The novel coronavirus outbreak has shaken the markets worldwide. Most of the investors are under panic whereas there are many, who are considering this as an opportunity to make decisions which could turn out to be fruitful in the long run. Equity as an asset class can be volatile but is believed to be the best performing asset in the long term. Warren Buffet once said that it is good to be greedy when others are fearful. The deep correction in the stock markets could be a wealth generation opportunity for long term investors, as the majority of the market is fearful.
In the last three months, when the pandemic spread to more than 200 nations, the FTSE 100 index has fallen by nearly 25 per cent. Similarly, the FTSE AIM All-share index and FTSE AIM 100 have fallen nearly by 21 per cent in the last three months. The AIM 100 index which constitutes 100 companies ranked by market capitalisation on the junior market just like FTSE 100, which has a list of 100 blue-chip companies. The AIM 100 index is a collection of top 100 companies on the junior market ranked by market capitalisation, just like the FTSE 100 index, which is a reflection of bigger businesses.
As the global markets are devastated by the deadly virus, one thing is for sure; stock markets are not for the weak-hearted. However, they can add multiple dimensions to one’s portfolio. Here we will discuss the AIM stocks, first, let us ponder on five reasons to include them in one’s watchlist.
- They are affordable and pocket friendly
- AIM shares possess the ability to outperform the mainstream stocks
- The FTSE AIM stocks are now not just restricted to small miners and have wider coverage across multiple sectors
- Most of the institutional investors and fund managers have a significant amount of exposure in the AIM-listed securities
- If they go right, they really can pack a punch
In this article we would discuss insights of few stocks, which operate in the different realms of the economy such as Financial Services, Retail, and Industrial transportation; quoted on the FTSE All Share index of the London Stock Exchange (LSE). The stocks under review are Amigo Holdings Plc, N Brown Group Plc and Eddie Stobart Logistics Plc. We have considered these stocks based on one of the important factors, their annual dividend yield; there could be different parameters as well for selecting the stocks.
Amigo Holdings Plc (LON: AMGO)
The Group’s revenue was up by 8.5 per cent to GBP 218 million in the fiscal year 2020 as compared to GBP 201 million in the same period the previous year. The Group’s customer base increased by 18 per cent to GBP 232.1 thousand in nine months FY2020. The Group’s Adjusted profit after taxation plunged to 37.9 per cent to GBP 44.7 million during the period in contrast to GBP 72.0 million in nine-month period FY2019. The group is likely to announce its full-year results in May 2020.
According to its Covid-19 trading update, the company has decided to refrain from disbursement to new customers except in unusual circumstances. It stated that the employees on the bench would be shifted to other teams and serve existing customers well. The company has allowed its employees to work remotely in line with the advisory issued by the British government.
Company Overview: Amigo Holdings Plc (LON: AMGO) is the United Kingdom domiciled consumer finance group. Headquartered in Bournemouth, it is one of the largest providers of guarantor loan in the UK, which, through its subsidiaries, provides sales financing services. It offers unsecured guarantor loans to those who are unable to borrow from traditional lenders and help them to rebuild their credit scores and improve their ability to access credit. The shares of the company have their listing on the main market segment of the London Stock Exchange. There they trade with the ticker name AMGO.
Stock price performance: On 17th April 2020, Amigo Holdings Plc shares last traded at GBX 18.72 at the market close. Stock's 52 weeks High and Low is GBX 297.50/GBX 10.48. Along with an annual dividend yield of 56.36 per cent, the beta of the company stood at 3.27, reflecting higher volatility as compared to the benchmark index. The total M-Cap (market capitalisation) of the company stood at £77.38 million after the market close.
N Brown Group Plc (LON: BWNG)
As per the recent trading update, the first two weeks of trading in the financial year 2020, remained in line with forecasts until the last week in which the group faced a decline in demand from customers due to outbreak of novel coronavirus. The daily product sales declined by over 40 per cent as compared to what was expected earlier, and the company expects the demand to reduce further through the financial year 2021.The company has taken the necessary steps to reduce its expenditure to preserve the liquidity of the business.
Company Overview: N Brown Group Plc is the UK clothing & footwear digital retailing company which find its place among the top 10 retail companies. It offers a wide variety of clothing, footwear and homewares, and financial services. The company is headquarters in Manchester, and it employs over 2,400 people across the UK. The company helps customers with financing solutions through a range of convenient delivery options.
Stock price performance: On 17th April 2020, N Brown Group Plc shares last traded at GBX 16.32 at the market close. Stock's 52 weeks High and Low is GBX 163.90 /GBX 10.02. Along with an annual dividend yield of 43.50 per cent, the beta of the company stood at 2.36, reflecting higher volatility as compared to the benchmark index. The total M-Cap (market capitalisation) of the company stood at £48.25 million after the market close.
Eddie Stobart Logistics Plc (LON: ESL)
The leading UK end-to-end supply chain group, Eddie Stobart emphasised about its employees and its stakeholder’s safety which is paramount during this period of unprecedented crisis. The business has been experiencing exceptional volumes and is well placed to continue supporting all the customers' needs while also safeguarding the wellness of the employees. The logistics is playing a key role in this hour of turbulence.
The company’s revenue increased by 26 per cent to £421.3 million in the first half of 2019, as compared with the corresponding period of the last year, which represents a growth of 6.4 per cent in the underlying business.
Company Overview: Eddie Stobart Logistics Plc is the United Kingdom-based supply chain and logistics company. The group caters to various sectors such as Manufacturing, Industrial & Bulk (MIB), retail, consumer, e-commerce, and Special Operations sectors.
Stock price performance: On 17th April 2020, ESL shares last traded at GBX 8.10 at the market close. Stock's 52 weeks High and Low is GBX 101 /GBX 4.0. Along with an annual dividend yield of 58.76 per cent, the beta of the company stood at 0.49, reflecting lower volatility as compared to the benchmark index. The total M-Cap (market capitalisation) of the company stood at £31.68 million after the market close.
Comparative Chart as on April 17 after the market close (Source: Thomson Reuters)
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