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Summary
- In recent times UK stock market has witnessed significant investment interest from big global investors.
- The high economic growth rate for the next two years backs a positive outlook towards the UK markets.
The UK stock market is becoming a favourite investment destination for big global investors. More international investors are bullish on the UK market than six years back, as per the report by the Bank of America. The positive outlook could result in outperformance of the domestic stock market.
Positive outlook towards UK market is because of multiple factors:
- The UK economy is expected to grow at 7.2% this year as per the forecast by Economic Co-operation and Development (OECD), its fastest rate since the second world war and Next year growth rate could be at 5.5% as per estimated of OECD.
- Market experts are of the view that listed stocks in the UK market are available at lower valuations compared to the US market, the reason being uncertainty due to the Covid-19 Pandemic and Brexit referendum, which provides an opportunity for investors and catch up in terms of returns with global peers.
- Successful vaccination roll-out and further ease in restriction could lead to a bounce-back in domestic demand.
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Here are some of the UK listed stocks that have given superior returns to shareholders:
Royal Mail Plc (LON: RMG)
The British multinational operates postal and courier services worldwide. The company serves small and medium enterprises and large businesses with its parcel delivery and logistics services.
Royal Mail reported revenue of £12.6 billion, up by 16.6% (2020 Revenue: £10.8 billion) in the year ended March 2021, operating profit was £702 million, while the basic EPS stood at 62p. In addition, the company declared a final dividend of 10p per share for shareholders.
The stock has given 218% returns in the last one year, supported by volume growth in the UK market, which was up by 48% during the year. The international business reported 26% growth mostly because of lockdown, which created a higher demand for parcel services. The company anticipate the growth trend to continue and plans capital expenditure of £400 million in the UK market.
The Watches of Switzerland Group PLC (LON:WOSG)
The company operates in the luxury jewellers and timepieces business through its 120 retail outlets and online website in the UK. Other than the UK market, the company has operations in the US market and sells its product under the brand such as Rolex, Cartier, TAG Heuer, Omega.
The luxury brand generated £905.1 million in revenue, up by 13.3% in FY21 (FY20 revenue: £810.5 million) and 34.9% increase in the adjusted EBITDA at £105.4 million (FY20 EBITDA: £78.1 million). The strong performance was reported because of the development in multi-channel business model.
The stock has given 226% returns in the last one year. The company has 16.2% CAGR growth in revenue during FY15 to FY22 and EBIT CAGR growth at 40.2% in the last five years, and significant improvement in the ROCE at 19.7%. The humungous growth has been possible because of management’s positive outlook and consistent growth delivered in last the five years.
Reach Plc (LON:RCH)
The company produces and distributes content through newspapers and digital platforms in the United Kingdom and other European countries. The company’s key brands are Sunday Mirror, Daily Mirror, OK! and New. It also offers third party newspaper printing services.
The media firm recently gave a trading update and upbeat guidance for the year 2021. The company reported total registration of 6.2 million to date, up from 5.8 million at the start of March 2021. The company is confident to reach 10 million registrations by the end of 2022. The operating profit for the current financial year is anticipated at £137.1 million, much ahead of market expectation.
Reach Plc has given a 333% return in the last one year, backed by 41.3% rise in digital revenue in two years. At present, the digital advertisement contributes more to revenue than print media.
Arrow Global Group Plc (LON: ARW)
The financial sector company acquires and manages debt investment portfolios. The company has over £3.66 billion of assets under management.
In the first quarter of 2021, the company reported £78.2 million in revenue and a loss of £6 million. The company said after a good start to the year and a successful track record of execution that it is set to benefit from significant investment and asset servicing opportunities.
Arrow Plc has given a 262% return to its shareholder. The stock saw positive momentum after it accepted a £563 million takeover bid from private equity firm TDR. TDR bought Arrow Plc for 307.5 pence per share.
Electra Private Equity Plc (LON:ELTA)
It is a private equity firm that invest in start-ups and early growth stage companies based in the UK and other European countries. The company’s objective is to achieve a high return on investment by investing in private equity assets and listing them on stock markets.
Electra Plc has given 229% returns to its shareholders in last one year. The stock gained momentum recently after the company made the announcement to list TGI Fridays, the restaurant chain, by the third quarter of this year. TGI Fridays' UK business has recorded a 14% growth in sales post lockdown. The restaurant chain is valued at £146.2mln on Electra’s books.
