C-19 update: two stocks surge 65% and 74%

In volatile times, good news can have a significant impact on share prices. Here are today’s winners. 

On a day when companies exposed to the UK economy were rocked by more market turbulence, a 65% jump in share price at Connect Group (LSE:CNCT) should soften the blow for some investors.

The company, which is better known as the owner of Smiths News, achieved the surge after pulling off an equally impressive feat in the current market conditions — an M&A deal.

The proposed sale of freight distribution division Tuffnells for £15 million is hugely significant for the £60 million company, as it eliminates a significant drag on the group's profitability and cash flow.

That should improve the ability of the news wholesale operation to manage current Covid-19 uncertainty, particularly with no distraction of a turnaround plan for loss-making Tuffnells.

In particular, it should allow the group to refinance debt facilities on more advantageous terms than would have been possible with Tuffnells still part of the group. The Sheffield-based freight business, which only became part of Connect in 2014, is being acquired by investors brought together by a specialist restructuring advisory firm.

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Connect also revealed today that newspaper sales were 20-25% lower for the first two weeks of the lockdown, with 10% of the retailers it supplies, including high street and travel outlets, temporarily closed.

The postponement of the UEFA 2020 football championships has also meant the loss of revenues from sticker albums and other merchandise.

However, at midday Connect shares were still trading 30% higher at 23.75p, with investors clearly pleased to hear that “the operations and business model of Smiths News should be able to accommodate a relatively high degree of variability in demand while remaining profitable and cash generative.” 

The group, which was spun out of WH Smith (LSE:SMWH) in 2006, had fallen to as low as 13p in mid-March from 31p a month earlier.

Source: TradingView Past performance is not a guide to future performance

Alongside Connect, construction group Costain (LSE:COST) surged as much as 74% to 96p after its Skanska Costain Strabag joint venture was given the green light on HS2 works relating to the design and building of major tunnels in the approach to London's Euston station.

Connect and Costain were among the handful of positive market stories today in a session when investors were focused on the impact of a longer Covid-19 lockdown on UK companies. JD Wetherspoon (LSE:JDW) and Mitchells & Butlers (LSE:MAB), for example, were both down by more than 10%, while Jet2.com holidays firm Dart Group (LSE:DTG) tumbled by 15%.

The domestic-focused FTSE 250 fell 4% to 15,507 as it continued to give back the record-breaking gains seen last week. The FTSE 100 index was down 2% at 5,657, with BP (LSE:BP.) and Royal Dutch Shell (LSE:RDSB) 5% lower after the International Energy Agency predicted that oil demand was set to slide by 29 million barrels per day in April to levels not seen in 25 years.

Energy services group Hunting (LSE:HTG), which today withdrew its full-year guidance due to limited visibility, fell 10% despite confirming it will pay an interim dividend of three cents a share announced earlier this month.

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Hastings was one of the few stocks in the FTSE 350 index to make headway, with investors relieved that the car insurer is sticking by plans to pay a 2019 dividend worth £36 million on 29 May. It has seen a reduction in accident claims due to the lockdown, but this is offset by inflationary pressures from disruption to repair networks and supply of parts.

Shares rose 4% to 190p, which means Hastings (LSE:HSTG) is trading back at levels seen prior to the start of the Covid-19 pandemic. 

Liontrust Asset Management (LSE:LIO) is on a similar path after posting an impressive trading update today.

The specialist fund manager said it achieved net inflows of £492 million in the three months to the end of March, with another £136 million added in the first nine days of April to take assets under management to £16.8 billion.

Source: TradingView Past performance is not a guide to future performance

CEO John Ions said:

“Liontrust went into the pandemic in a strong position, and by maintaining the processes we have put in place over the past decade, we have been able to replicate how we work normally.”

Shares rose 4% to 1,045p, which compares with 700p in the middle of March and 1,320p prior to the market slide in February.

Other market risers today included pharmaceuticals company Diurnal, whose shares lifted 14% to 32p after it said it was well positioned to minimise the impact of Covid-19. CEO Martin Whitaker added there was now enough cash on the books to take the business through to profitability without having to return to the market.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.