Global indices have recovered some of their value over the last two weeks. But they are still far below where they were when the coronavirus crisis kicked off.
By sharp contrast, the valuations of some UK companies have bounced to such an extent that March appears as a mere blip on their respective charts.
Here are three examples that caught my eye.
Pets at Home
Due to “exceptional levels of demand” from pet owners over the last few weeks, retailer Pets at Home (LSE: PETS) has outperformed. Underlying pre-tax profit for the full year is expected to come in “slightly above the top end of the range of current market expectations.” As such, it’s probably no surprise its share price has galloped back to where it was only a few weeks ago.
Can this positive momentum continue? It’s a tricky one. Having already closed its grooming salons, Pets now expects lower revenue from its vet practices and stores as people only make a trip if absolutely necessary.
Given the company has reported customers “pulling forward purchases,” you have to consider the possibility many owners have already stockpiled enough food for their furry friends should the lockdown be extended.
With no guidance for the next financial year issued, it’s understandable if prospective investors are still reluctant to buy. Nevertheless, the defensive nature of its industry surely makes Pets a far safer bet than other stocks in the FTSE 250.
Online trading provider CMC Markets (LSE: CMCX) is another firm that’s seen its share price recover. Actually, that’s something of an understatement. It’s now higher than before the coronavirus pandemic struck.
This all feels very logical, given CMC benefits from periods of market volatility. Indeed, recent numbers suggest business is booming. More clients are signing up to use its platform (or logging back in). So the small-cap now expects full-year trading revenue from its main CFD business to be around £214m. This is almost double what it generated in FY19.
Markets are likely to remain jittery for the foreseeable future. But I think those buying now could still make decent gains. Having said it would retain its policy of paying out 50% of post-tax profit to its shareholders, CMC looks a relatively safe bet for income investors too.
Last, but not least, we have antibody developer and supplier Bioventix (LSE: BVXP). While unrelated to the current crisis, last week’s set of interim results helped explain why its share price has now returned to levels seen in February.
Revenue and pre-tax profit jumped 21% and 31% respectively over the six months to the end of December. In addition to this, Bioventix saw fit to raise its interim dividend by a cracking 20%, to 36p per share.
The near-term outlook was also reassuring. A reduction in some diagnostic testing might impact earnings. But Bioventix expects to continue supplying antibodies to customers in countries affected by Covid-19. This makes sense given that healthcare services have now been prioritised.
The only slight concern for me is the company’s small workforce (16 people). This could become stretched if government guidelines on how companies should operate are modified.