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King of the 34: Microsoft, Rentokil Initial and Reckitt Benckiser

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We mentioned in last weeks King of 34 update that worries of a second-wave of COVID-19 contamination in China, Japan, India and a number of US states had been swept aside. Investors had preferred to focus on the US Federal Reserve’s announcement of corporate bond relief and a solid rebound in US retail sales in May.

However, investors did take note this week as the number of new COVID-19 infections continued to rise with markets generally in the red over the course of the week.

It has been a mixed performance for our King of 34 Recovery Stock Competition picks this week, particularly for our Construction (Ibstock and Forterra) and Pharmaceutical stocks (Hikma Pharmaceuticals and Pfizer). However, our picks as a whole continue to perform well with Zoom (+79.2), ITM Power (+61.2%), Square (+57.1%), Rio Tinto (+27.6) and Huya (+26.1%) topping our leaderboard.

This week, we are focusing on five stocks that we have not yet covered in this competition: Microsoft, Rentokil Initial and Reckitt Benckiser.

Tech giant Microsoft NASDAQ:MSFT saw its share price fall in line with the general markets in February and March of this year as investors raced to sell equities. However, since then, the recovery has been swift with the share price racing past its best 2020 levels to reach an all-time high. With a plethora of products and services that meet the needs of consumers and businesses whether we are in lockdown or not, this stock is well suited to the modern age. This week, Goldman Sachs raised Microsoft’s 12-month price target to $215 from $198 and maintained the stock’s buy rating

Pest control and hygiene services firm Rentokil Initial LON:RTO suggested in their last trading update back in April that as lockdown measures eased and businesses begin to open their premises, they anticipated many customers having an increased requirement for Pest Control and Hygiene services, particularly hand cleaning services and specialist disinfection clean up services. With this in mind, JPMorgan raised their rating to Overweight from Neutral and lifted the price target to 560p from 430p. the broker pointed to earnings upside and a resumption of M&A in the second half of the year. Shares are currently slightly off their all-time highs seen in February but the business remains a consistent performer for investors.

Multinational global brand consumer goods company Reckitt Benckiser [LON:RB] has seen its share price enjoy almost continuous growth since March. It’s Q1 update at the end of April saw like for like sales for the essential health, hygiene & home products producer up 13%, with especially strong demand for its over the counter products such as Dettol. The business suggested in the update that  the performance for the year will be better than previously expected. The stock is currently trading at 2 year highs.


Our King of the 34 performance table to 25 June 2020

Company % change
Zoom +79.2
ITM Power +61.2
Square +57.1
Rio Tinto +27.6
Huya +26.1
Shopify +21.5
Flutter Entertainment +16.3
Burberry +15.8
AVEVA +15.0
Homeserve +14.8
CIBC +13.5
Remedy Entertainment +12.4
Unilever +11.4
Microsoft +10.8
Reckitt Benckiser +10.5
Walt Disney +10.2
Harvia +9.8
Netflix +9.7
Dexcom +9.3
Mastercard +8.8
Rentokil Initial +8.5
Regeneron +7.9
WM Morrison +4.0
Chorus Aviation +3.7
Eli Lilly +3.2
Just Eat Takeaway +2.8
Equinix +1.5
BP -1.7
Pets at Home -4.6
Hikma Pharmacuetical -5.7
Newmont -9.7
Ibstock -9.8
Pfizer -16.1
Forterra -17.2

*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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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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