Should One Be Looking at Financial Services Stocks Now?

Summary

• Financial service sector includes a plethora of services that offers diversification opportunity within
• It is one of the most important sectors and accounts for almost 15 per cent of the total listed companies on the LSE.
• The sector after the unprecedented crisis remains in a comparatively better position than some other sectors

The financial service sector includes a plethora of services apart from banks; it includes companies such as of Insurance, Financial Services, and Mortgage REITs, Cryptocurrencies, Fintech, Blockchain, pension funds and many more. The sector offers diversification opportunity within.

It is one of the most crucial and influential sectors of the economy. If we talk about the stock markets, the financial stocks account for almost 15 per cent of the total listed companies on the LSE.

The industry has diverse participation of large, medium and small businesses; it’s because of this and their growing importance to the economy that the segment’s businesses were allowed to remain operational during the peak of the unprecedented crisis. They have contributed to the UK’s economy in these tough times and have managed to remain afloat during the heightened crisis.

Because of the outbreak of the Covid-19 pandemic, the economy has been facing a hard time, and even the best financial stocks have had a tough year, however, they are in a comparatively better position than some other sectors.

Let’s have a look at four of the LSE-listed financial services stocks that have given a good return.

Starvest PLC- 1 Year Return of 814.6 Per Cent

Starvest PLC (LON:SVE) is a company focusing on small company issues and prospects of pre-initial public offering. It supports early-stage mineral exploration ventures and invests in sectors like mining, energy and agriculture.

In the half-yearly report for the period ending 31 March 2020, the company disclosed that there was an increase in Net Asset Value by over 100 per cent to £4.66 million from £2.25 million as at 30 Sept 2019, which was driven by the outstanding performance of its portfolios Greatland Gold plc (LON:GGP) and Ariana Resources plc (LON:AAU). Increase in NAV resulted in an increase in operating profit to 4.53 pence per share. The revenue recorded by the company was £62,253 (31 March 2019: £27,165).

The stock of SVE was trading at GBX 18.50 on 8 October 2020 at 15:54 PM, unchanged at its previous close. The 52-week low-high price range of the company’s stock stood at GBX 1.75 and GBX 20.50. The British investment company’s total outstanding market capitalisation stood at £10.65 million. Since the start of the year till date, SVE shares have returned 802.44 per cent.

Braveheart Investment Group PLC- 1 Year Return of 300.0 Per Cent

Incorporated in the year 1997, Braveheart Investment Group PLC is involved in providing debt as well as equity services. It also provides advisory services to SMEs.

In the yearly report for the period ending 31 March 2020, the company disclosed that the revenue generated from investment management fees stood at £60,000 (2019: £574,000). The net assets of the Group were recorded at £1,777,000 (2019: £2,281,000).

The stock of BRH was trading at GBX 38.50 on 8 October 2020 at 15:59 PM, up by 1.32 per cent from its previous close of GBX 38.00. The 52-week low-high price range of the company’s stock stood at GBX 7.00 and GBX 41.00. The investment company’s total outstanding market capitalisation stood at £13.19 million. Since the start of the year till date, BRH shares have returned 280.00 per cent.

CMC Markets PLC- 1 Year Return of 148.8 Per Cent

CMC Markets PLC providing online and mobile trading services is a holding company. Its service offerings are for both retail and institutional customers.

In the recently released trading update (for the period from 1 July to 31 August 2020) the Group revealed that it was performing strongly with client income retention exceeding the expectations of the Board and remaining above 80 per cent. However, the net operating income run rate for the period was below the Q1 2020 level.

The stock of CMC was hovering at GBX 341.00 on 8 October 2020 at 16:07 PM, lower by 6.45 per cent from its last day’s close of GBX 364.50. The 52-week low-high price range of the company’s stock was recorded at GBX 121.20 and GBX 364.50. The company’s total outstanding market capitalisation stood at £1,013.36 million. From the beginning of 2020 to date, CMC shares have returned 146.95 per cent.

Seneca Growth Capital VCT- 1 Year Return of 94.7 Per Cent

Formerly known as Hygea VCT PLC, Seneca Growth Capital VCT PLC (LON:HYG) is a venture capital trust (VCT). Established in 2001, it primarily aims at providing shareholders with an striking income and return by investing its funds in a mix of both quoted (on AIM) and unquoted companies.

The unaudited NAV of the Group was recorded as 37.6 pence per share on 30 September 2020, increasing by 1.8 pence per share as compared to that on 4 September 2020. For the year ended 31 December 2020 of 5p per share dividend was declared by the company.

The stock of HYG last traded at GBX 29.00 on 8 October 2020 at 16:16 PM. The 52-week low-high price range of company’s stock stood at GBX 19.50 and GBX 32.00. The company’s total outstanding market capitalisation stood at £2.35 million. Since the start of the year till date, HYG shares returned 38.10 per cent.