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Widespread containment announced by governments across the world is weighing on the global economic activities. Social distancing measures being implemented in order to prevent rapidly surging infection of COVID-19 virus cases has put a demand on halt for many businesses’ products and services, and companies continue to witness huge trade losses since late February 2020 till date.
The World Health Organisation declared COVID-19 as pandemic on 11th March 2020, which resulted in a significant impact on lives, businesses and communities. Also, there will be a severe impact on the global economy, yet to be ascertained.
In the past few months, we have seen the drastic economic impact of COVID-19 on financial markets across the globe, especially shares of more vulnerable sectors like manufacturing, travel and tourism, and hospitality have been impacted significantly. The global travel and tourism, which makes a significant contribution to the world GDP and also is the employer of millions of workforces, is in shambles.
However, the impact of a novel virus has spread across the nations and across the industry segments, but small-scale businesses have relatively been hit hard as compared to their deep-pocketed peers. The UK's benchmark index for small-cap companies the FTSE Small Cap Index tumbled about 23% on a YTD basis, with approximately 100 companies relatively underperforming the benchmark index performance in the coronavirus outbreak and its spread period.
Despite the panic sell-off in small-cap counters on LSE, we have identified 4 FTSE small-cap stocks, who performed completely opposite to their benchmark index and rather significantly outperformed the benchmark amid this tough time.
- Batm Advanced Communications Ltd: The £64m market-cap BVC is telecommunication and hardware equipment manufacturer and supplier. The group is based out in Israel and engages in the development, production, and marketing of medical products and data communication products. Its shares have surged approximately 16% on a YTD basis and have relatively outperformed the benchmark index by 49% during the same time. However, on a YoY basis, its shares have slumped ~10%, and the relative outperformance against the benchmark stood at 15% respectively. Also, at the last closing price of GBX 43.0 (as on 9th April 2020), its shares have traded marginally above its crucial long-term support level of the 200-day simple moving average, which can be called a positive indicator.
YTD price performance (BVC vs FTSE Small Cap Index). Source: Thomson Reuters.
- Huntsworth PLC: The group is London-headquartered public relations and integrated healthcare communication business. Its areas of business are divided into three broader categories, including Citigate, Grayling and Hunsworth Health and Red. The citigate segment of the company provides services related to communication, including corporate, global financial, consumer, investor relations and public policy communications consultancy, with a unified system across the United Kingdom, Europe, the United States and Asia. Grayling is a global integrated communications network, covering marketing communications, public relations and public affairs while Huntsworth Health is a healthcare communications company. Red Consultancy is a United Kingdom-based multi-specialist, a consumer-focused communications consultancy.
Shares of HNT have registered strong performance on LSE, as it has moved up by 52% in the past three months and was up by 31% on a YTD basis, the relative outperformance of HNTS over the period mentioned above stood at 98% and 69% respectively. Also, its shares were sporting a YoY return of 28% and outperformed the index by 63%. Moreover, despite a solid performance of its share on LSE, the company is offering a dividend yield of 2.4%.
YTD price performance (HNTS vs FTSE Small Cap Index). Source: Thomson Reuters.
Also, its shares have traded above the crucial short-term and long-term averages of 5-day, 10-day, 20-day, 50-day, 100-day and 200-day simple moving averages, which implies a positive trend in the stock.
- Indivior PLC: United Kingdom-based INDV is a speciality pharmaceuticals company, and its operational interest lies not only in manufacturing and sale of prescription drugs for the treatment of opioid requirement, which are based on buprenorphine, but its development as well. Its treatment and future focus are disorder related to alcohol as well as opioid use. Also, in overdose rescue and CNS (central nervous system) complaints/schizophrenia. The outstanding market capitalisation of the company stood at £6m, which ranks it among the small-cap listed and traded on the LSE.
On a YTD basis, its shares gave rallied approximately 29% and were up by 17% in the past five trading sessions and registered a relative outperformance of 66% and 10%, respectively in the period mentioned above. However, on a YoY basis, its shares have plummeted by 53%.
YTD price performance (INDV vs FTSE Small Cap Index). Source: Thomson Reuters.
INDV shares are trading above its 5-day, 10-day, 20-day, 50-day, 100-day and 200-day simple moving averages, which is a favourable trend given the current market situation led by COVID-19 pandemic.
- Galliford Try Holdings PLC: The £ 152.8m market-cap GFRD is a construction company, based out of the United Kingdom. Its key brands portfolio comprises The Galliford Try Brand, Morrison Construction, Oak Dry Lining and Rock & Alluvium. Its Construction business carries out building and infrastructure development in public, private and regulated sectors. Its projects include the construction of assets with services, involving design and build, construction only and refurbishment. It also provides maintenance, renewal, upgrading and managing of services across utility and infrastructure assets.
Shares of GFRD has surged approximately 52% on a YTD basis and were up ~ 92% on a YoY basis. And, during the same period, its share has relatively outperformed its benchmark index by 96% and 143%, respectively and outperformed its peers by 77% and 106% respectively.
YTD price performance (INDV vs FTSE Small Cap Index). Source: Thomson Reuters.
Also, its shares have traded significantly above its long-term crucial support level of 200-day simple moving average and traded above its short-term support level of 30-day SMA, which reflects its shares are hovering in positive territory amid panic sell-off in the market.
Disclaimer
The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. Kalkine does not in any way endorse or recommend individuals, products or services that may be discussed on this site.
