The mood music stopped about six months ago on a pre-COVID-19 high (19/02). It pays to group stocks into: a) those which, six months later, outperform their pre-COVID-19 highs, and b) the laggards.
Six months from hell to Central Banks’ sugar rush
There are no less than 104 stocks out of the 456 under coverage that trade above their 19/02 price. Here are essential statistics around this split of the European universe of listed large caps.
In effect, the gainers’ group is 30% dearer on an 11% rise, while its 2020 earnings were trimmed by 19%. Obviously, the 14% loss of European equities over the last six months is the combination of losers losing 21% and gainers adding 11%.
Below are a few extra observations.
The first is the remarkable take-off of these combined 104 stocks post the COVID-19 crash, while this universe was bog standard before the pandemic hit (chart).
If only we had known…
The second observation is that the universe is seriously expensive, at 24.6x next year’s earnings.
This is explained, third observation, by the fact that these are mostly quality names, including on their funding front (see chart). The intriguing counter-intuitive observation is that this universe is rather US$-exposed with 33% of revenues in that weakening currency.
Six-month gainers are mostly quality businesses
Give us the names…
104 is just too many to list but the list is available on request. Just to promote a sense of humility to stock pickers, one will cross the path of a Logitech (+58% and rising), an obvious candidate ex post, of Qiagen (+29%) and not such an obvious call as Thermo Fisher had defined a ceiling, of Mayr Melnhof also an ex post obvious candidate in a fast-rising e-commerce world, of Rio Tinto, Prada, CD Projekt, etc. The striking statistics is that 57 subsectors out of 130 are represented so that in effect there are no preferred sectors. Just individual business stories as long as they are not financials, which are conspicuously absent from this list of gainers.
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