- £1,000 invested in Ocado, Babcock and Rolls-Royce apiece would have returned an average 40%
- Combined initial £3,000 stake would now be worth £4,201
- 10 FTSE 350 stocks have rallied more than 20%
Did you back any of July’s biggest FTSE 350 share price winners? £1,000 invested in Ocado (OCDO), Babcock (BAB) and Rolls-Royce (RR.) apiece would have returned an average 40% over the month, or in other words, your £3,000 combined stake would now be worth £4,201.
So what has driven this outperformance, and which other stocks shot the lights out in July?
Online grocer Ocado (OCDO) hit top spot after rallying more than 65% due to a flurry of positives, including a 16% one day jump (22 Jun) after rumours swept the stock market that tech giant Amazon (AMZN:NASDAQ) was priming a takeout offer worth 800p-a-share.
That speculation, reported in The Times, came to nought but that didn’t stop Ocado shares jumping again later in July following well-received first-half results, showing an welcome return to growth, posting an 8.6% rise in revenue to £1.37 billion.
Shares jumped 15% on the news as it also said it had swung into a profit of £16.6 million compared to a loss of £13.6 million.
The easing of grocery inflation has also helped Ocado, and progress within its technology solutions business, however some analysts remain sceptical about the company due to its inability to opening new centres for its existing customers.
RECOVERY JUICES BABCOCK
The aerospace and defence giant saw its stock jump 35% during July after bouncing back into the black. Babcock, which has been trying to repair itself for some time, saw last year’s £1.81 billion loss turn into a £182.3 million pre-tax profit in the year to March 2023.
More recently its shares were up 10% on 20 July as its latest set of earnings beat forecasts and it announced that it was to reinstate its dividend – signalling good news for existing shareholders.
George McWhirter at Berenberg said two weeks ago that he expects Babcock shares to continue outperforming the market given revenue, profit and cash flow were ‘comfortably ahead of our estimates and consensus’ despite the Type 31 charge being at the top end of the firm’s guidance of £50 million to £100 million.’
NEW BOSS FEEL
New CEO Tufan Erginbilgic has hit the ground running, helping the UK aero-engineer surge. Another turnaround story in the making, Erginbilgic seems to have given the FTSE 100 company a good shake, while poaching some of his ex-BP (BP.) colleagues to help lead the transformation process, such as Nicola Grady-Smith, appointed as chief transformation officer, and Helen McCabe as chief financial officer.
The positive trading update on 27 July demonstrated that Erginbilgic’s tough talk around reviving the fortunes of the company is yielding early results.
While the shares had stalled in recent months, after Erginbilgic’s initial rhetoric drove a big re-rating at the start of the year, a big jump on 26 July in the wake of the trading update, means Rolls remains one of the best performing FTSE 100 stocks year-to-date, up more than 80%.
Disclaimer: The author (Sabuhi Gard) owns shares in Ocado.
