One year on, some of the lockdown winners will surprise you

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Cast your mind back a year. Complacency about the coronavirus (COVID-19) virus being a Chinese problem was being replaced by panic as people realised it was everyone’s problem.

That sense of panic spread to the stock market; between February 15 and March 14 – the day after Valentine’s Day and the day before the ides of March if you are looking for symbolism – the FTSE 350 fell from 4,182 to 2,875, which is a fall of 31%.

Be greedy when others are fearful and fearful when others are greedy is a well-known investment adage and if you had the chutzpah or cojones to dive into the market a year ago, good on you; the FTSE has rallied to 3,830 – almost exactly a third higher than its March 14, 2020, low point.

Some of the winners over that period are easy to explain and others, not so much.

The easy to explain winners

William Hill PLC (LON:WMH), up 641%, is the best FTSE 350 performer, reflecting the agreed bid from Caesar’s Entertainment.

Some other online gambling plays also did well, such as Entain PLC (LON:ENT), up 380%; 888 Holdings PLC (LON:888), up 339%, and Playtech PLC (LON:PTEC), up 209%.

The liberalisation of sports betting in the US and expectations of further consolidation in the sector have all driven share price growth, plus it is possible many of us have been gambling like lunatics online during lockdown to alleviate boredom.

CMC Markets PLC (LON:CMC) probably won’t thank me for lumping the stock in with the bookies but its 244% gain is hard to ignore.

Contracts for difference trading platform operators love volatility so it is small wonder CMC has done well but how do you explain its outperformance compared to its rival, IG Group Holdings (LON:IGG), which is up a comparatively measly 50%?

If we’re betting or trading online incessantly, we’re also still baking a lot and stuffing our faces judging by Premier Foods PLC’s (LON:PREM) 429% gain.

Interestingly, Premier still only trades on a price/earnings ratio (PER) of 11.2 based on its last 12 months to earnings and that PER falls to 9.9 if you put faith in brokers’ earnings projections for the current 12 months.

The nation must need a strict diet – check out gymnasium shares now – given that not only have we apparently been gorging on Mr Kipling’s finest, we’ve not been toddling down to the shops, relying instead on Royal Mail Group PLC (LON:RMG) – up 249% – to deliver goods to our door.

For the same reason, online white goods seller AO World PLC (LON:AO.) has had a good pandemic, with the shares up 410%.

I can see the nation pulling back on its consumption of Bakewell tarts but the trend towards shopping online looks irreversible.

The head-scratchers among the winners

In the colour me puzzled section we have pubs group Mitchells & Butlers PLC (LON:MAB), up 209% over the last year.

The last time I checked it was not possible to get the full pub experience online and according to that nice Mr Martin at JD Wetherspoon PLC (LON:JDW), the government is hell-bent on killing off all of Britain’s pubs, presumably so the plots can be bought up on the cheap by its mates in the housebuilding sector.

To explain (partially at least) M&B’s eye-catching recovery over the last year you have to go back a bit further to that fateful date of February 15, when the shares were trading at 376p; a month later they were languishing at around 109p as it did not take traders long to work out that “lock-ins” = good for pubs, “lockdowns” = bad.

So, although the shares are now bobbing along fairly nicely at 309.5p, they have still not recovered to February 2020 levels but then neither has the company gone bust, and that looked a possibility even in the good times.

If pubs have had a hard time, think of the poor old bus companies, as the trend towards working from home has not only hit passenger numbers over the last year but is likely to put a permanent dent in the bus companies prospects.

The situation appears to be a bit different for coaches operator National Express Group PLC (LON:NEX), however, which has seen its shares triple over the last year.

It started 2020 like a train – if you’ll forgive the expression – but revenue over the whole of 2020 was down 29% while it posted an underlying loss before tax for the year of £106.1mln, compared to a profit the year before.

The company is less reliant on commuters than the bus companies and the prospect of lockdowns ending could see a massive upsurge in summer travel.

That would play well for WH Smith PLC (LON:SMWH), the newsagent chain that has in recent years increasingly focused on its outlets in travel hubs (airports, railway stations, coach depots) at the expense of its High Street estate.

Lockdowns, travel restrictions and Twitter memes about the shoddy nature of many of its shops have not stopped the shares from rising 169% over the last year.

The retailer was cash positive in November and December 2020 and despite the lockdown introduced by the government on January 4 has traded better than expected this year.

The last head-scratchers are cinema chain Cineworld Group PLC (LON:CINE), which is up 123% over the last year, and Carnival PLC (LON:CCL), up 127%.

As with M&B, you have to go back a bit further than one year to put the share price performance of Cineworld and Carnival into perspective.

In mid-February, Cineworld – like M&B massively over-borrowed – was trading at around 182p and it has only rallied to 122p.

As for Carnival, the cruises operator was in many ways the canary in the gold mine, as its collapse started in January 2020, with the shares falling from 3,708p on January 11 to 3,010p by February 15 and then plunging to 614p at the end of March 2020.

The shares have recovered to 1,683.5p but whether the appeal of spending days on end cooped up with people on a floating Petri dish will ever return to previous levels is open to question.

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