Stocks that may outperform as Britain enters the second coronavirus wave

Summary

• The sectors that did well during the initial pandemic phase, might be the ones that could do well this time around as well.
• Other sectors who have been able to adapt and have learnt to function despite the constraints are also likely to continue with their recovery.
• Few of the top performing stocks on the London Stock Exchange are AstraZeneca, Hikma, Vodafone, Legal & General, and GlaxoSmithKline, they might do well through the rest of 2020.

The rising number of Covid-19 cases in the UK has got everyone worried. With large parts of the country like Scotland and Ireland already under lockdown, the possibility of a national level lockdown is almost certain. This period is going to be very difficult for many sectors, many of which have just started to recover from the first phase of the pandemic. Despite this, many companies have done well and are expected to do well in the next quarters. 

We look into three such sectors and five good performing stocks which are expected to do well for the rest of the year.

Tech space

The digital technology sector has grown six times more than the rest of the economy during the post-pandemic period, as per expert estimates. The industry continued to hire through the lockdown, with the number of digital job advertisements exceeding other job ads by twice between January and mid-April. 

In fact, the UK fintech sector has become one of the largest solutions providers during the pandemic crisis. Right from providing online payment plans to data and network security, the demand for tech services has gone up exponentially. 

Pharmaceuticals

Many of the UK pharma companies have done well throughout the pandemic. Top British pharma companies like AstraZeneca and GlaxoSmithKline are on the forefront of vaccine research initiatives for the coronavirus.  

Some other pharma companies have supplied necessary medicines to the National Health Service, UK, to support the government. The sector has performed well and is expected do well as the British and foreign governments are pouring funds for research for new medication. 

The online retailing

Online retailing has seen a meteoric rise in 2020 as people are staying indoors and shopping online.

(Source: Office for National Statistics, UK)

The proportion of online retail reached 10 per cent for the first time in November 2011 and doubled it in November 2017. After that, the proportion of online retail sales to total retail sales has been seeing a meteoric rise, crossing 33 per cent in June 2020. 

The massive shift of consumer preferences from physical shop floor to online retailing over a period of just a few months did not give the former companies an adequate time to adapt, leading to a significant loss. While the traditional shop floor retail businesses contracted, the online businesses made investment to expand their operations.

Stocks in focus

AstraZeneca plc (LON: AZN) - The company is preparing one of the world’s leading COVID-19 experimental vaccines along with the Oxford University.

Source- Thomson Reuters

As on 28 October, the shares of AstraZeneca plc were trading at GBX 7880.00 per share, losing 2.35 per cent over the previous day’s close.

Hikma Pharmaceuticals plc (LON: HIK) - Throughout the pandemic, Hikma’s injectable division has seen a double-digit growth as there was an increased demand for its products in EU and the US for treating coronavirus patients.

Source- Thomson Reuters

As on 28 October, the shares of Hikma Pharma closed at GBX 2,548.00 per share, losing 2.04 per cent over its previous day’s close.

Vodafone Group plc (LON: VOD) – The British telecom major, Vodafone is also one of the few companies on LSE that has paid dividends in 2020.

Source- Thomson Reuters

As on 28 October, the shares of Vodafone closed trade at GBX 103.06 per share gaining 4.46 per cent over the previous day’s close.

Legal & General Plc (LON: LGEN) – The London-based multinational financial services company provides financial services such as investment management, pensions, annuity and life assurance. The company also declared a dividend during 2020.

Source- Thomson Reuters

On 28 October, the shares of Legal & General plc closed trade at GBX 182.35 per share, losing 2.17 per cent value over its previous day’s close.

GlaxoSmithKline plc (LON: GSK) - British pharma giant GSK and Sanofi, the French pharmaceutical giant, are also developing a vaccine for the coronavirus pandemic. Both the companies are claiming that they would launch the vaccine by 2021.

Source- Thomson Reuters

As on 28 October, the shares of GlaxoSmithKline plc closing trade at GBX 1324.00 per share losing 1.89 per cent over the previous day’s close.