The standout UK companies in 2022
No-one can deny that the first half of 2022 has been a challenge. The cost-of-living crisis – including the energy price hikes – has dealt consumers a massive blow. We’ve also witnessed the ongoing Russia Ukraine war following President Vladimir Putin’s invasion back in February.
Such global uncertainty has sent shockwaves through international stock markets and the FTSE 100 has been no exception. After starting January around 7,505.20 points, it had dropped to below 7,000 points by early March.
However, it has mounted a recovery in the months since – albeit a volatile one – and was trading around 7,200 points by early July*.
And there have certainly been winners and losers in that time when it comes to the performances of companies in the FTSE 100 index. While the most impressive are trading 50% higher than the start of 2022, the worst have plunged into negative territory by a similar amount.
So, which stocks have been the standout performers? And which funds are invested in them?
BAE Systems has been one of the clear winners this year. The aerospace and security company’s share price had soared almost 50% from £5.54 in early January to £8.08 by 7 July 2022*. In a statement ahead of BAE’s annual general meeting in May, chief executive Charles Woodburn said trading in the first quarter had been in line with expectations. “We see opportunities to further enhance the medium-term outlook as our customers address the elevated threat environment,” he said.
BAE is one of the holdings in the multi-cap Rathbone Income fund run by the experienced hands of Carl Stick and Alan Dobbie*. It aims to deliver annual income that’s in line with – or better than – the FTSE All-Share Index over any rolling three-year period. The managers also look to increase the income paid to investors in line with the Consumer Prices Index (CPI) measure of inflation over any rolling five-year period. A small number of UK-listed stocks are bought for the portfolio with investments being made in those offering the best opportunities at the most attractive prices.
Pharmaceutical giant AstraZeneca has been another star performer this year. The company’s stock price has risen more than 30% from £84.73 to £111.12 this year*. In early April, the company announced total revenue for the first quarter 2022 had increased 60% to $11.4bn, reflecting growth across the business. Chief executive Pascal Soriot, said: “Our investments in pioneering science give us confidence of further advances in the years to come.”
AstraZeneca is the largest holding in the Sanlam Enterprise fund*, which is managed by Mark Boucher and Mark Swain. It invests primarily in the UK and can make money out of both rising and falling share prices. This enables the managers to participate on the upside when markets are buoyant, and also to protect the fund during more volatile periods.
Shares in oil company Shell have also enjoyed a bumper year so far, having risen from £17 in January to £20.31 during the early days of July*. That’s a rise of almost 21%. In early May, the company announced strong first quarter 2022 adjusted earnings of $9.1bn in what it described as a “volatile geopolitical and macroeconomic environment”. In a statement, chief executive Ben van Beurden, said: “Generating value through strong earnings and cash flow, coupled with maintaining a healthy balance sheet and continuing the disciplined delivery of our strategy, are crucial for Shell to play a leading role in the energy transition.”
Shell is one of the top 20 holdings in the JOHCM Global Opportunities fund* managed by Ben Leyland and Robert Lancastle. The fund can invest in any company around the globe, but has a strong bias towards larger and medium-sized multi-national businesses where revenues are generated from all over the world. It is highly active and the managers always have an eye on capital preservation. As a result, they are very willing to hold high levels of cash if valuations are unattractive.
Other funds to consider
A number of the best performing FTSE 100 stocks this year are held by the Jupiter UK Alpha fund, which is managed by Richard Buxton. The list includes the aforementioned AstraZeneca and Shell, along with GlaxoSmithKline*, the pharmaceutical company which is up more than 12% this year to £18.04*. The objective of this fund is capital growth, with the aim to deliver a return greater than that of the FTSE All-Share Index over rolling three-year periods.
Elsewhere, there’s an alternative for investors who want exposure to AstraZeneca, along with a more continental flavour to the overall portfolio. The pharmaceutical company is one of the largest holdings in the BlackRock European Absolute Alpha fund that’s run by Stephanie Bothwell and Stefan Gries*. This fund aims to achieve positive absolute returns on your investment over a period of 12 months, regardless of market conditions.
Darius McDermott is managing director of Chelsea Financial Services and FundCalibre