The first quarter of 2020 was turbulent for the FTSE 100. The index shed just over 30% of its value in the depths of the market crash. Only a handful of the best-performing FTSE 100 stocks for this period didn’t sink into the red.
Since then, the FTSE 100 has recovered marginally to now sit 22% down on the year.
Investors will be painfully aware that the outbreak of Covid-19 has caused havoc in the stock market, stimulating a bumper sell-off. As a result, the index slipped into bear territory for the first time in over decade.
While it’s impossible to tell whether the market has bottomed out, I think there are plenty of bargains on offer in the index. Many look like strong buys to me.
Best-performing FTSE 100 stocks of the quarter
Only five FTSE 100 companies recorded a positive performance in the first quarter, with winners being few and far between. The four runners-up were Pennon, Fresnillo, Hikma and Reckitt Benckiser.
Precious metals mining company Polymetal (LSE: POLY) came out on top as the best-performing FTSE 100 stock of the quarter. From the start of the year until the end of the first quarter, the company’s share price increased by 15%.
No doubt a rise in the price of gold has helped the company’s share price, with the commodity seen as a safe-haven asset in times of market uncertainty. But what about the fundamentals of the company itself?
Polymetal released its first quarter production results at the beginning of this week. The report details a solid performance with group CEO Vitaly Nesis stating: “Q1 was a strong start to the year for the Company, delivering steady performance amidst unprecedented global disruption and uncertainty.”
Gold equivalent production grew by 5%, evidently off the back of increased demand, and quarterly revenue rose by 9% year-on-year.
In current market conditions, the 3.04% dividend yield looks attractive to me. What’s more, the company has maintained its dividend pay-out for this year in light of its stable financial position. That’s a rare occurrence in an index where companies have slashed dividend payments left, right and centre, in order to preserve cash.
Responsible business strategy
Polymetal has successfully established its position as a leading precious metals mining group in both Russia and Kazakhstan. The only gold mining company in the FTSE 100 is now the second largest gold producer in Russia.
Moreover, I’m impressed by the company’s impressive record on sustainability. Major initiatives include reducing freshwater usage and carbon footprint in its mines. I also like the look of the group’s growth prospects over the coming years.
Looking ahead, Polymetal plans to continue investing in greenfield exploration to find new deposits in the former Soviet Union, which could be a major driver of growth, depending on success.
What’s more, with operations set to begin in Russia’s fourth largest gold deposit in 2021, the group expects to increase its output substantially by 2023.
So, I’m not buying the best-performing FTSE 100 stock of the first quarter simply because of its impressive share price performance. Rather, I’d invest because of the company’s sustainable business strategy and bright growth prospects could bring healthy returns to investors over the long term.
Matthew Dumigan has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo, Hikma Pharmaceuticals, and Pennon Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.