Shares round-up: the mid-cap risers worth watching closely

by Graeme Evans from interactive investor |

Share on:

One of these FTSE 250 stocks is up 600% since the March crash and others are grabbing attention too.

A rip-roaring few months for William Hill (LSE:WMH) shares continued today as the bookmaker joined fallen giants Marks & Spencer (LSE:MKS) and FirstGroup (LSE:FGP) on the FTSE 250 index risers board.

William Hill shares lifted another 8% to their highest level in almost two years after it was revealed last night that its US sports betting data and odds will feature on ESPN's platform.

A positive update from new grocery retail partner Ocado (LSE:OCDO) helped Marks & Spencer shares rally 4%, while FirstGroup was up 5% after a positive AGM trading update allayed recent fears about its future. A positive session for followers of the second-tier index also saw gains of 6% for construction supplies firm Polypipe (LSE:PLP) and defence countermeasures specialist Chemring (LSE:CHG).

At just over £2 billion, William Hill still has a long way to go before it can think about reclaiming its place in the FTSE 100 index. Encouragingly, however, the stock has now recovered all the losses seen in this year's market sell-off, having been trading as low as 30p in March.

They were at 214.1p today as investors placed their bets on growth in the US, where legislation in certain states has opened up opportunities across sports betting and online casino.

William Hill's prospects are built around a partnership struck in January 2019 with Eldorado, under which the US firm received a 20% stake in William Hill US. After Eldorado's recent acquisition of Caesars Entertainment, William Hill’s exclusive sports betting rights were carried forward to the new assets.

This was extended when Caesars, which owns or operates 54 properties across 16 states, including an iconic portfolio of casinos on the Las Vegas strip, signed an exclusive agreement with sports entertainment network ESPN.

William Hill CEO Ulrik Bengtsson said: ESPN is one of the pre-eminent brands in sports. Tens of millions of fans will now have a direct link to our sports betting apps and odds. Giving ESPN users this access will accelerate our leadership as we continue to expand in the US.

 

While the resumption of the sports calendar has boosted confidence in recent weeks, the opportunities in US sports betting continue to give William Hill and its top flight rivals GVC Holdings (LSE:GVC) and Flutter Entertainment (LSE:FLTR) a significant boost. The FTSE 100 index pair were up 2% and 3% respectively, alongside a clutch of mining stocks and blue-chip powerhouse Ocado.

The grocery delivery company, whose lofty valuation of £17.5 billion is roughly 90% based on the global potential of its warehouse robotics technology, was back close to a record high in the wake of an update relating to its core UK retail operation.

Sales were 52% higher at £587.3 million in the 13 weeks to 30 August after the website received an average 345,000 orders a week, a rise of almost 10% as shopping habits continue to evolve in the wake of Covid-19 lockdowns.

It's still early days for the new joint venture with Marks & Spencer, but Ocado said the weighting of M&S products in the average Ocado basket was higher than Waitrose prior to the switchover.

Given the strong performance for the retail arm in the first three quarters of the financial year, Ocado is in a position to resume financial guidance with a full-year underlying earnings estimate of at least £40 million for the wider group. The update also boosted M&S shares, although at 108.5p the former blue-chip stock is still half the price seen at the end of 2019.

FirstGroup shares were 8% higher after the bus and rail operator reported a pick-up in passenger demand since the start of the new school year on both sides of the Atlantic. Operating profits and cash generation were ahead of expectations between April and 31 August, albeit underpinned by support from governments to ensure services run in accordance with social distancing rules.

CEO Matthew Gregory expects FirstGroup to comfortably meet banking covenants set for the end of the month and said that “clarity is improving over time” as the group comes to terms with pandemic disruption. It has also been encouraged by significant interest from potential buyers for FirstGroups North American businesses, including its First Student school buses.

Shares in bus operator Go-Ahead (LSE:GOG), which is set to be relegated from the FTSE 250 index later this month, and National Express  (LSE:NEX) were both flat after surrendering initial gains.

Other risers in the FTSE 250 index included Polypipe after posting a recovery in trading in July and August, with revenues 6% and 3% lower but much better than the 22% slump recorded for the first six months of the year. Half-year profits were today 93% lower at £2.3 million.​​​​​​​

 

This resulted in no interim dividend, but Polypipe offered hope that it could still pay one for the full year performance in May. It added that the fundamentals of its market remained strong, driven by a structural housing shortage, the increased push for carbon zero construction, as well as an increased focus on general air quality and ventilation.

Polypipe shares rose 5% to 427p, which compares with 445p when it raised £120 million from shareholders in May. The stock had been more than 600p in February.

Chemring shares were 4% higher after the defence, aerospace and security specialist said results for the year to 31 October should be towards the upper end of City expectations of between £47 million and £53 million.

CEO Michael Ord added that Chemring's deep customer relationships and sole-source or market leading positions also boosted longer-term prospects. Order intake up to 31 August was 4% better than the same period a year earlier.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.

get more news and expert articles direct to your inbox
Sign up for a free research account and get the latest news and discussion, and create your own Virtual Portfolio