After the portfolios had one of their best months since inception nine years ago, our head of equity strategy reveals the big drivers and how they’re smashing the benchmark index.
What a start to the year! An unusually poor December for stock markets gave cause for concern heading into an historically weaker January. We needn’t have worried.
Hopes that the current interest rate cycle may be near a peak, and that any recession will be much shallower than feared, have triggered a surge of optimism among equity investors, especially toward growth stocks. Data in the US also hints that inflation can be brought under control while keeping the economy ticking along.
A seven-week growth sector rally that began mid-October resumed at the start of 2023, sending global equity markets back to their November peaks or, in the case of the UK mid- and small-cap indices, their best since last summer. The FTSE 100 takes the crown, however, making a multi-year high and laying the groundwork for the record levels we saw at the start of February.
As good as that performance was, both Wild’s Winter Portfolio did better.
The consistent basket of five stocks returned 9.5% in January, taking its total for the first three months of this six-month strategy to 13.8%. The higher risk aggressive portfolio surged 11.6% in just one month and is now up 29.5% since the winter season began at the start of November. Both portfolios easily beat the FTSE 350 benchmark index, which added a modest 4.4% in January and now stands up 9.8% so far this winter.
Wild’s Consistent Winter Portfolio 2022-2023
Past performance is not a guide to future performance.
It was close for top spot in Wild’s Consistent Portfolio, but it was food packaging business Hilton Food Group (LSE:HFG) that took it, rocketing to its best price since the aftermath of a profits warning in September. There was huge relief that a trading update for the 52 weeks ended 1 January provided no surprises, with results still expected to match expectations revised in November. Management is also “confident in the outlook for 2023”. The shares shot up 18.9% in January to leave them up 8.5% so far this winter.
Electronic components firm discoverIE Group (LSE:DSCV) wasn’t far behind. It too had underperformed this winter despite business going well, but turned the tables with better-than-expected third quarter results. The company, which makes customised electronics for industrial use, said it is on track to deliver full-year underlying earnings ahead of expectations, prompting one analyst to reiterate its “buy” rating and 1,000p target price. The shares added 17.6% in January, ending the month at 860p and up 15.4% this winter.
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Self-storage firm Safestore Holdings (LSE:SAFE) had a strong month, too, with a 6.5% jump taking winter gains to 11.3%. The FTSE 250 company issued a positive trading update, with levels of demand stable and rates paid by new customers still growing.
Elsewhere, Liontrust Asset Management (LSE:LIO) rose for a third month, this time by 3.4%. A strong trading update for the final quarter of 2022 means the asset manager is now up 35.6% this winter, and is by far the biggest contributor to the consistent portfolio’s market-beating return.
Finally, London Stock Exchange Group (LSE:LSEG) fought back from December’s big loss to post a 3.8% gain. However, the financial markets and data giant remains the laggard this year across both portfolios, down 2.1%.
Wild’s Aggressive Winter Portfolio 2022-2023
Past performance is not a guide to future performance.
The three companies included in both of this year’s portfolios have all done well, which is reflected in the performance of Wild’s Aggressive Portfolio. But there’s one stock exclusive to the basket of five higher-risk shares that’s head and shoulders above the rest, and which explains its stunning returns.
Tracksuits-to-trainers retail chain JD Sports Fashion (LSE:JD.) sprinted 29% higher in January after confirming strong trading over Christmas. Revenue in the six weeks to 31 December grew more than 20%, and the company expects annual profit of £933-£985 million, at the top end of market expectations. Next year it could top £1 billion. Chair Andy Higginson added to the bullish mood when he bought £240,000 of JD shares at just above 150p each.
Finally, financial services giant Investec (LSE:INVP) made it a clean sweep of positive returns for the portfolios in January. A 1.2% monthly profit made it 18% for the past three months.
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