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Anatomy of a winner: picking a coronavirus success stock

While the pandemic has roiled global markets, and society, since March, investors may have found success among the lockdown if they had parked their cash in a number of sectors and industries ahead of the crisis

Novacyt SA - Anatomy of a winner: picking a coronavirus success stock

While the wider market has been plunged into almost historical volatility as a result of the coronavirus pandemic, the subsequent lockdown measures around the world and the added bonus of an oil price crash, some companies have seen the recent turmoil as a boon to their share prices.

If investors had decided to ring in the new year by parking their cash in any of the company’s below, they are likely to have made a tidy profit off of the coronavirus crisis, netting them something of a pandemic payday.

Biotechnology

While it may perhaps seem obvious, the pandemic has seen a surge in the value of multiple biotechnology firms, particularly those that have projects related to either battling the symptoms of coronavirus or working towards a vaccine.

It is, in fact, a biotech that since has seen the largest share price increase across the entire London market since January 2. In late March, Novacyt SA (LON:NCYT) was provided emergency authorisation by the US Food and Drug Administration (FDA) to deploy its test for coronavirus, just when the outbreak was accelerating in several western countries.

Since then, the firm has secured a slew of manufacturing agreements as well as other deal relating to testing for the virus, while since the start of the year its shares have rocketed over 1,700% to around 258p at Thursday’s close.

Other groups in the sector that have seen their share prices surge on the back of pandemic demand include Synairgen PLC (LON:SNG), which is currently testing whether its SNG001 treatment, designed to help patients with chronic obstructive pulmonary disease (COPD) who are also suffering cold or flu infections, can be repurposed to help coronavirus sufferers. Its shares have risen nearly 650% since the start of the year.

Another big biotech riser is Avacta PLC (LON:AVCT), which so far this year has surged around 616% as its Affimer technology is incorporated into rapid tests for coronavirus.

Gold diggers

With the pandemic playing havoc with equities, one beneficiary of the coronavirus fallout has been the traditional haven asset of gold, which has seen its price steadily climb over the last six months before hitting an eight-year high of around US$1,770 an ounce earlier this month.

The surge also shows little signs of receding, with some experts [LINK] predicting the price could reach as high as US$3,000.

The scramble for the yellow metal has provided a boost to the world’s gold miners, as after having struggled in recent years to secure funding for exploration now find themselves facing a market willing to provide almost unlimited funding in pursuit of a secure investment.

AIM 100 gold explorer Greatland Gold PLC (LON:GGP), which has a portfolio of gold projects in Western Australia, has seen its share price climb around 556% since the start of January.

Other small caps riding the wave of gold price appreciation are West-African focused explorer Goldstone Resources Limited (LON:GRL), which has seen a 314% rise in its share price since the start of the year, while fellow African miner, Goldplat PLC (LON:GDP), has jumped 146% in value.

VR, remote learning and working from home

One of the more notable and substantial changed brought upon by the outbreak is the proliferation of technology enabling both students and workers to interact and perform their tasks remotely as office spaces and schools closed to comply with lockdown measures.

While the technology to allow remote working and schooling has existed for years, many businesses and schools are now being forced to adopt these measures to ensure a child’s continued education as well as the continued viability of a company’s operating structure.

This shift, which is already being discussed as a potential ‘new normal’, firms such as VR Education PLC (LON:VRE) has seen its share surge around 120% since the start of the year as the lockdown has driven renewed interest in ENGAGE, the company’s virtual reality (VR) platform designed to allow users to interact in virtual classrooms and offices.

Another beneficiary of the boom in teleworking is conference call specialist LoopUp Group PLC (LON:LOOP) as its shares have surged just under 96% since the start of 2020.

Honourable mentions

These three sectors are not the only industries to achieve ‘winner’ status within the volatile market.

With so many in isolation during lockdown delivery firms have found themselves firmly in demand to ferry products from businesses to customers, with the likes of grocery group Ocado Group PLC (LON:OCDO) up around 57% so far this year while Poland-focused pizza delivery group DP Poland PLC (LON:DPP) has jumped 60%.

The effects of the pandemic on global markets have also proved to be a boon for the LSE’s spread-betters, which has seen demand surge as traders look to take advantage of the turbulent markets or to offload their holdings and cut losses.

CMC Markets PLC (LON:CMCX) has seen its value increase by 84% during the economic crisis, while peer Plus500 Ltd (LON:PLUS) has climbed just shy of 50%.

Video game firms and shrewd investment funds have also partaken in the coronavirus ‘boom’, however the enduring success of the firms with rocketing market caps may depend much more on the ‘new normal’ the world, and markets, will now face.

Quick facts: Novacyt SA

Price: 300 GBX

AIM:NCYT
Market: AIM
Market Cap: £211.88 m
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