As the lockdown policies of governments around the world begin to loosen and the global economy begins its journey back to some form of social distancing normality, investor sentiment has returned to bullish.
The escalating war of words between the US and China and the impending threat of a renewed trade war has done little to dampen investor enthusiasm.
King of 34 Recovery Stock picks
On the back of a bullish week in the financial markets, our King of 34 Recovery Stock Competition picks are generally performing well. The top 5 stocks after week 3 are ITM Power (+68.1%), Square (+21.5%), Walt Disney (+20.3%) Rio Tinto (+19.3) and Burberry (+18.2%) with the latter two replacing Huya and Zoom on our leaderboard.
If you haven’t seen our competition before now, you can read about it here.
This week, we will be focusing on five stocks, that have each seen share price moves as the lockdown restrictions are easing: Walt Disney, Homeserve, CIBC, Unilever and Just Eat.
The launch of Disney+ last month was timed to perfection with families restricted from movement away from the home for Walt Disney [NYSE:DIS] and has been a catalyst for their recovery this month. The company has also laid out its plans this week for a phased reopening of its parks over the next two months. We don’t know how social distancing will affect revenue at this stage but resolving this would go some way to maintaining momentum. Brokers are rating Walt Disney shares as Outperform with a target price up 6% on current level.
Multinational home emergency repairs and improvements business Homeserve [LON:HSV] announced their final results last week. With no staff furloughed or redundancies over the lockdown period, the business has been running as normal and results presented a positive picture for the year, topped with the announcement of a final dividend. The share price fell dramatically in March as investors fled the markets but the recent positive news means the share price is now close to its 2020 highs. The outlook for 2020 and beyond remains positive according to brokers with a Buy/Outperform consensus.
Canadian Imperial Bank of Commerce [TSE:CM] has seen the lockdown have a significant impact on revenues and the share price suffered a dramatic slide in late March as part of the wider market sentiment. The Canadian government support for homeowners and business suggests that the Canadian economy is well positioned to recover quickly as the lockdown is eased. An attractive 7% dividend yield may be tempting income investors back in to the stock which has seen strong share price growth since it hit a low on 27th March.
British-Dutch multinational consumer goods company Unilever [LON:ULVR] had seen its share price on a decline since 2019 having enjoyed years of continuous growth. However, since its lows towards the end of March, the essential consumer product supplier has seen its share price enjoy a renaissance. It was the supermarkets that enjoyed investor attention in the early stages of the Covid-19 crisis as consumers rushed to stock up in preparation for the lockdown, but with factories running throughout the crisis and the business adapting to consumer needs, Unilever appears to be well positioned to recover quickly.
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Having merged Just Eat and Takeaway.com in February to create Just Eat Takeaway [LON:JET] the newly formed groups’ share price was an early beneficiary of the lockdown. With staying indoors the new normal, consumers began rushing to the app and the share price provided savvy investors with some excellent gains in what became an increasingly volatile market. As the lockdown has eased, the share price has continued to rise, albeit at a much slower rate. With restaurants and bars unlikely to open in the near future, demand for takeaways may still be on the menu for many, for now.
Our King of the 34 performance table to 28 May 2020
|Reckett & Benckiser||+8.3|
|Pets at Home||-8.9|
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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.