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The Covid-19 outbreak and plummeting oil prices have sparked negative sentiments among investors with reference to markets. Due to the pandemic outbreak, most of the sectors such as jet makers, travel and tourism, entertainment & leisure have been deeply impacted with a weak growth outlook.
As the people are refraining from travelling, the travel stocks are melting down every passing day. Furthermore, the airlines have reduced orders of newer aircraft, the worldâs most prominent jet makers Boeing and Airbus are likely to suffer the most. These companies might have to lower the production at some point in time if the situation persists. Moreover, the finished goods would fetch the companies with storage and carrying costs and dent future revenues.
The rapid spread of the pandemic over the past few weeks has worsened the situation for global trade. According to the Public Health England website, till 10 March 2020, around 26,261 people have been tested in the United Kingdom out of which 373 were confirmed positive.
The pandemic is believed to be derived from the animals and attacks the respiratory system in human beings, eventually leading to organ failure. The symptoms are cough, fever and difficulty in breathing. Till date, no cure has been identified for it. However, governments are running awareness campaigns regarding its prevention.
Itâs not that all the sectors are bleeding, there are many sectors like the food staples, processed foods, Personal care, Household products and Home Entertainment, whose stocks are expected to do well amid the global coronavirus crisis.
According to media reports, people are into panic buying and preferring isolation; as a result, supermarkets in the United Kingdom have started rationing essential items to ensure everyone gets access to these products. It has been reported that people emptied the shelves in panic buying to the products including disinfectants, hand sanitizers and other cleansing & hygiene solutions. In food staples, dried pasta, milk and tinned vegetables got stock-out at supermarkets and grocery stores.
Moreover, a substantial lift in freezer sales has also been observed, which nearly doubled year on year last week according to some media reports. People are looking to increase their storage capacity amid Coronavirus fear by buying chest freezers and under-the-counter freezers.
From the sectors which are likely to withstand the global turmoil due to the Covid-19 outbreak, we have selected some stocks with better prospects. Tesco Plc, Reckitt Benckiser Group Plc, and John Lewis of Hungerford Plc, we will be discussing their stock as well as overall financial performances.
Business overview: Tesco Plc
Tesco Plc (LON:TSCO) is a retail company which apart from retailing is also engaged in insurance services and retail banking business. The company has around 450 thousand employees who serve millions of customers in stores and online marketplace. It has more than 6,800 shops in various locations such as the UK & Republic of Ireland, Central Europe & Asia. The company has a great history of coming from market stall to the UKâs biggest supermarket.
The company recently proposed disposal of its business in Thailand and Malaysia, which shall result in Net cash proceeds of $10.3 billion
Tesco Plc Financial highlights H1 FY20
(Source: Companyâs filings, London Stock Exchange)
The companyâs statutory revenue was almost in line at £31.9 billion during the period in comparison to the first half of the fiscal year 2019. The companyâs statutory operating profit rose by 11.4 per cent at constant currency to £1,134 million during the period in comparison to £1,007 million in the first half of the fiscal year 2019.
The companyâs profit before taxation surged by 3.7 per cent at constant currency basis to £494 million during the period in contrast to £463 million in the first half of the fiscal year 2019. The companyâs interim dividend per share increased by 58.7 per cent to 2.65 pence in the first half of the fiscal year 2019 as against 1.67 pence in the first half of the fiscal year 2018. The companyâs net debt was down by 7.8 per cent to £12.6 billion.
Tesco Plc -Stock price performance
Daily Chart as on 11-March-20, before the market closed (Source: Thomson Reuters)
On 11th March 2020, at the time of writing (before market close, GMT 01:14 PM), Tesco Plcâs shares were trading at GBX 236.8. Stock's 52 weeks High and Low is GBX 260.40/GBX 210.70.Â
Business overview: Reckitt Benckiser Group Plc
Reckitt Benckiser Group Plc (LON:RB) is a global organisation engaged in the business of home products, health and hygiene. The companyâs brands are being sold in many stores in around 200 countries. The company believes that through research and development, it creates best products that enable its customer to take their health into their own hands and homes. Lysol, Vanish, Dettol, Harpic and many others are popular brands of the company.
Reckitt Benckiser Group Plc-2019 Financial highlights
(Source: Companyâs filings, London Stock Exchange)
On like-for like basis, the companyâs net revenue from continuing operations grew by 0.8 per cent on constant currency to £12,846 million in the financial year 2019. The companyâs adjusted net income from continuing operations was up by 0.7 per cent at constant currency to £2,437 million in the fiscal year 2019. The companyâs annual dividend increased to 174.6 pence in the fiscal year 2019 as against 170.7 pence in the fiscal year 2018.
Reckitt Benckiser Group Plc -Stock price performance
Daily Chart as on 11-March-20, before the market closed (Source: Thomson Reuters)
On 11th March 2020, at the time of writing (before market close, GMT 01:18 PM), Reckitt Benckiser Group Plcâs shares were trading at GBX 5,651. Stock's 52 weeks High and Low is GBX 6,744.00/GBX 5,510.00.
Business overview: John Lewis of Hungerford Plc
United Kingdom-based group, John Lewis of Hungerford Plc (LON:JLH) is a household goods company, which is into the business of designing, manufacturing, retailing designer kitchens, wardrobes, bedrooms, freestanding furniture, fridges and architectural components through direct retailing to customers from its nationwide network of showrooms.
Furthermore, the company has its own online platform as a part of its business model, in the name of Just Doors, known for replacing kitchen and cabinet doors. The company is known for its specialised kitchen work, bedroom & living space, dressing rooms, furniture and utility rooms and specialised paints with special antiqued finishes, high gloss colours and specialist rubbed colours.
JLH- Financial highlights for 2019
(Source: Companyâs filings, London Stock Exchange)
The companyâs revenue stood at £8,305,948 in the fiscal year 2019. The companyâs gross profit stood at £3,931,568 during the period. The company witnessed a surge in freezer sales due to the Coronavirus panic, according to some media reports.
John Lewis of Hungerford Plc -Stock price performance
Daily Chart as on 11-March-20, before the market closed (Source: Thomson Reuters)
On 11th March 2020, at the time of writing (before market close, GMT 01:20 PM), John Lewis of Hungerford Plcâs shares were trading at GBX 0.50. Stock's 52 weeks High and Low is GBX 0.7138/GBX 0.4337.
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