The coronavirus stock market crash in March saw investors take flight, causing shares in most companies sink – but some have bounced back very strongly since

The coronavirus stock market crash in March saw investors take flight, causing shares in most companies sink – but some have bounced back very strongly since.    

Some Footsie companies have seen their share price jump back as much as three-fold from the lows they hit in March, such as Premier Foods and ventilator maker BATM Advanced Communications.

However, the large share price increases should be taken with a pinch of salt, as they are not necessarily indicative of a company having come out of the woods or that their financial position is healthy.

They could have just been oversold in the crash, for instance – so these gains are no indication of future success.

Some Footsie companies have seen their share price jump back as much as three-fold from the lows they hit in March when markets crashed due the Covid-19 pandemic

Some Footsie companies have seen their share price jump back as much as three-fold from the lows they hit in March when markets crashed due the Covid-19 pandemic

Some Footsie companies have seen their share price jump back as much as three-fold from the lows they hit in March when markets crashed due the Covid-19 pandemic

The biggest rebound was that of Mr Kipling maker Premier Foods, whose shares rose 345 per cent since the FTSE All Share hit the low point on 23 March, when the UK went into lockdown, to market close on 16 July.

The company, whose brands also include Sharwood’s, Bisto and Batchelors, has been well positioned to benefit from stockpiling and people cooking more at home during lockdown.

Richard Hunter at interactive investors noted that the company was already having a strong 2020, even before Covid boosted sales, with shares up 140 per cent in the year to date.  

‘The company has posted 11 consecutive quarters of UK growth, helped in part by a relaunch of Mr Kipling in 2018,’ he said.

And added: ‘In addition, changes to its pension fund have resulted in a current surplus of £1.2billion.’

Another company to have bounced back strongly since March’s lows is bio-medical and cybersecurity solutions provider BATM Advanced Communications, thanks to demand for its Covid-19 tests and ventilator.

Its share price is up 213 per cent since March and an even larger 300 per cent in the year so far.   

Shares in troubled Tullow Oil, which like many oil companies have been hit by a slump in oil prices, have also bounced back strongly.

Now up 203 per cent since March lows, they however remain 52 per cent down in the year to date.

And priced at just 30p, Tullow’s rebound ‘reflects an example of percentages which can be flattered on a share price coming from a lower base,’ according to Hunter. 

The five best performing FTSE All Share since 23 March 2020 
Stock Performance since 23 March to market close 16 July 2020
Premier Foods 345%
BATM Advanced Communications 213%
Tullow Oil 203%
William Hill 187%
Halford Group 187%
Source: Interactive Investor   
The biggest rebound was that of Premier Foods, whose shares have risen 345% since March 23

The biggest rebound was that of Premier Foods, whose shares have risen 345% since March 23

The biggest rebound was that of Premier Foods, whose shares have risen 345% since March 23

‘Overall, investors should be wary of ‘off the clock’ recent share price performances in isolation, which are often better viewed in the context of the company’s general progress and momentum,’ he added. 

For example, in the case of Tullow Oil, shares are now worth only around 30p –  well below the 325p from January 2017. 

The company has been badly hit by the oil price collapse and in March, it announced plans to slash its workforce by a third.

It is now looking to sell off assets as part of a plan to raise £800million to reduce debt and strengthen its balance sheet.

William Hill and Halfords complete the top five, each rebounding 187 per cent over the period, but both are also still lower since the start of the year –  down 36 per cent and 8 per cent respectively.

William Hill, which has been hit hard by the closure of its betting shops and the cancellation of major sporting events, estimated that the Covid-19 pandemic would cost it £25million a month.  

But its fortunes have improved after the return of sport, albeit behind closed doors, plus it’s likely to benefit from the lucrative US online gambling market, according to Hunter. 

Halfords, on the other hand, has benefited greatly from rising demand for bicycles during lockdown, but its shares remain 71 per cent lower than five years ago.

Although cycling sales jumped by over 50 per cent during lockdown, this was offset by a 45 per cent decline in its higher margin motoring category.      

Five trends to look out for in the second half of 2020

Markets have rebounded strongly since March’s crash, with the FTSE All-Share up 26 per cent since the March lows as life slowly returns to a new normal. But there are still multiple risks facing the markets, according to Adrian Lowcock, head of personal investing at investment platform Willis Owen.      

He thinks that the following will inevitably influence markets in the coming months:

1) a weak dollar;

2) the ongoing trade war between China and the US;

3) possible disappointment with finding a Covid vaccine;

4) how the economy will perform; and

5) the recent massive rises in tech stocks could die out.

Shares in video conferencing company Zoom are up more than 280% in the year so far, but will the massive rise in tech stocks like Zoom continue?

Shares in video conferencing company Zoom are up more than 280% in the year so far, but will the massive rise in tech stocks like Zoom continue?

Shares in video conferencing company Zoom are up more than 280% in the year so far, but will the massive rise in tech stocks like Zoom continue?

He warned that share price rises like that for video conferencing company Zoom, which has gained more than 280 per cent in the year so far, are no guarantee of future performance. 

‘It is impossible to know when the momentum driving the valuations of some technology companies will stop, but as the share prices rise further the risks of significant losses increase,’ he said.

Potential further falls in the dollar could also have an impact on markets.

The dollar, which has been falling after reaching its March high, hokifreebet could be set to fall further down to a mix of more money printing by the US central bank, low savings and high levels of Government debt.

‘That would be good news for emerging markets where companies borrow in US dollars, as a weaker currency makes their borrowing costs cheaper,’ Lowcock said.

Another thing that investors need to keep their eyes on is the ongoing trade war between China and the US. 

The ongoing trade war between China and the US could animate markets in the second half of the year (Pictured: President Donald Trump with Chinese President Xi Jinping)

The ongoing trade war between China and the US could animate markets in the second half of the year (Pictured: President Donald Trump with Chinese President Xi Jinping)

The ongoing trade war between China and the US could animate markets in the second half of the year (Pictured: President Donald Trump with Chinese President Xi Jinping)

Lowcock said: ‘Markets so far have shrugged off the trade tensions as they focus on the more immediate issue of COVID-19 and the impact that it is going to have on the world.

As the recovery from the pandemic continues, the focus for investors may shift to the other headwinds the global economy faces.’ 

Markets have reacted strongly to news of possible vaccines in recent months, with markets soaring yesterday after news that a coronavirus vaccine developed by the University of Oxford appears safe and triggers an immune response.  

But while hopes of an early breakthrough are high, it may take years before a vaccine is found.

‘Stock markets are often optimistic and prone for disappointment and that remains a key risk, Lowcock said. 

And finally, although markets have seemed to be disconnected from the raft of grim economic data coming from everywhere, they may pay more attention to the data from the second half of the year.

‘Economies should be functioning more efficiently than during lockdown, so the data will be more accurate and give a better reflection of economic activity and employment,’ Lowcock said. 

‘Given the strong rebound in employment data in the US, investors have been more hopeful of a ‘V’ shaped recovery thus far.

However, if pent up demand tapers and unemployment remains high investor euphoria might be replaced as a ‘U’ or ‘W’ shaped recovery suddenly looks more likely.’  

<div class="art-ins mol-factbox money" data-version="2" id="mol-51496f80-cb54-11ea-9073-3141f0ea3d5b" website five UK stocks that have performed best since the Covid crash