Stock market winners and losers in 2018

Russ Mould
10 December 2018

•    Just 27 FTSE 100 companies deliver a gain
•    Worst performer was British American Tobacco – sitting on a 43% loss
•    Online delivery service Ocado up 105%

Russ Mould, investment director at AJ Bell, comments:
“On a total return basis, fewer than a third of the FTSE 100 delivered a positive return in 2018, a year that proved tricky for UK investors. The FTSE 100 overall is down 11% in price terms in the year to 7 December 2018.”

Rank

Name

Market Cap

Sector

Total return*

1

Ocado Group PLC

£5.5bn

Food & Drug Retailers

105.0%

2

Evraz PLC

£7.1bn

Industrial Metals & Mining

58.8%

3

Sainsbury (J) PLC

£6.6bn

Food & Drug Retailers

28.6%

4

Pearson PLC

£7.2bn

Media

26.6%

5

AstraZeneca PLC

£77.3bn

Pharmaceuticals & Biotechnology

20.1%

6

Smith & Nephew PLC

£13.2bn

Health Care Equipment & Services

18.9%

7

Experian PLC

£17.2bn

Support Services

18.5%

8

Shire

£41.2bn

Pharmaceuticals & Biotechnology

17.2%

9

Whitbread PLC

£8.3bn

Travel & Leisure

16.4%

10

Bunzl PLC

£7.7bn

Support Services

14.9%

 

100

British American Tobacco PLC

£61.4bn

Tobacco

-43.1%

99

Fresnillo PLC

£5.8bn

Mining

-42.1%

98

Standard Life Aberdeen PLC

£5.9bn

Financial Services

-38.7%

97

Micro Focus International PLC

£6.2bn

Software & Computer Services

-38.3%

96

WPP Group PLC

£10.2bn

Media

-34.5%

95

DS Smith PLC

£4.2bn

General Industrials

-32.3%

94

Kingfisher PLC

£4.9bn

General Retailers

-30.3%

93

Schroders PLC

£6.5bn

Financial Services

-29.1%

92

Just Eat PLC

£3.7bn

General Retailers

-29.0%

91

Taylor Wimpey PLC

£4.3bn

Household Goods & Home Construction

-28.3%

Source: Sharepad/AJ Bell. *Total return from 2/1/18 to 7/12/18

Top Performers
“Online grocery delivery service Ocado was the best performer in the FTSE 100, as the firm began to persuade investors that it was indeed really a software and technology play, rather than a marginally-profitable delivery firm. The company signed more licensing deals for its Ocado Solutions technology and the shares roared higher, helped by a massive ‘bear squeeze,’ as short-sellers of the stock gave up betting on its shares going down over the summer. They scrambled to buy stock to cover their short positions, driving the share price to new highs. However, Ocado has drifted lower by quite some way from its highs.

Pearson is up 26.6% in the year, having appeared to recover from a tumultuous 2017, which was mired with multiple profit-warnings and a dividend cut. Boss John Fallon aimed to convince investors that the problems were due to the American academic textbook market, rather than a longer-term structural decline in the business. A cost-cutting programme helped to convince investors that the future looks brighter, as did the lack of any further profit warnings.

“Corporate activity was key to boosting some companies’ share prices, and Sainsbury’s proved popular as investors warmed to its planned merger with Asda, even if the deal has yet to receive regulatory clearance. Whitbread announced plans to break itself up and then sold Costa Coffee to Coca-Cola, leaving itself with the Premier Inn hotel chain, while drug developer Shire became the target of a bid approach from Takeda.

“Pharmaceutical companies AstraZeneca and GlaxoSmithKline also rose through the ranks as analysts began to warm to AstraZeneca’s drug pipeline in particular.”

Bottom performers
“Doubts over two more major transactions also had a role to play in shaping the list of the FTSE 100’s worst performers, as investors pondered whether the merger with Aberdeen Asset Management and a decision to focus on asset management rather than insurance was the right thing to go for Standard Life Aberdeen.

British American Tobacco’s £42 billion acquisition of Reynolds American in 2017 also came in for fresh scrutiny, as regulatory pressure prompted fresh declines in US and global cigarette volumes and sales of next-generation products proved disappointing, notably in Japan.

“Everyone will have read about WPP’s woes this year, after chief executive officer Sir Martin Sorrell left under a cloud, following nearly 33 years at the helm. The rumours of a scandal scared shareholders, and new boss Mark Read was handed the unenviable first task of issuing a profit warning. Read has begun his attempts to win investors over, with the planned sale of the Kantar market research firm – a move many had previously suggested. However, he has a long way to go to convince shareholders of a turnaround.

“Mexican silver miner Fresnillo languished as the precious metal’s price fell by some 15% during 2018 to $14.50 an ounce, its lowest level since 2016. In addition, investors fretted about the possible impact of Mexico’s new, left-leaning President, Andres Manuel Lopez Obrador, who launched a review of the country’s tax and regulatory treatment of the mining industry as 2018 drew to a close.”

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