Most of us enjoy a regular tipple, it’s safe to say. Our need for a stress-relieving drink or two is particularly strong during worrying times, of course. It’s a phenomenon that Naked Wines’ (LSE: WINE) most recent financials illustrated perfectly around the top of the month as Covid-19 drove drinks sales through the roof.
Booming demand for its reds and whites up to early April could have been put down to stockpiling as Britons feared a disruption to supply chains. Back then, Naked Wines said that full-year revenue for the financial year (to March 2020) would ring in at an estimate-bashing £200m.
Data from the Office for National Statistics on Friday, however, shows that booze has continued to fly off the shelves. Apparently, alcohol volumes sold via off licences have ballooned 31.4% in April, it says. This follows news of soaring sales in supermarkets too, and suggests that Naked Wines has got the new financial year off to a flyer.
Speaking of which, City analysts expect the AIM-quoted company to bounce back into the black in this fiscal period. A forward price-to-earnings (P/E) ratio of 132.7 times is expensive on paper, sure. But that isn’t stopping the share price from continuing to surge. It’s up another 9% in Friday business and trading at fresh 17-month peaks of 345p.
Thriving despite Covid-19
IG Group Holdings (LSE: IGG) is another firm performing resolutely despite the Covid-19 outbreak. In fact, it has been a beneficiary of the social, economic and political turmoil thrown up by the pandemic. Fragile investor confidence, and the subsequent uptick in financial market volatility, is supercharging trading volumes at the derivatives giant.
A bubbly trading update on Friday, in fact, shoved IG Group’s share price to its most expensive for a year-and-a-half, above 740p. The FTSE 250 firm has advised that “financial market volatility has been sustained at exceptionally high levels since the last week of February 2020.”
With client transaction fees driving revenues, IG Group said that turnover during the first 36 trading days of the fourth fiscal quarter stood at £173m. This compares with the £139.8m it generated in the whole of the three months to February.
6% dividend yields!
City brokers are expecting annual earnings to have risen 16% in the fiscal period to May 2020. They expect them to recede 9% in financial 2021 though. But on the back of recent trading — and the likelihood that financial markets will remain volatile for some time yet — these are figures I expect to be significantly upgraded in the weeks and months ahead. IG Group currently trades on an undemanding forward P/E ratio of 14.8 times and this gives it plenty of scope for further share price gains.
A final, but quite important, thing about the business. City analysts are expecting the annual dividend to remain locked at around 43.2p per share for the next two fiscal periods. But on the plus side, this still leaves IG Group boasting a mighty 6% dividend yield. It’s a particularly pleasing figure given the steady stream of dividend cuts that UK share investors are having to endure.
