- Royal Mail has outperformed two S&P 500 stocks all the time in the past year
- Other home winners include Gala Bingo owners Anten, NatWest and Glencore.
- Despite strong performance, only 14% of investors favor UK markets
Royal Mail’s bumper 189 percent share price rise in one year comes at the head of a group of Britain’s big hitters who have outperformed most US stocks, but remain largely unaffected by everyday investors.
UK stocks have bounced back somewhat since the start of the year, partly due to vaccine rollouts and a cyclical rally, where companies that push to improve the economy continue to grow.
Data compiled by the DIY investment platform eToro shows that Royal Mail delivered better returns than the two S&P 500 companies at all times. This is due to a massive increase of 189 per cent, as the ongoing lockdown has accelerated parcel deliveries.
Royal Mail has overtaken American tech giants Apple, Microsoft, Netflix and Google’s parent company Alphabet this year
That means it even outperformed high-flying US tech stars: Google parent company Alphabet is up 82 percent, Microsoft is up 41 percent, Apple is up 28 percent and Netflix is up 14 percent over the same period.
But Royal Mail couldn’t quite keep pace with the two bounced US stocks, Signet Jewelers and Capri Holdings.
To highlight how some UK stocks have outperformed US large caps regardless of fashion, eToro created a hypothetical Anglo-American 50 index that includes the top 45 S&P 500 performers and the top five FTSE 100 companies.
Based on share price performance, Entertain, owner of Gala Bingo, is the 15th best performer with over 141 percent returns to shareholders.
Ashted, whose shares have rallied around 125 per cent in the past one year, will be the 21st best performer in the index.
NatWest and Glencore ranked 37th and 38th, giving investors 104 and 100 percent returns, respectively.
Shares of Royal Mail sank after peaking a few years ago, but have risen in pandemic
Despite this strong performance, UK stocks remain largely unpopular among investors who believe other markets can deliver the best returns.
UK dividend stocks jump
UK Equity Income Funds and Trusts have been tipped to bounce back to investors.
They were hit hard by the reduction in dividends in the pandemic, but companies are now rolling back payments or increasing them.
Analysts and managers have said equity earnings are an area that isn’t worth watching — and many companies that pay dividends, such as oil and financial firms, could also benefit from the recovery.
Earnings in the investment world were “severely hit in 2020, with sharper and deeper cuts in dividends than we have seen before in any crisis,” says Simon Gergel, who runs Income Investment Trust Merchants.
But he says that the worst is over. ‘That hit is being matched by an equally sharp recovery, with the 2021 dividend market expected not too far from the 2019 peak.’
Read more: It’s time to reinvest for income
A survey of 6,000 retail investors conducted by eToro revealed that only 14 percent of investors say UK stocks present the best buying opportunities.
This compares to 39 per cent of investors who support the US markets, followed by about 38 per cent who see Europe as the best buying opportunity.
China came third with 24 per cent, despite concerns over recent government interference in the markets.
Ben Ladler, Global Markets Strategist at eToro, said: ‘If investors should take anything from our research, it is that they should not take a general, broad-brush approach to stock-picking.
‘Discounting a firm simply because it is headquartered in the UK – or any other market currently considered to be slow-growing – increases the chance that you will miss out on the companies that deliver the best returns.’
It is perhaps not surprising that UK stocks are unpopular among investors. London’s Blue Chip Index has fallen more than 3 per cent in the past three years, although it has done well this year. In comparison, the Dow Jones and the S&P 500 have gained 32 and 53 per cent, respectively.
But UK shares look better valued, eToro says. US large caps have an average price-earnings ratio of 22 and are trading at an 80 percent valuation premium to their UK peers, who have a price-earnings ratio of 12.
As the economy begins to recover, there will be some London-listed firms poised to profit and investors who are away from the market entirely may miss out on some of the top returns.
“While the FTSE 100 doesn’t include many of the great tech stocks that have made the S&P 500 so popular with investors over the past decade, it does include a number of firms that are likely to do well as economies grow,” Ladler said. recovering from coronovirus. .
“There will be a huge demand for products and services from miners, banks and oil companies – who make up a large portion of the FTSE 100 – as shackles are freed from major economies.”
“Therefore, we could see a reversal of fortunes for the leading UK index in the coming months – and with it a change in outlook towards the FTSE 100.”
|company||Country||one year performance|
|bath & Body Works||we||169%|