as a whole but critically, Q4, which covers the January to March 2020 period, showed sales down 27%. These numbers do not appear to have dampened investor appetite with the share price up 5% today as I write but moving from the red to a +2% gain over the period of our competition.

Pets at Home [LON:PET] hasn’t fared quite so well. 2019 finished strongly with total revenue exceeding £1billion, rising more than 10% year on year. However, the retailer noted that additional costs and lower sales will combine to have a material impact on the numbers for this year. The business is unsure as to how consumers will react as the lockdown unwinds but the business has sufficient confidence to maintain its dividend. This hasn’t been enough to reassure investors with the share price down -13% over the course of the competition. There is a trading update due at the end of July which is likely to provide greater visibility for investors.

Brickmaker Ibstock [LON:IBST] and building product manufacturer Forterra [LON:FORT] have both had a tough time of things since the UK government called a halt to the construction industry back in March and their performance at the bottom of our King of 34 performance table with share price drops of -6.3% and -17% reflects the industry lack of inactivity. However, with construction having been given the go ahead to re-commence works and large housing construction groups like Taylor Wimpey phasing in the work this month, albeit with social distancing measures in place, investors may feel that these current lows may provide opportunity for some worthwhile gains.

Anglo-Australian multinational mining group, Rio Tinto [LON:RIO], has been one of the biggest movers on our list of 34 this week and is now up +15% since our competition began, mirroring the positive movement of the copper price rally as the Chinese economy begins to resurface outside of lockdown. We’ve been bullish on Copper here at The Armchair Trader for a while now as the metal provides a vital building block to a greener future for our planet. We have also seen the price of Gold increase as central banks re-initiate their quantative easing strategies in order to combat the economic cost of the lockdown. In addition to Copper and Gold, Rio Tinto produces iron ore, diamonds  and uranium and the share price is rewarding investors who are bullish on a range of vital commodities.

Our King of the 34 performance table to 21 May 2020

Company% change
ITM Power+31.3
Square+22.2
Zoom+18.8
Walt Disney+16.6
Huya+16.3
Rio Tinto+15.4
AVEVA+12.6
Flutter Entertainment+11.3
Remedy Entertainment+9.9
Dexcom+9.6
Homeserve+9.4
Reckett & Benckiser+8.4
Mastercard+7.4
Shopify+6.4
Hikma Pharmacuetical+6.3
Rentokil initial+5.2
Harvia+4.4
Netflix+2.7
Burberry+2
Unilever+1.7
Microsoft+1.5
CIBC+0.7
WM Morrison-2.1
BP-2.2
Newmont-2.2
Regeneron-2.3
Pfizer-3.3
Eli Lilly-3.5
Chorus Aviation-4.1
Equinix-6.1
Ibstock-6.3
Just Eat-12.5
Pets at Home-13
Forterra-17

Data sourced from SharePad. The UK’s no.1 investment data & analysis software for Private Investors as voted for by FT/Investors Chronicle readers.  Discover the advantage at www.sharescope.co.uk/sharepad.

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Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Michael Morton

Michael Morton

Michael has worked within the Financial Industry for more than 20 years. Starting out as a financial analyst, he has extensive experience working with fund management groups and brokerages.

With an interest in Stocks and Shares, Funds, ETFs and Commodities, his investment focus is medium to long term gains, with the objective of financial security on retirement, and building wealth for his young children for their adult life. His broker of choice is Hargreaves Lansdown.

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