Phi Trends: Taking stock

A look at the 2021 first-half performance of certain stocks recommended by entrepreneur and investor Shailesh Dash, who shares his perspective in this monthly column

Since the beginning of 2021, the changing market narratives have led to higher uncertainty and increased volatility in global equities. While accelerated vaccination programmes in certain countries has helped push equity markets to new highs, the recovery is likely to slow down over a period of time, which could restrict the upside in the short-to medium-term. Hence, it will be imperative for investors to focus on companies and sectors that are likely to gain competitive advantage and improve earnings over an extended period of time.

Given the importance of long-term investing, we had recommended a total of 26 stocks since March 2020 to capitalise on strong fundamentals and robust growth in earnings over the medium term. Cumulatively, the 26 stocks appreciated by 11.1 per cent in Q2 2021 after declining by 8.3 per cent in Q1 2021, resulting in a net gain of 2.8 per cent in H1 2021 compared to a rise of 12.9 per cent and 11.4 per cent in NASDAQ and MSCI World index, respectively. It is worth noting that the recommended stocks delivered stellar returns of 116.7 per cent in 2020, outperforming the broader indexes by a significant margin.

Here, we have taken a closer look at two sub-sectors within the broader technology space to understand their performance during the past six months. We will explore other sub-sectors in the next issue.

Healthtech and medtech: The recommended stock prices of companies appreciated by 2.2 per cent in H1 2021. Most key recommended stocks experienced a pullback in Q1, down by 8.4 per cent, but strong recovery in Q2 of 10.6 per cent pushed the sector index performance in green during H1. Within the selected universe, Health Catalyst was the best performing with gains of 26.1 per cent in H1, while Teladoc Health was the worst performer with losses of 17.6 per cent. The outperformance in Health Catalyst was broadly driven by robust Q1 earnings coupled with strong future client growth and rising subscriptions going forward.

Fintech: The recommended fintech stocks continued the positive trajectory in H1 with gains of 8.6 per cent, after rising by 133.2 per cent in 2020. Within the fintech space, PayPal and Shift4Payments were the top performers with gains of 23.7 per cent and 23 per cent respectively, while StoneCo was the only stock to experience a drop of 17.5 per cent in H1. Square recorded gains of 11.7 per cent in H1, continuing to benefit from the expected growth in earnings going forward.