Top LSE Stocks to Watch Out for July 2020

Summary

  • Many of the companies have exhibited strong market growth with the recovery in sentiments
  • From 4 July 2020 onwards, most of the businesses in the UK recommenced operations
  • Government is leaving no stone unturned to support the businesses and kick-start the economy

The economic fallout of the novel coronavirus has devastated most of the businesses, not only in the UK but all across the globe, with many of the companies collapsing into administration, while others seeking consolidation within the industry.

UK’s broader equity benchmark index, FTSE 100 crashed by more than 30 per cent during the first wave of the pandemic in the mid of March 2020. Travel & Leisure, Hospitality, Tourism, Aviation and Manufacturing were among the worst-hit sectors. Since March 2020, the FTSE 100 index has recovered by nearly 20 per cent, still has a long way to go to reach the pre-crisis levels.

From 4 July 2020 onwards, most of the businesses have recommenced operations in line with the safety guidelines issued by the British Government. The Government has announced several relief packages along with furlough schemes to help the businesses stay afloat during these pressing times. The Chancellor of the Exchequer, Rishi Sunak, has left no stone unturned to kick-start the economy. From VAT cuts to tax holidays, incentivising businesses to call their furloughed employees back, the government is trying everything to protect the economy. All these measures could fuel growth and consumer confidence, but there are uncertainties as well with respect to Brexit and trade agreements with the US and EU.

If we talk about the markets, there are some businesses which have exhibited growth during these unprecedented times. The businesses have been promoting the idea of working remotely during the crisis and retuned their business models to adapt to the rapidly changing environment, as experts believe that Covid-19 might stay a bit longer than expected. Here we are sharing 15 stocks to watch this month.

Also read: The Best FTSE 100 Stocks to Invest in With £1,000 in Your Pocket

  1. Petropavlovsk Plc

UK based gold miner, Petropavlovsk Plc (LON: POG) shares have delivered a whopping three-digit price return of 104.50 per cent from the start of this year (2020) to till date. The prevalent uncertainties in the economy and the gloomy outlook seem to have helped the gold prices. Historically, Gold has always outperformed in volatile markets. The precious metal touched 8-year high, crossing US$1,800 per ounce earlier this month. The gold stocks, most of the times, resonate with the gold prices. The gold miner, Petropavlovsk Plc’ revenue grew at a CAGR of 5.44 per cent over the course of four years (FY15-19). As the outlook for the rest of the year still looks gloomy, the gold miner is likely to continue its growth momentum. Notably, investing in gold or related instruments is ideal for investors who are looking for the safety of capital and modest returns.

  1. Avon Rubber Plc

The aerospace & defence company, Avon Rubber Plc (LON: AVON) recorded an organic constant currency growth in revenue of 9.5 per cent in the first half of the fiscal year 2020 as it successfully procured long-term body armour contracts worth up to $600 million with the US Department of Defence during the period (H1 FY20). The company has enough liquidity and is confident of achieving its expectations for the remaining year. Avon Rubber shares have delivered two-digit price return of 71.20 per cent from the start of this year (2020) to till date.

An FTA negotiation between the UK and US is underway. Technology sharing is expected between the two countries, placing the company in an advantageous position.

  1. AO World Plc

AO World Plc (LON: AO.) is an online retailer of electrical and home appliances across the United Kingdom. The shift to online mode by shoppers during lockdown has become an indispensable way of life, and the company has served its customers through these unprecedented times. In the pre-crisis era, a large proportion of company’s sales was made through bricks and mortar stores. However, during the corona induced lockdown, the company was able to make a swift transition to the online business model. AO World Plc’s revenue grew at a CAGR of 17.30 per cent over the course of four years (FY15-19).

Despite an overall sectoral decline, the company has witnessed increased market share and sales during the lockdown. AO World Plc shares have delivered two-digit price return of 70.50 per cent from the start of this year (2020) to till date. The company expects to gain a strong market share despite the Coronavirus crisis being a new normal.

  1. Ocado Group Plc

United Kingdom-based online grocer, Ocado Group Plc (LON: OCDO) has played a major role in making the national lockdown successful in these unprecedented times and contributing to the nation’s economy. Throughout the lockdown period, the company has shown great resilience to cater to the needs of consumers in the UK by increasing the delivery slots and providing employment opportunities. Ocado Group Plc shares have delivered two-digit price return of 56.40 per cent from the start of this year (2020) to till date.

Recently, the government imposed a local lockdown in Leicester, due to a sudden spike in Covid-19 cases. The sudden spikes in the rise of infection could defer consumer confidence from going out. The consumers still rely on online modes of shopping for essentials, increasing the prospect of the company.

  1. Scottish Mortgage Investment Trust Plc

Scottish Mortgage Investment Trust Plc (LON: SMT) is a closed-end global investment company incorporated in the UK. During the unprecedented crisis, the banking and financial sector has been up and running. They have facilitated the businesses by providing them with access to government backed schemes. Scottish Mortgage Investment Trust Plc shares have delivered high two-digit price return of 55.80 per cent from the start of this year (2020) to till date. The company has a resilient business model along with a large pool of liquid assets. As global markets tend to pick up some steam, the company is likely to deliver better gains for its stakeholders. The company paid an annual dividend of 3.25 pence for the fiscal year 2020, up by 4 per cent from the previous year, becoming a preference of investors seeking dividend income as well as capital appreciation.

  1. Allianz Technology Trust Plc

Allianz Technology Trust Plc (LON: ATT) is a closed ended global investment company, which strives to generate wealth by investing in technology companies. We are still in the middle of a crisis, where the importance of technology is key to the prosperity for businesses. The technology sector continues to benefit from strong tailwinds which should continue to drive attractive long-term growth for the company.

The company provides investors with indirect exposure to technology companies worldwide. The technology sector was among the unperturbed sectors during the corona crisis. Allianz Technology Trust Plc shares have delivered two-digit price return of 43.60 per cent from the start of this year (2020) to till date.

Do read: Some Penny Stocks Worth Watching in The Current Scenario

  1. Polar Capital Technology Trust

Polar Capital Technology Trust (LON: PCT) is a global investment company, which strives to generate wealth by investing in technology companies. Technology has had a great run in terms of e-commerce or cloud computing during the corona crisis. Working remotely has been a trend globally. Allianz Technology Trust Plc shares have delivered two-digit price return of 33.70 per cent from the start of this year (2020) to till date. The company’s growth prospects are bright as the reliance on technology is expected to rise until normal lifestyle resumes and even beyond that.

  1. Reckitt Benckiser Group Plc

Reckitt Benckiser Group Plc (LON: RB.) manufactures hygiene and cleansing products. The British government has rolled out sector-specific guidelines for ensuring the safety of its people by emphasising social distancing and hygiene. The demand for cleansing and hygiene is expected to rise as most of the businesses have recommenced operations from 4 July. Reckitt Benckiser Group’s shares have delivered two-digit price return of 25.40 per cent from the start of this year (2020) to till date. Going forward also the company is likely to witness a strong surge in sales of its products.

  1. Civitas Social Housing Plc

Civitas Social Housing Plc (LON: CSH) is a closed ended investment company, which strives to generate wealth by investing in housebuilders. Civitas Social Housing group’s shares have delivered two-digit price return of 23.20 per cent from the start of this year (2020) to till date despite the sector coming to a screeching halt during the lockdown.

Rishi Sunak, the Chancellor, has announced holiday on stamp duty of up to £500,000. In addition, the housebuilders are seeking a dedicated bailout package for the sector. These measures should provide a boost to the real estate sector. Those looking for indirect exposure in the UK housing market can look at the company’s value proposition.

  1. Gamesys Group Plc

Gamesys Group Plc (LON: GYS) offers online gaming and entertainment. During the lockdown, people were forced to stay indoors and seek some sort of home entertainment. People would still prefer home entertainment than going to a multiplex, or an entertainment zone in the times to come. Gamesys Group Plc’s shares have delivered two-digit price return of 23.20 per cent from the start of this year (2020) to till date.

  1. IG Group Holdings Plc

UK based IG Group Holdings Plc (LON: IGG) provides online share dealing account, which provides access to a wide array of securities, ETF’s, Bitcoins, and index funds. The account is ideal for cash-poor retail investors. The company seems to be unfazed by the Covid-19 crisis and has delivered a two-digit price return of 22.90 per cent from the start of this year (2020) to till date.

  1. Avast Plc

Avast Plc (LON: AVST) is a well-known provider of antivirus and cybersecurity products. During the unprecedented crisis, the cyber-attacks have increased by five times, according to the WHO. Thus, with increasing reliance on technology and online platforms, there is a need to protect the data networks. The demand for security software is expected to rise in the times to come. The security solutions company has delivered a two-digit price return of 22.30 per cent from the start of this year (2020) to till date.

  1. Rentokil Initial Plc

Rentokil Initial Plc (LON: RTO) is a provider of pest control solutions. The demand for cleansing and hygiene is expected to rise as most of the businesses have recommenced operations from 4 July. Rentokil Initial Plc’s shares have delivered two-digit price return of 15.10 per cent from the start of this year (2020) to till date. The company is likely to witness a strong surge in sales of its products as demand remains unabated.

  1. AstraZeneca Plc

The British drug maker, AstraZeneca Plc (LON: AZN) has been making a lot of headlines in recent times. The company partnered with the Oxford University for the development of Covid-19 vaccine. According to some reports, the company would be in apposition to supply the potential vaccine by September this year. Pharmaceutical space can, and the companies in it are less dependent on economic factors. AstraZeneca’s shares have delivered two-digit price return of 13.80 per cent from the start of this year (2020) to till date.

  1. Tesco Plc

Tesco Plc (LON: TSCO), the food & drug retailer has been up and running during the unprecedented times. Throughout the lockdown period, the company has shown great resilience to cater to the needs of consumers in the UK by increasing the delivery slots and providing employment opportunities. The sudden spike in infection could defer consumer confidence from going out. The consumers would still rely on online modes of shopping for essentials. Therefore, the company is expected to remain profitable and payout dividends. The company has a dividend yield of 4.32 per cent.

These 15 stocks belong to retail, technology, financial services, and pharmaceutical sector, most of these sectors have resilient business models which allowed them to not only stay afloat during the unprecedented crisis but also to deliver solid results.


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