One year ago, Boris Johnson ordered Britons to stay home and directed various businesses to close. This lockdown followed rapid increases in Covid-19 infections. One year on, the UK looks very different. Last year saw the worst fall in UK economic output in three centuries. Output collapsed by almost a tenth (9.9%) as lockdown restrictions hit spending and investment, while unemployment soared. But government support packages exceeding £350bn prevented total economic collapse. Meanwhile, the FTSE 100 index suffered one of its steepest and fastest crashes ever.
The FTSE 100 crashes and then bounces back
On 31 December 2019, the FTSE 100 ended the year at 7,587.1 points. However, as Covid-19 spread worldwide, the Footsie began to plummet. By ‘Meltdown Monday’ (23 March 2020), our main market index was in freefall. Exactly a year ago, it fell to a low of 4,922.8, before closing at 4,993.9. In less that three months, it lost over 2,600 points — more than a third (34.2%). Ouch!
As I write, the FTSE 100 stands at 6,713 points, up almost 1,720 points since Meltdown Monday. In hindsight, Meltdown Monday was a ‘once in a decade’ opportunity to buy cheap shares. Because of admin delays, I couldn’t invest at the very bottom. Still, within days of this trough, my wife and I had moved 50% of our wealth from cash into US-dominated equities. Today, the US S&P 500 index is up more than three-quarters (76.1%) from its March 2020 low, generating bumper returns for our family portfolio.
These five shares badly lagged the Footsie
But what about shares that didn’t do so well? Of the 101 FTSE 100 shares, 93 are up over one year. But eight stocks have lost value since Meltdown Monday. Some have lost very little overall, while others are down in double-digits. Here are all eight FTSE 100 losers since 23 March 2020:
Severn Trent (Water utility) -0.3%
Morrison (Wm) Supermarkets (Supermarket) -2.7%
Unilever (Consumer goods) -2.8%
National Grid (Electricity & gas utility) -3.5%
Pennon Group (Water utility) -6%
Rolls-Royce Holdings (Aero-engine maker) -9.3%
GlaxoSmithKline (Pharmaceuticals) -10.1%
HSBC Holdings (Bank) -15%
I’d buy three losers today
Let’s start with the glaringly obvious. This list includes three utility stocks: Severn Trent, National Grid, and Pennon Group. These shares didn’t bounce back as hard as the wider market because they didn’t plunge so steeply beforehand. Utility stocks are supposed to be boring and less volatile, so I guess these three FTSE 100 shares performed much as expected.
As for the five remaining losers, Unilever enjoyed a great sales boost last year, but its cheap shares are more than a sixth (17.3%) off their 2020 high. I’d happily buy them today for my income portfolio. Morrisons also thrived, but the extra costs of Covid-19 control crimped profits harder than expected. With air miles flown being decimated, Rolls-Royce had an annus horribilis. The engineer only survived by raising billions through bond and share sales. RR is definitely off my buy list for now.
As for the final two losers, GSK is my biggest personal shareholding. Alas, its ranking at #100/101 in the FTSE 100 over the past year has cost my family a hefty sum. But I still see the GSK share price as too low, so I keep buying for the future. Likewise, I see global bank HSBC as likely to benefit from any vaccine-fuelled recovery in late 2021/22, so I’ve added it to my watchlist today.
