Top FTSE 100 Performers in 2020 So Far: Ocado, Kingfisher, Hikma, Reckitt Benckiser and Admiral Group

Summary

  • There have been some resilient stocks which delivered double-digit returns despite the carnage in the stock markets
  • Retail, Financial, and Insurance are some of the sectors which have seen the minimal impact of Covid-19
  • Ocado reported strong revenue growth in the third quarter of 2020 due to a surge in online orders of essentials

2020 has been a disastrous year for the global stock markets. London’s broader equity benchmark index, FTSE 100 or Footsie plummeted by more than 20 per cent since the beginning of this year. FTSE 250 index, which reflects UK’s domestic economy was down by one-fifth since January.

However, there are quite a few LSE traded stocks, which have outperformed these benchmark indices despite the catastrophe caused by the novel coronavirus. In this article, we would put our lens through some stocks which have performed well despite the odds in the trading environment.

(Data Source: Refinitiv, Thomson Reuters)

  1. Ocado Group Plc: YTD Total return-120.4%

Due to a surge in online orders of essentials such as groceries, the Company witnessed a strong revenue growth in the third quarter of 2020. Orders per week, a key metric to gauge the performance of the company, has risen substantially, while the average order size stood at normal levels.

Due to switch over to the M&S products, Ocado Group witnessed a strong forward demand. The retail sector is supposed to be impacted by the social distancing protocols in place with consumer confidence hitting a new low in the wake of a second wave of the novel coronavirus. The Company expects the trading environment to be challenging in the near term.

The Company witnessed an increase of 52 per cent in retail revenue due to the surge in online orders during the third quarter of 2020. The retail sales increased at a faster pace due to increased demand during the period in comparison to the second quarter of 2020. Compared to pre-pandemic era, the Company’s average order size remained higher.

The online grocery retailer, Ocado Group Plc (LON: OCDO) is expected to converge all its synergies to keep its supply chain intact as the UK anticipates a second wave of the coronavirus pandemic. Moreover, the competitors are rapidly investing in technological advancements to stay ahead of the competition. Tesco Plc (LON: TSCO) would be trying drone deliveries in October.

  1. Kingfisher Plc: YTD Total return-36.4%

The first half of 2021 has been challenging due to the coronavirus crisis. Kingfisher Plc (LON: KGF) has managed a decent start to the second half of 2021, with Group LFL sales moving up by 16.6 per cent (From 2 August until 19 September 2020) with growth across all retail banners and categories. The Company has taken significant operational and financial actions, after a decent demand for home improvement. The Company has implemented social distancing protocols in its stores, which could slightly deter the consumers to avoid visiting the stores.

(Source: Company’s filings, LSE)

During the first half of 2021, the Company has delivered a resilient performance, with strong sales recovery in the second quarter of 2021. On a constant currency basis, the sales were down by 1.1 per cent year-on-year during the first half of 2020, with a decrease in LFL sales (1.6 per cent down) year-on-year. The decline in sales was primarily driven by the catastrophe caused by Covid-19 during the first quarter of 2021.

The retail profit increased by 17.7 per cent year-on-year on a constant currency basis led by strong performance in the UK & Ireland. The Group has not announced any dividends due to prevalent uncertainties in the trading environment. Increasing competition and technological advancements can weigh heavily on the FTSE 100 listed general retailing company.

  1. Hikma Pharmaceuticals Plc: YTD Total return-31.5%

United Kingdom-based Pharmaceuticals and Biotechnology Company, Hikma Pharmaceuticals Plc (LON: HIK), specialises in generic medicines.

In the first half of the financial year 2020, the Company showed improved financial performance. Both the top-line and the-bottom line performance have improved on the reported and core basis. The performance from all three businesses have improved for the period and is expected to carry the same momentum in the second half of FY2020.

In the first half of the financial year 2020, driven by growth in all businesses, the core revenue increased by 9 per cent to $1,132 million (H1 2019: $1,043 million). The basic earnings per share increased by 15 per cent to 87.6 cents in H1 2020 (H1 FY2019: 76.4 cents), and interim dividend surged by 14 per cent to 16 cents in H1 2020 (H1 FY2019: 14 cents).

The Group expects revenue from injectables to be in between $950 -$980 million, with core operating margin ranging in between 38-40 per cent. The revenue from generics business is expected to be in between $720 - $760 million, while the branded revenue is expected to show growth of mid-single-digit on CER (constant exchange rate) basis. However, the Company’s operations are impacted negatively due to uncertainties created by the Brexit and Covid-19.

  1. Reckitt Benckiser Group Plc: YTD Total return-25%

(Source: Company’s filings, LSE)

Following the strong performance demonstrated in the first half of 2020. The Company expects to end the FY20 with better net revenue, earnings, and margin. The favourable tailwinds from Covid-19 shall support high single-digit growth for 2020. The net revenue growth is expected to be benefited with increased sales for Dettol and Lysol. For the first half of the financial year 2020, the Company reported an increase of 10.8 per cent in net revenue, while like-for-like basis revenue surged by 11.9 per cent.

Reckitt Benckiser (LON: RB.) delivered decent profitability margins for the period, driven by operational leverage from COVID-19 tailwinds and improving underlying performance. As on 30 June 2020, the net debt declined to £10,202 million, reflecting strong free cash flow generation for the period. Reckitt Benckiser Group declared an interim dividend of 73 pence per share during the period. Reckitt Benckiser has made investments to capture growth opportunities for Lysol and Dettol.

  1. Admiral Group Plc: YTD Total return-24.3%

London Stock Exchange-traded Admiral Group Plc (LON: ADM) is a non-life insurance company, which operates in motor insurance and household insurance segment. Due to Stay at Home premium refund and coronavirus impact, the Company’s turnover reduced by 4 per cent to £1.69 billion in H1 2020 (H1 2019: £1.76 billion).

However, the statutory profit before taxation of the Group rose by 31 per cent to £286.1 million (H1 2019: £218.2 million). Despite the challenging trading environment, the Insurer has declared an interim dividend of 70.5 pence during the first half of 2020.

These stocks have shown resilient performance and yielded handsome returns for their shareholders. They survived the carnage in the stock markets due to the Covid-19. The nation is expecting another wave of the pandemic, and hence all the stocks which have delivered a resilient performance during the first needs to be tracked.

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