The UK’s best-performing shares during the pandemic

Massive profits were made calling the bottom of the Covid crash. These were the stocks to buy.

Investors who bought shares on the day the UK went into its first Covid-19 lockdown have gains as high as 558% to show for their success calling the tipping point in the stock market.

Boris Johnson's stay-at-home order turned out to be precisely when the FTSE 100 index began its recovery. However, with companies withdrawing financial guidance and focusing solely on conserving cash, it would have been a brave punter who bought shares on 23 March 2020.

Combating the spread of coronavirus meant most corporate profits could only worsen in the near term but, having seen the FTSE 100 index dive to below 5,000, many analysts reckoned that the mammoth policy response in monetary and fiscal terms would soon restore calm.

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Analysts at Morgan Stanley called it right a year ago today when they said that “we think we are probably close to peak uncertainty right now”, adding that the risk-reward balance for long-term investors appeared attractive.

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And so it proved, with the FTSE 100 recovering to 6,470 by June and 6,712 today as a host of stocks also benefited from some unique trends created by the pandemic.

This was particularly the case for gambling companies, who overcame initial betting shop closures and cancelled sporting fixtures to benefit hugely from a surge in online gaming.

The improvement was accompanied by further US-driven consolidation in the sector, making Ladbrokes owner Entain (LSE:ENT) the best performing FTSE 100 index stock over the past year with a 342% rise. Flutter Entertainment (LSE:FLTR) was 166% higher, while William Hill (LSE:WMH) led the way in the FTSE 250 index with a 558% jump after it backed a takeover by Caesars Entertainment.

AO World (LSE:AO.) wasn't far behind — up 541% — as the closure of rival bricks-and-mortar stores enabled the online household goods retailer to build a wider customer base. Halfords (LSE:HFD) benefited from the staycation surge in cycling during the lockdown as shares rose 534%, and Premier Foods (LSE:PFD) gained 372% after transforming its balance sheet on the back of a home cooking boom.

FTSE All-Share’s best-performing stocks during the pandemic

Source: SharePad. Share price performance as at close on 22 March 2021

The logistics sector's biggest winners included Royal Mail (LSE:RMG), with record levels of parcels business helping the popular retail stock to rally 265%. It traded above 500p for the first time since May 2018.

Other recoveries in the FTSE All-Share index were more surprising, not least the 340% turnaround for bank note printer De La Rue (LSE:DLAR) at a time of much-reduced cash use. The company has continued its progress under Clive Vacher, aided by strong demand for polymer banknotes as well as tobacco stamp products in its authentication division.

In the FTSE 100 index, mining companies have been among the biggest risers of the past year as the economic recovery fuels hopes for the start of a new commodities supercycle. Copper stocks were particularly popular, with Chile's Antofagasta (LSE:ANTO) up 178%, Anglo American (LSE:AAL) ahead 155% and Glencore (LSE:GLEN) 148% higher on the back of the metal's role in the low carbon transition.

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FTSE 100’s best-performing stocks during the pandemic

Source: SharePad. Share price performance as at close on 22 March 2021

Among the hardest hit blue-chip stocks in the pandemic sell-off, InterContinental Hotels (LSE:IHG) has almost recovered all the lost ground after rallying 92% in the past year. GKN owner Melrose Industries (LSE:MRO) is still only halfway there, despite a 95% rise, and Rolls-Royce (LSE:RR.) has seen no recovery at all as uncertainty about the outlook for engine flying hours continues to deter investors.

Only three other stocks failed to benefit from the rebound in the FTSE 100 index, with heavyweights GlaxoSmithKline (LSE:GSK) down 5%, HSBC (LSE:HSBA) 13% lower and Tesco (LSE:TSCO) off 15% despite an initial boost as customers stockpiled household goods at the start of the lockdown.

BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) also remain sharply lower than where they were prior to the pandemic, having hit income investors with dividend cuts to reflect the pain of sharply lower oil prices and significantly reduced demand. The pair have risen 20% and 32% in the past year, with most of this progress coming since the discovery of vaccines in November.

Lloyds Banking Group (LSE:LLOY) shares were as low as 24p in September, but with the threat of negative interest rates now receding, the stock is 34% higher over the past year. There's also been a tentative recovery for BT Group (LSE:BT.A), which is 24% higher in a year when sentiment was initially shaken by the decision to pull the dividend for the first time since privatisation in 1984.

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