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June is a good time to look back at what has and hasn't worked in our portfolios during the first half of the year. A quick glance at the FTSE winners and losers over this period suggests a disparate bunch of names. #
On the winners’ side, we have everything from gambling stocks and hotels, to jet engine companies; while on the losing side we have online food retailer Ocado, lumped in with a bunch of energy companies.
Confused? I certainly was when I first looked at that list, but a deeper delve reveals there are a couple of overarching themes that explain many of these share price movements.
First, the customer is king. High inflation and weak economic growth have meant consumers are thinking hard about where to spend their money. The answer, mostly, has been on experiences over things, with people trying to brighten up their week, or year, with a meal out, a weekend away, or even a trip to the bookies. Companies that offer budget-friendly hospitality and entertainment stand out here.
Whitbread, owner of Premier Inn, and Mitchells & Butlers, owner of restaurant chains such as Harvester, are just two of the names on the list that have been beneficiaries of this more focused consumer spending, with the former seeing its share price rise by more than a quarter over the last six months, and the latter rising by almost 50%. This is despite recessionary fears being alive and well in the UK.
On the flip side of these new, more experience-focused consumer spending habits, is Ocado, where cash-strapped consumers have been cutting back as discount grocers gained market share. Although client numbers are actually up over the period, Ocado.com users are buying less of its higher-end groceries and trading down to cheaper items. This trend has depressed Ocado's revenue and ultimately its share price, so much so that the stock was almost demoted from the FTSE 100 last week.
Meanwhile, the key dynamic shaping the list of underperformers is the normalization of energy prices. Energy costs had sykrocketed in the first year of war in Ukraine, buoying oil majors such as Anglo American and explorers such as Capricorn Energy. Fast forward to a year later, the world has largely adjusted. Both crude oil and natural gas prices have returned to pre-war levels, deflating the latest energy stock rally.
Over the last six months only four stocks across the FTSE 100 and 250 have actually seen negative share price movements, and of these four, three of them are energy firms.
