Fearless millennials look set to make a mark in 2019

Our top traded shares in January and February 2019 for Millennials (23-38).

Rank Company Drop in share price*
1 Flybe -91.76%
2 Boohoo -25.21%
3 Motif Bio -82.39%
4 Sirius Minerals -46.37%
5 Anglo African Oil -39.58%

*These prices indicate the drop from each share at the peak of share price to the current price within the last six months

Global market uncertainty has continued so far in 2019 due to various economic factors such as US/China trade tensions, Brexit, and the strong dollar which have caused a slowdown in global growth. Consequently, a weakening in investor sentiment has resulted in investment pull-outs across the globe, especially in the emerging market regions.

Risk is a crucial part of investment strategy for individual investors as they seek to achieve their goals. Therefore, what we have observed in markets over the last few months is a relative redistribution of investors’ portfolio exposure into ‘safer’ assets in an attempt to lower overall risk. However, one group that does not appear to be as affected by this enhanced risk is ‘Millennials.’

It is clear Millennials are seeing market disruption as an opportunity with every stock in the table having net buys. The exception is Flybe which has been in a takeover situation for a while thanks to a bid from the consortium behind Connect Airways Ltd.

The recurring theme amidst the stocks in the top five is a significant drop in their share prices within the last six months, with a 57% average decline. Millennials are viewing this as a strong entry point with scope for capital appreciation in the future. Although it presents high risk investing in companies whose share prices have taken a hit, this risk can sometimes be accompanied by high returns in the event of a rebound to healthy growth. This is called the risk/reward trade-off.

Boohoo

Boohoo’s profit margins and potential to scale up provide a long term opportunity. Adopting an innovative model has enabled Boohoo to react to ever-changing consumer trends with considerable speed, whilst delivering products at a market leading price. However, a rough 25% reduction in share price due to lower consumer demand and the reverberations of the profit warning from competitor ASOS, which led to a 40% plunge in its shares, created some doubt about the sector in the market. Millennials spotted this opportunity to invest in a growing, innovative company at a lower market price recording 47% more ‘buy’ orders than ‘sells.’

Motif Bio

Motif Bio is a biopharmaceutical company focused on developing antibiotics for life-threatening illnesses such as MRSA. Motif’s share price has been hit recently by worries over its financial situation, following doubts over its ability to raise capital for loan repayments and future research. That has led to a significant reduction in its share price.

Sirius Minerals

Mining is a notoriously risky sector featuring political, economic and production risks. Higher than expected costs for its Yorkshire-based organic fertiliser project, alongside little expectation of profits for at least a few years, has created doubts which have proved too much for some investors to bear, resulting in a sell-off of Sirius Minerals. However, once completed this polyhalite mine is set to be one of the largest in the world, creating significant value for investors. Millennials seem to be attracted to this proposition and are happy to risk the short term volatility for the long term reward with over 188% more ‘buy’ orders than ‘sells.’

Anglo African Oil

Anglo African Oil is an oil and gas company operating in the Republic of the Congo. With a new drilling base set to start in April with an estimated 1,500 barrels of oil per day expected to be produced for the first 14 months. This speculation is driving investment as the company has minimal revenues and cash, and may have to raise further capital in the near term, which again heightens the risk. This investment has the potential to earn a substantial return or it may simply crumble and eventually become de-listed. Clearly Millennials are banking on the former.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

 
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