October was a choppy month for markets, as we went into it with a Brexit deadline for 31 October, coinciding with Halloween. There wasn’t a last minute spook, with an extension being granted before talks went down to the wire.
This news was taken positively by the British pound, which rallied hard from the lows. Unfortunately, this hindered the overall performance of the FTSE 100 for the month, making it only return about 2% despite the news.
There were some real out-performers within the index which are worthy of mention. Now that we are well into November, let’s take a look at the three best performing stocks from last month and see if the good run has continued.
No. 1 – BT (+14.6%)
BT (LSE: BT-A) is a well known telecommunications firm. Far from delivering strong historical returns, the share price has been sliding for much of the past five years.
October saw it outstrip the index performance massively, thanks to the unveiling of a new ‘boost’ turnaround strategy. It also noted that it was on track to be in line with full-year outlook regarding financial performance.
Since then, BT has remained heavily in the news thanks to the Labour pledge to deliver free broadband as part of plan to partially nationalise the company. The shares dropped 4% on the news, but recovered to finish down only 1% by the end of the day.
For me, without the Labour pledge I would say BT is a buy, but with the uncertainty of the potential nationalisation and the unknown pay out for shareholders, I would stay clear of it for the moment.
No. 2 – Aveva (+13%)
Aveva (LSE: AVV) is an IT and software company that doesn’t get a huge amount of coverage. It has grown to trade internationally mostly through acquisitions.
October was a very strong month for the business, with financial performance being seen as the main driver. The reoccurring revenue (outlined as a key driver for the business) is now up to 62% of overall revenue. This is seen as a positive by investors as it makes the firm less sensitive to new business demand, given that it can generate a substantial amount of business from repeat clients.
It also completed another acquisition (Maxgrip) recently, seen as a good addition to the portfolio. With business going well, I think Aveva is a buy from here.
No. 3 – IAG (+11.8%)
International Airlines Group (LSE: IAG) may not ring many bells for you, but it is the parent company of the considerably better known British Airways. It actually is the sixth largest airline in the world (mostly thanks to the operations of British Airways).
Last month saw it benefit from the Thomas Cook business going bust, as investors thought IAG would pick up business from travellers that were previously serviced by Thomas Cook. Indeed, business is going well, with an announcement last week that it is buying Air Europa to expand operations.
Despite the bounce being largely due to Thomas Cook, I think IAG could be one to watch for further gains.
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Jonathan Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019