March was a brutal month for many shareholders. Yet broader markets have been somewhat calmer in the first half of April. Not only the UK government but also many other countries have been providing liquidity and financial support to businesses and individuals. The aim is to alleviate the damaging effects of the lockdown on the economy. As a result, many FTSE 100 shares are beginning to stabilise and even inch up.
Therefore, today I’d like to highlight several companies whose stock prices have increased so far in April. Long-term investors may want to do further due diligence to see if they could belong in their portfolios.
Investing with consumers
Analysts are warning that we may be in for a deep global recession. If you also agree that our economy is contracting, then you may want to diversify your portfolio. Investing in certain industries and stocks may prove to be a wise decision during economic downturns.
For example, you may put the consumer in the centre of your investing strategy. After all, we all have to buy basic daily essentials.
In April, we have seen the share prices of several providers of such basics do better than others. They include
Associated British Foods – up 10% so far this month, but still down 23% year-to-date (YTD)
British American Tobacco – up 9% this month, but down 7% YTD
Diageo – up 1.5% this month, but down 18% YTD
Unilever – up 1% this month, but down 5% YTD
Will the financial sector stabilise?
Many feel investing in UK-based bank and insurers takes courage right now. Amid the stock market carnage, these shares have dived.
And, as of April, they have had to axe their dividends and suspend their share buybacks. Obviously this has been an important development for many investors, especially those who rely on passive dividend income.
So what can current, or potential, financial sector investors do now? Are these businesses worth buying?
Investors need to answer this question in light of their risk/return profiles. But I’d like to highlight that markets always look forward. Successful investing requires buying shares that are likely to offer value in the long run.
These financial sector stocks have already seen their prices go up in the past two weeks:
Barclays – up 3.5% so far this month, but still down 45% YTD
LLoyds – up 4% this month, but down 46% YTD
Prudential – up 1% this month, but down 27% YTD
Royal Bank of Scotland – up 1.5% this month, but down 52% YTD
Other winners in April
What we have experienced in the past two months was a broad-based selling. Therefore a large number of high-quality businesses are now available at discounted valuations. Here are five other businesses that the market is buying in April:
Anglo American – up 3% so far this month, but still down 33% YTD
Aveva – up 2.5% this month, but down 23% YTD
BAE Systems – up 3% this month, but down 5% YTD
BHP – up 5% so month, but down 26% YTD
BT – up 6.5% this month, but down 35% YTD
Smith & Nephew – up 7% this month, but down 16% YTD
As always, don’t regard these names as formal buy recommendations. Instead, view them as a starting point for more research.
