November stocks: Top 5 UK outperformers/underperformers
17:30, 30 November 2021
November has been a very turbulent month for UK and global stock markets, with a number of major events such as interest rate decisions by the Bank of England, the European Central Bank and the US Federal Reserve. With UK inflation touching a 10-year high and eurozone inflation following suit with multi-year highs as well, investors have been getting increasingly jittery about what the rest of the year could bring.
Speculations of the Bank of England increasing rates in December to quell inflation are still active, with investors anticipating a more hawkish stance from next month.
Airline, energy and travel stocks have suffered the most, with the ongoing supply chain and energy crisis still not resolved. The Covid-19 variant, dubbed Omicron, discovered recently has also brought whatever recovery was achieved so far to a screeching halt, as investors mull the uncertainty surrounding financial markets.
While scientists race to determine how contagious the Omicron may be, investors are trying to assess its impact on markets in the short and medium term.
Top 5 UK outperformers
Auto Trader Group
Auto Trader Group had a very strong month, delighting investors with pre-tax profits for the first half of the year, which surged over 127%, to touch £150m ($199.2m) in revenue. The group also gained considerable goodwill and raised investor confidence by subsidising all of its dealers who could not operate their dealerships due to the pandemic. A number of new customer discounts related to the virus also saw a marked gain in the number of retailers which used their platform for advertising.
Royal Mail announced £400m as a payout to investors as their parcel business grew exponentially during the pandemic. Its pretax profits jumped to £315m up from £17m, whereas revenues gained 7.1% to £6.1bn. A half-year dividend of £67m was also announced on the back of lower restructuring and pandemic associated costs.
BT Group had a busy month with some major reconstruction plans as the group built a new global office, which will serve as its headquarters in London. This new building, named One Braham is expected to change the way BT teams work and facilitate more agile, forward-looking work. BT is also working on building the biggest fibre broadband network in Britain. Reports of takeover interest by India’s Reliance Industries also contributed to shares rallying.
Testing and inspection group Intertek Group recently became one of November’s top performers after it announced that it was on track to achieve its full-year targets. This bolstered investor confidence significantly, especially as the group recently acquired SAI Global Assurance, which was a costly move.
Software group Sage Group has consistently done well this month, with a growth forecast of 8% to 9%, after investing significantly in their new cloud offer platform. This move has caused shares to rise, as this will increase the group’s capacity considerably. The cloud platform will allow them to expand their client base from small and medium payroll software customers to larger construction or real-estate clients, thus opening up a whole new market.
Top 5 UK underperformers
Flutter Entertainment shares fell this month after the bookmaking company readjusted its profit and earnings targets from between £1.27m and £1.37m to between £1.24m and £1.28m. This was due to Liverpool’s recent win against Manchester United, as well heavyweight boxing champion Tyson Fury’s latest win, which resulted in more payouts and a reduction in profit margin.
Chemicals company Johnson Matthey saw its shares fall after announcing that it was exiting the battery making business and selling its battery materials arm due to too much competition. The company also announced that its CEO would be leaving the company the following year. However, investors found a silver lining toward the end of the month, as Tata Chemicals entered talks with the company to buy out the battery business.
International Airlines Group
International Airlines Group shares dipped in November following its threats to reduce Heathrow flights after the airport was reported to be considering a hike in charges. This 50% increase in charges would cut significantly into the company’s revenues when demand and profits are still struggling under the weight of the pandemic. The discovery of the new Omicron variant and the swift travel bans by a variety of countries following it have also hit the company hard and are expected to continue having an effect in the last quarter of the year.
Low-cost air carrier EasyJet, already suffering during the pandemic, has come under fire in November after shares inched lower following increased charges on hand luggage. This has been made worse by a price war in the German domestic market as well as demand dipping sharply after the Omicron discovery.
Like most travel stocks, Tui also struggled with news of the new variant, with a lot of travelers cancelling their trips and asking for refunds. Deutsche Bank in a note suggested that TUI was most at risk from the Omicron variant, as travel restrictions tighten in several European countries, such as Austria, Germany and Denmark, as well as the UK.
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