Serco Group [SRP] – 26 years on the LSE

On this day in 1988 Serco Group listed on the LSE.

Monthly seasonality of Serco Group

The following chart plots the average monthly out-performance of the shares over the FTSE 100 Index since 1988. For example, on average Serco Group has out-performed the FTSE 100 by 4.4 percentage points in January.
Average monthly performance of Serco Group [SRP] relative to the FTSE 100 Index (1988-2013)

Observations:

  1. The strongest month for Serco Group shares relative to the market has been January (the shares have out-performed the market in this month in 18 of the last 25 years).
  2. The weakest month for Serco Group relative to the market has been July (the shares have only out-performed the market in this month in 11 of the past 25 years).

Serco Group is in the FTSE 350 Support Services [NMX2790] sector.

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The Stock Market in July

After a usually disappointing May and June, shares tend to perform a bit better in July, but not by much. July ranks 9th of all months for performance. On average the market increases 0.8% in July, with a probability of a positive return of 55%.

The accompanying chart plots the percentage performance of the FTSE All Share Index for each July since 1982. For example, last year in 2012 the market rose 1.2% in July. In the last 20 years the market has risen 11 times in July.

The market has risen on the first trading day of July 69% of years since 1984 – making it the strongest first trading day of any month. And the strength has tended to continue for the first week of trading (making it one of the strongest weeks in the year). After that, the market has a propensity to drift lower for a couple of weeks until finishing strongly in the final week of the month.

Sectors and stocks

Although this may not be an exciting month for the overall market, there can be a fair degree of divergence of performance at the sector level. Historically the sectors that have been strong in July are Chemicals, Personal Goods and Real Estate Investment Trusts while weak sectors have been Gas, Water & Multiutilities, Support Services and Beverages.

At the stock level, the following companies seem to like July: Experian, Greene King, Imagination Technologies, and Senior – these shares have risen in at least nine of the last ten years in July (Greene King is the only FTSE 350 stock whose shares have risen every July since 2003). While the two worst performing shares in July over the last ten years have been Petra Diamonds and Serco.

IPOs

July has been the most active month for flotations; over 50 of the companies in the FTSE 350 Index have had their IPOs in this month. (Perhaps this is to allow company founders to go shopping for yachts in the summer months?) One such July IPO was for Antofagasta which floated on 5 July 1982; coincidentally, in recent years July has been the best month for the company’s shares. The longest-listed company with a July flotation date is one of the odder companies on the LSE – Law Debenture Corporation.

Diary

The date to watch this month is 4 July when the MPC interest rate announcement will be made, and the New York Stock Exchange will be closed (Independence Day).

Article first appeared in Money Observer.

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Shares that like/dislike July

Shares that like July

The following table lists the four FTSE 350 shares that have the best returns in July over the last ten years. For example, Greene King has an average return of 6.6% for the month of July. Each stock has risen in at least nine of the past ten years in July – Greene King is the only stock in the FTSE 350 whose shares have risen every July in the past ten years.

Company TIDM Avg(%)
Experian 3.4
Greene King 6.6
Imagination Technologies Group 7.2
Senior 6.0

A portfolio of these four stocks would have out-performed the FTSE 350 Index in July in nine of the last ten years with an average out-performance of 4.4 percentage points each July.

Shares that dislike July

The following table lists the two FTSE 350 shares that have the worst returns in July over the last ten years. For example, Petra Diamonds has an average return of -5.8% for the month of July. Both stocks have fallen in at least eight of the past ten years in July.

Company TIDM Avg(%)
Petra Diamonds Ltd -5.8
Serco Group -2.6

 

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Support Services sector monthly seasonality analysis

The 2013 edition of the Almanac looks at the historic monthly performance of the FTSE 350 sectors. Here we look at the Support Services sector.

The following chart plots the average out-performance of the FTSE 350 Support Services sector over the FTSE 100 Index by month since 1999. For example, since 1999 on average the sector has out-performed the FTSE 100 Index by 1.2 percentage points in January.

Observations:

  1. The strongest months have been January and December – the sector has under-performed the market only four times in December in the last 14 years.
  2. The weakest month has been July – the sector has out-performed the market only four times in July in the last 14 years.

The 23 stocks in the FTSE 350 Support Services sector [NMX2790] are-

Aggreko [AGK] Filtrona [FLTR]
Ashtead Group [AHT] G4S [GFS]
Atkins (W S) [ATK] Hays [HAS]
Babcock International Group [BAB] Homeserve [HSV]
Berendsen [BRSN] Howden Joinery Group [HWDN]
Bunzl [BNZL] Interserve [IRV]
Capita Group (The) [CPI] Intertek Group [ITRK]
Carillion [CLLN] Menzies (John) [MNZS]
De La Rue [DLAR] Michael Page International [MPI]
Diploma [DPLM] MITIE Group [MTO]
Electrocomponents [ECM] PayPoint [PAY]
Experian [EXPN]
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