FTSE 100 and 250 winners and losers of 2023 so far revealed

Markets have not had an easy six months – inflation remains high and the banking system had only just stabilized after the SVB and Credit Suisse crises when US politicians began to worry about debt defaults.

Despite all this, some companies managed to make significant gains over the past six months.

Those in the FTSE 100, the index made up of the 100 largest companies listed in London by market share, saw their share price rise to 73 per cent.

Indeed, on June 1, 2023, the FTSE 100 was at almost exactly the same level as it was at the beginning of the year – at 7,490 points versus 7,451.

While companies in the FTSE 250, the index of the next 250 largest companies by market share, saw increases of up to 72 percent.

The FTSE 250 index is also at almost exactly the same level as at the beginning of the year.

A quick look at the FTSE winners and losers over the past six months suggests a diverse range of names and sectors.

On the winning side, we have everything from gambling stocks and hotels to aircraft engine companies – while on the losing side, we have online food vendor Ocado lumped in with a bunch of energy companies.

We asked experts why these companies performed so well over the past six months and whether this performance could continue.

Biggest winners of the past six months

There are a number of overarching themes that explain the success of the FTSE risers.

Michael Field, Morningstar’s European equity strategist, said: “First, the customer is king.

‘High inflation and weak economic growth make consumers think carefully about where they spend their money. The answer was usually on experiences about things.

Mitchells & Butlers, owner of restaurant chains such as Harvester, is just one name on the list that has benefited from this more focused consumer spending.

Sophie Lund-Yates, principal equity analyst at investment platform Hargreaves Lansdowne, said the recovery in the travel sector also explains the success of companies exposed to this sector.

“This is the first summer season that has been fairly trouble-free since Covid, which has seen airlines Wizz Air and Rolls Royce, which make engines for long-haul jets, gain altitude.”

“The depth of the cuts to Rolls Royce’s valuation is also what has made the recovery so strong and there is an audible sound of relief from investors.”

It is also refreshing to see some retailers performing well in a very difficult period for the industry.

“The market has also been very complimentary towards Marks & Spencer, in response to the group’s well-executed strategy shift,” she added.

As a result, the clothing and food propositions have improved dramatically.

Richard Hunter, head of markets, at interactive investor zoned gambling company Flutter Entertainment up 38 percent over the past six months.

He explained that: “The recent Q1 update in May reported a ‘very strong’ performance in the US. This contributed to the earlier uptick in full-year results, as investor excitement continued to grow around the prospects for Flutter.”

Will this success continue? Says Hunter: “Further on, Flutter estimates the addressable sports betting market will reach more than $40 billion by 2030, more than 4.5 times more than today, and the growing presence and profile of the group bodes well for its outlook .

“The potential growth of the group, especially in the US, looks promising.”

The well-known name Wetherspoon made a profit of 65 percent in the past six months.

In its recent update in May, Wetherspoons raised a small glass after returning to pre-pandemic trading levels, and then some.

Hunter commented: “It expects revenue for this year to be at the high end of estimates, with 2023 possibly a record year for sales.

Easter Week sales were the company’s highest ever and, compared to all of last year, like-for-like sales increased 12.2 percent in the third quarter and 12.7 percent year-to-date .

“As the group’s value for money ratio in its outlets continues to appeal to a money-conscious consumer, the group currently sees the benefit of being in line with economic times,” he added.

And the losers…

Inflation has led consumers to cut back with little money by buying less or switching to cheaper items.

This has led to falling earnings and share prices for Ocado, down nearly 43 percent, to the extent that the stock was nearly downgraded from the FTSE 100 this week.

Hunter explains: Ocado is caught between a rock and a hard place as the two elements of his company (Solutions and Retail) go through different tests.

The solutions business, on which most of the group’s hopes for future growth and profitability rest, has yet to deliver sufficient results to satisfy investors.

Promises of widespread adoption of the advanced technology have yet to be fully realized after some time, which has led investors to shun the stocks en masse.

Lund-Yates agreed that this has affected his performance: “Ocado’s technical side, which includes its robot warehouses, which are set up for other retailers, is also not doing as well as the valuation originally demanded.

“This is not the capital-light model investors once believed, and the stock price is moving to accommodate that shift.”

‘It is becoming increasingly difficult for the retail sector, where the majority of turnover currently comes from.

The so-called ‘Covid relaxation’ has had an impact on normalizing shopping habits, while customers have looked elsewhere for cheaper products in the face of the UK’s economic hardship.

On Ocado’s future, Hunter says, “Patience has run out as the danger mounts that Ocado will be seen as a remnant jam tomorrow stock. It looks like it will continue to be under pressure.’

Field pointed out that while falling utility bills are good news for consumers, it’s bad news for energy and resource companies who are seeing falling revenues combined with rising costs.

“Of the only four stocks that have actually seen price declines in the past six months, three fit this bill,” Field said.

Publisher Future was another company that suffered in the past six months, falling nearly 43 percent.

Hunter said: “As of its last update in May, shares were down as much as 15 percent on the day as the media group revised its full-year expectations downward due to challenging market conditions.

“The publisher’s titles include Country Life, Marie Claire and Music Week, among others, and the group reported a 10 percent drop in sales.”

The outlook was equally disappointing, with the company saying current trends were likely to continue “with challenging market conditions impacting the public.”

Asked if the performance of these companies will continue, Lund-Yates said: “Uncertainty remains for the remainder of the year.

A big question mark hinges on the ability of UK companies to pass on rising costs to consumers.

“Business confidence is currently much higher than consumer confidence, suggesting price increases are not a sustainable strategy,” she added.