Back in 2020, we highlighted five key sector themes to watch, ranging from housebuilders to alternative energy. Now, five years later, let’s revisit those insights and see how they played out. Were our predictions on point, or did the market take an unexpected turn?
1. Are UK Housebuilders Overheating?
In 2020, we wrote: “Should we chase this sector in 2020 and beyond? Perhaps. For medium-term momentum traders, the sector trend remains positive. New highs over the turn of the year affirmed this view. But we shouldn’t rule out some reversionary moves during 2020, especially as prices are currently far extended above their long-term means.”
Since then, UK housebuilders have faced significant challenges. Rising interest rates and inflation have cooled the housing market. Shares of Berkeley Group (BKG), Barratt Developments (BDEV), Taylor Wimpey (TW/), and Persimmon (PSON) initially climbed post-2020 but have since struggled. For instance, Persimmon’s shares peaked in 2021 before declining sharply, losing nearly 50% of their value by late 2024. Investors who took profits during the highs of 2021 would have fared far better than those holding long-term.
2. Will the Pharma Boom Extend to 2025?
We observed: “Healthcare/pharma stocks… had a relatively bullish year. Their price trends are unmistakably positive despite the ongoing choppiness… At this rate of appreciation, reaching the psychological 8,000p [for AstraZeneca] should not be too difficult.”
This prediction aged well. AstraZeneca (AZN) has gone from strength to strength, surpassing 8,000p in late 2020 and continuing its upward trajectory. By 2024, its shares had risen over 50% from 2020 levels, driven by growth in its oncology and vaccine divisions. GlaxoSmithKline (now GSK) also performed decently but lagged behind AstraZeneca, reflecting its slower pace of innovation.
3. Utilities Recovered in 2019. Will They Rise Again before 2025?
We said: “Prices jumped as investors celebrated the receding threat of nationalisation… This recovery led to a classic development of a ‘base formation’… there could be more upside in the months ahead.”
Utilities largely delivered as predicted. The likes of National Grid (NG) and Severn Trent (SVT) have remained resilient, benefiting from their defensive nature during uncertain times. However, rising energy prices and regulatory challenges have capped significant upside. Investors who held their positions have seen steady, albeit modest, returns.
4. Will Oil Stocks Extend Their Underperformance?
Our take: “Perhaps… oil stocks may stage an intermediate rebound near term as geopolitical tensions elevate oil prices. By the way, Shell and BP are yielding 6.2% and 6.4% respectively.”
This call was spot-on. After an initial slump during the pandemic, BP and Shell rebounded strongly, supported by surging oil prices in 2021-2022. By 2024, Shell’s shares were up over 80% from 2020 levels, while BP’s shares more than doubled. The energy crisis and geopolitical tensions underscored the sector’s importance, delivering handsome gains to patient investors.
5. Is This the Time to Invest in Alternative Energy Stocks?
We noted: “The hype around the sector means you are paying up now for these assets. Wait for a consolidation to initiate/add positions here.”
Alternative energy stocks like Renewables Infrastructure Group (TRIG) and Greencoat UK Wind (UKW) saw tremendous interest post-2020, riding the wave of ESG investing. However, valuations stretched to unsustainable levels, leading to corrections in 2022. Those who bought during dips have enjoyed steady returns, but the sector has faced headwinds from rising interest rates and policy uncertainty.
Final Thoughts
If you’d invested £5,000 equally across these themes in 2020, your portfolio’s performance would likely have been mixed. Pharma and oil stocks outperformed, while housebuilders and alternative energy stocks lagged. Utilities provided steady but unspectacular returns. The lesson? Diversification and timing remain critical in navigating market trends.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
You can contact Richard at richard@goodmoneyguide.com
