What a difference a few months can make. Talk of slowing global growth, imminent recessions and a disorganised EU exit had many market participants running for cover (and the safety of cash) back in December.
Since the beginning of 2019, however, confidence has returned in spades. Just look at the FTSE 100 — up 10%.
That said, this performance pales in comparison to the gains achieved by some individual stocks over the last few months.
In fine form
Down 28% between last September to the end of January, it’s fair to say that shares in online financial services provider Hargreaves Lansdown (LSE: HL) were firmly out of favour with investors a while back.
Since then, the very same stock has climbed 39% in value — a seriously big bounce for such a large company and no doubt helped by the aforementioned resumption of bullishness in the market.
Such falls and subsequent recoveries are perhaps to be expected. Meanwhile, the company keeps adding to customer numbers, rapidly raising its dividends and generating consistently high returns on capital employed. The latter, in particular, is something that at least one of the very best fund managers in the UK looks for when searching for quality businesses.
Another company whose shares have rocketed back to form has been mid-cap identity data intelligence specialist GB Group (LSE: GBG).
Between mid-February and the end of last week, the stock has gained a massive 42% in value.
This month’s trading statement will have only served to further raise the profile of the company among retail investors.
Total revenue for the full year (which ended on 31 March) has been calculated at £143.3m — up almost 20% on the previous year and ahead of what the market was expecting.
At £31.7m, adjusted operating profit is up by a similar percentage and, again, ahead of what analysts had predicted. Numbers will be confirmed in early June.
GBG is now valued at almost £1.2bn, making it one of the larger stocks in the junior Alternative Investment Market (AIM).
It might not grow at the same rate going forward but the future certainly looks positive for existing holders.
At a time when most retailers are struggling, sports and outdoor brands purveyor JD Sports Fashion (LSE: JD) has bucked the trend.
Superb full-year numbers earlier this month — including a 15.4% rise in pre-tax profit to just under £340m — show just how far ahead of its high street peers JD is performing.
At the beginning of the year, the shares were trading at 355p. They were at 612p before markets opened this morning — a fantastic gain of 72%. Another classic example of when searching for gold in hated sectors can really pay off.
With the acquisition of US firm Finish Line off to a great start and the purchase of battered footwear seller Footasylum seemingly welcomed by investors, JD can do little wrong right now.
The only drawback
So, three solid businesses whose share prices are all enjoying a purple patch. What’s not to like?
Not much in my opinion, apart from the valuations.
Unfortunately, their recent run of good form means that Hargreaves, GB Group and JD all now trade on high earnings multiples relative to industry peers and the market as a whole (forecast P/Es of 44, 40 and 19 respectively).
Buying now arguably carries more risk. Can we rewind a few months, please?
