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HIGHLIGHTS
- Generally, high-beta stocks are riskier but offer the potential for higher returns, while low-beta stocks may be associated with less risk and low returns.
- Harbour Energy Plc, Cineworld Group Plc, Menzies (John) Plc, Costain Group Plc and Capita Plc are the top volatile stocks on FTSE at present.
Volatile stocks are primarily those that show dramatic price movement in either direction; hence they are riskier than stocks that have relatively stable prices. But as the risks are high, they could offer a higher reward as well.
Beta is a common concept used to gauge the volatility of a stock in relation to the overall market. A stock that fluctuates more than the market has a beta of more than 1.0, and that moves less than the market has a beta of less than 1.0. As a general rule, high-beta stocks are riskier but offer the potential for greater return, while low-beta stocks may be associated with less risk and low returns.
It is often argued beta does not provide sufficient information about the company fundamentals and may be of limited value while making stock selections. Beta, however is regarded as a better indicator for short-term risk rather than long-term risk.
(Data source: Refinitiv)
Here we take a detailed look at the top 5 volatile FTSE stocks.
Harbour Energy Plc (LON: HBR)
FTSE 250 listed Harbour Energy is the UK’s independent oil and gas company. For the five months ended 31 March 2021, the company reported production of 162 kboepd. The company’s production guidance for the year 2021 currently stands at 185 to 195 kboepd (proforma basis) and 170 to 180 kboepd (reported basis). The company reported revenue of approximately $1.5 billion for the first five months of the year, and its average realised oil and gas prices for the period stood at around $57/bbl and 42p/therm, respectively.
Recently, Neptune Energy Group Ltd announced that it is considering a merger with Harbour Energy Plc to create one of the largest independent oil and gas firms in Europe.
The shares of Harbour Energy traded at GBX 370.80, down by 3.74% at 10:04 AM on 8 September 2021. The stock has a beta of 4.35, and its market capitalisation stood at £3,565.15 million.
Cineworld Group Plc (LON: CINE)
Cineworld Group is one of the largest cinema chains in the world and operates through 759 sites and 9,269 screens. For the H1 2021 ended 30 June 2021, the company recorded revenues of $292.8 million (H1 2020: $712.4 million) and an adjusted EBITDA loss of $21.1 million (H1 2020: profit of $53.0 million). It recorded a cash balance of $436.5 million at the end of June 2021.
On 7 April 2020, Cineworld’s board declared the suspension of a dividend of 4.25 cents per share for Q4 2019, to conserve cash. The company declared no dividend for H1 2021 as well, as the group continues to focus on the preservation of liquidity during its recovery from the pandemic.
The shares of Cineworld Group traded at GBX 67.60, up by 0.99% at 10:18 AM on 8 September 2021. The shares of the company gave a return of 13.70% in the last one year to shareholders. The stock has a beta of 3.76, and its market capitalisation stood at £919.08 million.
Menzies (John) Plc (LON:MNZS)
Menzies (John) is an aviation services company. In August 2021, Menzies announced the acquisition of a 51% stake in Interexpresso, aiming to expand its footprint in Central America.
Menzies (John) reported revenues of £415.8 million for H1 2021 ended 30 June 2021 compared to £431.5 million for H1 2020. The company’s operating profit stood at £15.4 million, and pre-tax profit stood at £4.7 million for H1 2021.
The shares of Menzies (John) traded at GBX 297.50, up by 0.51% at 10:31 AM on 8 September 2021. The shares of the company gave a return of 152.12% in the last one year to shareholders. The stock has a beta of 3.63, and its market capitalisation stood at £272.01 million.
Costain Group Plc (LON:COST)
Costain Group is a supplier of smart infrastructure solutions. The company recorded revenues of £556.8 million for the six months ended 30 June 2021 compared to £547.3 million in H1 2020. Its pre-tax profit stood at £9.4 million in H1 2021 compared to £3.8 million in H1 2020. The net cash balance of the company at the end of H1 2021 stood at £113.0 million.
The shares of Costain Group traded at GBX 60.50, up by 0.33% at 10:42 AM on 8 September 2021. The shares of the company gave a return of 31.92% in the last one year to shareholders. The stock has a beta of 3.34, and its market capitalisation stood at £165.79 million.
Capita Plc (LON:CPI)
Capita is a business process outsourcing and professional services firm based in London. In August 2021, the company announced the renewal of its £124 million learning services contract with a major UK financial services client.
Capita reported adjusted revenue of £1,584.7 million in H1 2021 (H1 2020: £1,582.1 million) and an adjusted pre-tax profit of £45.3 million (H1 2020: loss £11.1 million). It also reported that it won a total contract value of £2,576 million, up by 70% year-on-year (H1 2020: £1,513 million).
The shares of Capita traded at GBX 48.83, up by 2.05% at 10:54 AM on 8 September 2021. The shares of the company gave a return of 55.70% in the last one year to shareholders. The stock has a beta of 3.29, and its market capitalisation stood at £805.92 million.
