Recovery stocks are being unfairly neglected, claims an investment expert. Reacting to the current political situation in the UK and its implications for share prices, Chris Morrison, investment manager at Swiss asset management firm GAM has come out in defence companies capable of bouncing back.
‘Defensive plays, which enjoy high ratings that appear somewhat extended, are at one end of the spectrum and recovery stocks, which we prefer, are at the other,’ the investment manager says.
‘We seek out those companies that have fallen on tough times and have underperformed but crucially that still have the ability to be rehabilitated. We believe this area is being overlooked and as such offers greater scope for outperformance.’
To help get you thinking about some potential recovery ideas, below is a list of some of the biggest underperformers on the FTSE 350 year-to-date.
| Company | Performance YTD (%) |
| IP Group | -24.5% |
| Hunting | -24.9% |
| Wood Group | -25.4% |
| Pets at Home | -32.1% |
| Vedanta Resources | -32.2% |
| Tullow Oil | -41.5% |
| Petrofac | -52.8% |
Source: SharePad, 20 June 2017
Most of these names are in the resources sector, with oil services firm Petrofac (PFC) also hit by corruption allegations. A rebound for these stocks probably requires a material recovery in oil prices.
Specialist retailer Pets at Home (PETS) sticks out on the list. You will be able to read more on the company in the main feature of the latest edition of Shares out on Thursday (22 June).
