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30 May 2023

Who will make it to the ‘Survivors and when?

By David Robertson
There has been discussion in the City of London recently about who will be turning up to the “Survivors Party” once this recession is over. Six years ago some of the stocks that had been hammered in the downturn of 2001 and 2002 rebounded spectacularly as investors realised they had been ridiculously oversold. For example, Corus, the steel producer, saw its share price rise by 457 per cent in six months and there were many other participants in this “Survivors Party”.

Analysts and stock pickers are already looking to see who might join the party this time around. This may seem perversely optimistic as the global economy plunges headlong into a gloomy few months but there is no doubt that some stocks have already been drastically oversold.

Analysts at Citigroup have ranked firms according to when they are likely to recover from the current downturn. Perhaps unsurprisingly the automakers, banks and resource companies are the least likely to be demonstrating a rebound any time soon. The firms most likely to attend the next Survivors Party are, according to Citi, the telecoms, healthcare and food companies.

This theory makes a lot of sense as these companies have seen their share prices collapse in line with stock markets around the world but most have actually maintained strong revenue and earnings because very few people cut back on food, health and talking during a downturn. Unfortunately, the invites to the Survivors Party are not sent out beforehand so it is impossible to say exactly who will be attending – and when the party will begin.