FTSE stocks of 3 Key Sectors Signal Strong Momentum Despite Economic Headwinds

FTSE stocks of 3 Key Sectors Signal Strong Momentum Despite Economic Headwinds

The London Stock Exchange seems to take a breather from a steep crash in global stock market led by the pandemic coronavirus, spreading dreadful fears of global recession. The brief recovery in the UK stock market has come after the days of massive sell-off, which saw the benchmark FTSE 100 Index as well as the mid cap FTSE 250 index falling to their 52 week lows.

The United Kingdom (UK) went into a complete lockdown on 23 March 2020, leading to a halt in all economic and industrial activities in the country. It immediately sent the shock wave to publicly listed companies on stock exchange as the FTSE 100 index dropped below the 5000 point mark.

However, markets recently witnessed a marginal recovery, seemingly driven by the bailout package and the quantitative easing techniques used by the administration to build confidence among people. It seems that some fundamentally strong stocks, coming mainly from Financial Services, Real Estate, and Industrial Sectors, are well positioned to weather the ongoing economic turbulence. But do these stocks have enough impetus to give any strong hopes of bull rally in the coming weeks?  

  • Financial Services Sector

Financial services sector has been the key in fighting the financial challenges that have been brought forward due to the coronavirus outbreak. Banks and other financial institution have been at the forefront of this as most parts of the economic bailout package are being executed by them. There have been certain challenges in terms of the complete execution of such an enormous package, but new rules have been brought forward to help both the lenders as well as the customers to have access to all the services being offered by the government. The Banks have also been asked to scrap dividend and bonuses during this period, which was a bit of a disappointment for the shareholders of these companies. But given the situation in the country right now, the shareholders also seem to understand why cash reserves for these companies are crucial at this juncture. Let’s take a look at two leading players of the sectors.

Barclays Plc (LON: BARC)

Barclays is one of the largest financial services and banking groups that enjoys a global presence. The company operates through two of its core business divisions that include Barclays UK and Barclays International. In the recent week, Barclays’ stock price showed a positive momentum touching GBX 107.98 per share from a lower levels of GBX 83.20 recorded in March 2020.

The company’s market capitalisation sits at GBP 13.91 billion with a free float and share outstanding of 17.12 billion and 17.33 billion, respectively.

On 3 April 2020, the stock ended the week at GBX 80.24, down 1.69 percent or GBX 1.38 per share. At the time of writing, BARC’s beta stood at 1.33, reflecting that the price of the stock was more volatile compared to the value of the benchmark index.

HSBC Holdings Plc (LON: HSBA)

HSBC Holdings is a publicly listed financial services company that manages its product through four key segments- Retail Banking and Wealth Management (RBWM), Global Private Banking (GPB), Commercial Banking (CMB) and Global Banking and Markets (GB&M).

As at 3 April 2020, HSBC Holdings Plc's market capitalization was recorded at a value of GBP 81.76 billion with a free float and share outstanding of 20.30 billion and 20.37 billion, respectively. HSBC’s stock last traded at GBX 397.20, a decrease of approximately 0.14 percent or GBX 0.55 compared with the share price recorded at GBX 397.75 on the previous trading day.

The stock’s beta was recorded at 1.00 as on 3 April 2020. This means the price of the stock was almost equally as volatile compared to the value of the benchmark index.

Comparative Stock Price chart of BARC and HSBA

Source: Thomson Reuters, on 03-04-2020 after the closing of the London Stock Exchange Market

  • Real Estate Sector

The real estate sector was on the rise at the beginning of this year, as the occupancies were increasing despite the uncertainty around Brexit. This was also followed by renewed payment agreements with the high street retail companies and corporates on rent and leases, which led to an increase in the occupancy, but this trend later faded away when the coronavirus outbreak led to a countrywide shutdown of various commercial properties. This has been followed by rents not being received by real estate companies and property owners for at least the last two months, meaning heavy revenue losses. Markets have started to recover and even though the rent payments will still not come for quite some time now, there are few companies which continue show signs of recovery.

IWG Plc (LON: IWG)

Jersey-based workspace company, IWG Plc ended the week in green. On 3 April 2020, the company’s stock last traded at GBX 174.50, up 1.04 percent or GBX 1.80 per share, compared with the share price registered at GBX 172.70 on the previous trading day.

IWG Plc's market capitalization stood at a value of GBP 1.504 billion with respect to its last traded price. The stock’s beta, however, reflected a strong volatility as it was recorded at 2.03 as on 3 April 2020. That means the price of IWG’s stock was twice as volatile as compared to the value of the benchmark index.

Grainger Plc (LON: GRI)

On 3 April 2020, Grainger Plc's shares on the London Stock Exchange stood at a price of GBX 241.60, a decrease of approximately 1.55 percent or GBX 3.80 per share, compared with the share price registered at GBX 245.40 on the previous trading day. Grainger Plc's market capitalization was recorded at a value of GBP 1.653 billion at the time of writing, with respect to the current trading price of the share of the company.

It was reported that the firm's beta was at 0.64, indicating that the price of the stock was less volatile compared to the value of the benchmark index.

Comparative Stock Price chart of GRI and IWG

Source: Thomson Reuters, on 03-04-2020 after the closing of the London Stock Exchange Market

  • Industrials Sector

Things seem really grim for the Industrial space in the United Kingdom right now as all manufacturing and production activity (except for essential services) has come to a halt. This was also driven by the hindrance to the supply chain of these companies at the beginning of the year when Covid-19 outbreak was taking its toll in China and the other Asian countries which have been a supply chain hotspot for quite some time now. The sector will probably be non-operational for a time being, which may contribute to a significant rise in unemployment in the country. Despite these challenges, the industrial sector has shown optimism backed by the recently announced government’s stimulus package.

DCC Plc (LON: DCC)

Based in Ireland, DCC Plc is a marketing, sales and support services company. The company operates in diversified segments including retail, healthcare, technology and energy. It is publicly listed and trades under the ticker DCC on the London Stock Exchange.

On 3rd April 2020, DCC Plc's stock price stood at GBX 4921.00, a decrease of 0.99 percent or GBX 49.00, compared with the share price recorded at GBX 4970.00 on last trading day. DCC Plc's market capitalization was recorded at a value of GBP 4.84 billion at the time of writing.

It was recorded that DCC's beta was at 0.80, reflecting less volatility compared the value of the benchmark index.

Smiths Group Plc (LON: SMIN)

A well-renowned Smiths Group is a technology player that operates through its four core business divisions- Smiths Detection, John Crane, Smiths Interconnect and Flex-Tek and Smiths Medical.

On 3 April 2020, Smiths Group Plc's stock last traded at a price of GBX 1060.50, a decrease of approximately 6.81 percent or GBX 77.50, compared with the share price registered at GBX 1138.00 on the previous trading day. Smiths Group Plc's market capitalization was recorded at a value of GBP 4.20 billion with the free float and shares outstanding of 394.72 million and 396.21 million, respectively, as at 3 April 2020. SMIN’s beta stood at 0.95, reflecting that the price of the stock was less volatile compared to the value of the benchmark index.

Comparative Stock Price chart of DCC and SMIN

Source: Thomson Reuters, on 03-04-2020 after the closing of the London Stock Exchange 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.

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