The FTSE 100 index ended April at its highest level since March 23 and finished the month up about 8%. In the final days of the month, it even managed to go over 6,000. However, as I write, it is hovering around 5,800. Many investors would find this recent move up quite encouraging especially when you consider that March 2020 was a month to forget.
Today I’d like to highlight several companies that did heavy lifting for the FTSE 100 in April. Long-term investors may want to conduct further due diligence to see if they might belong in their portfolios.
Follow the consumer
Seasoned investors know that consumer staples stocks are defensive shares. Many in the City are now warning that we may be in for a deep global recession. If you also agree that our economy is going to be weak, then you may want to diversify your portfolio to include non-cyclical consumer shares. It is fairly safe to assume that the movements of the economy have little impact on their business models.
Thus I would consider putting the consumer at the centre of your investing strategy. For most of us, daily outings are still limited to going to food stores and pharmacists, as well as some outside exercise. And shopping mostly for essentials is likely to continue in the near future.
In April, we have seen the share prices of several consumer stocks do better than others. They include these shares.
AstraZeneca – up 8% in April, also up 7.5% year-to-date (YTD)
British American Tobacco – up 8% in April, but down 3% YTD
Coca Cola HBC – up 19% in April, but down 21% YTD
Diageo – up 11.5% in April, but down 13.5% YTD
Reckitt Benckiser – up 8.5% in April, up 6.5% year-to-date
Tesco – up 5% in April, but down 5.5% YTD
How did financials fare in April?
Many feel investing in UK-based banks and insurers takes courage right now. Amid the stock market carnage, these shares have dived in the first quarter of 2020.
And as of April, they have had to axe their dividends and suspend their share buy-backs. Obviously this has been an important development for many investors, especially those who rely on passive dividend income.
If you believe that the current market rally looks sustainable, then you may want to put financials on your research list. Successful investing requires buying shares that are likely to offer value in the long run.
These financial sector stocks have already seen their prices go up in the past two weeks.
Admiral Group – up 3.5% in April, also up 1% YTD
Legal & General – up 19% in April, but down 28% YTD
Prudential – up 19% in April, but down 19% YTD
Royal Bank of Scotland – up 3% in April, but down 50% YTD
Schroders – up 13% in April, but down 15.5% YTD
Other FTSE winners in April
What we experienced in February and March was broad-based selling. Therefore a large number of high-quality businesses are now available at discounted valuations. Here are six other businesses that the market bought in April.
BHP – up 10.5% in April, but down 25% YTD
DS Smith – up 17.5% in April, but down 15.5% YTD
Hargreaves Lansdown – up 8.5% in April, but down 14.5% YTD
Johnson Matthey – up 14.5% in April, but down 33.5% YTD
London Stock Exchange – up 8% in April, but down 3% YTD
Smith & Nephew – up 11.5% in April, but down 14% YTD
As always, don’t regard these names as formal buy recommendations. Instead, view them as a starting point for more research.
