With the global lockdown continuing to ease and businesses spearheading the economic recovery, equity investors are pushing hard to raise the markets back up to their pre-lockdown levels.
The bullish sentiment is at odds with the economic recovery of countries around the world, many of which are likely to be in recession territory over the coming months as the pace of output slowly picks up. On top of this, the war of words between the US and China has been ramped up as the current White House administration seeks voter approval for another term with November’s elections looming. Civil unrest in the US will undoubtedly have an impact on investor sentiment should Trump fail to resolve the current crisis.
With a lot of positive sentiment riding on the US markets and Trump holding many of the cards, it feels like there is still much to be done to justify the current charge. With so many plates spinning, the summer months are likely to show us the key drivers for the second half of the year.
The Armchair Trader’s May picks
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 to £13.94, we felt the stock had been oversold and added it to our Recovery stocks list. The fashion retailer this month survived its first big test with full year results to the end of March. The timing of the year end means that group sales were 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 at £16.16 at the time of writing.
We saw London-listed biopharma Hemogenyx Pharmaceuticals (LON: HEMO) share price jump over 260% last month on the back of an announcement that it was looking for COVID-19 antibodies which prompted us to add the stock to our watchlist. With good links with the rest of the biotech industry and some impressive collaborations, The Armchair Trader felt the business was well positioned for not only the short term but also once the corona dust has settled. The short term share price performance has proved to be disappointing, falling to 7.14p from 10p back on 30th April
Housebuilder Taylor Wimpey [LON:TW] was added to our watchlist on 15 May on news the company would open sales offices and show homes from 22 May. With an historically attractive dividend yield, this is a stock that will appeal to value and income investors alike. The share price has risen to 155.6p at the time of writing, up from 140.4p in 15 May.
Nordic mobile gaming business Next Games was added to our watchlist on 29 April following a series of purchases in the stock by Finnish businessman Jari Ovaskainen. Having risen to a high of €1.69 on 6 May from an entry point of €1.37, the stock fell as the purchases dried up and is now trading at €1.20 at the time of writing.
Australian-listed miner Mineral Commodities (ASX: MRC) reported a high grade resource of 2.5 million tonnes of 23.5% total heavy minerals at its Tormin mineral sands site in South Africa this month. The business is well-positioned to provide many of the materials that are going to be needed as the world shifts over to more electric vehicles and seems to have weathered the COVID-19 storm, with much of its operations coming back online. The stock was added to our watchlist on 20 May at a price of 0.23AUD and is currently trading at 0.24AUD at the time of writing.
Here’s how our May 2020 picks performed
|Company/Instrument||Start price||Current price*||Percentage change|
Removed from The Armchair Trader’s current watchlist: Novacyt, Next Games and Hemogenyx Pharmaceuticals.
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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