Most investors will remember 2022 as being one of the toughest years for stock markets around the world in a long time. However, plenty of stocks have delivered positive returns.

In this feature we look at the best performing London-listed stocks spread across four different parts of the market, covering small, medium and large sized companies.

£5 billion+ market cap

Ireland has been one of the standout economies of 2022 with forecasts for growth as high as 10% for the full year. Exports have been driven by the technology and pharmaceutical sectors, while domestic demand has been supported by household spending.

Bank of Ireland (BIRG) has benefited from strong credit demand with net interest income expected to rise by 6% to 7% this year, and in the first nine months the bank opened 245,000 new current and deposit accounts, a 90% increase on 2021.

A strong capital position, growing income and tight cost control will come in handy if there is a slowdown in economic growth next year. Its shares are up 57% since the start of 2022.

Educational publishing group Pearson’s (PSON) shares powered 53% higher with a boost from takeover offers, which it rebuffed, from US private equity group Apollo, as well as the positive momentum and margin improvement in the business as new CEO Andy Bird’s strategy began to take hold.

A beneficiary of global learning spend, Pearson is emerging from years of turbulence caused by the US education sector shifting online and is now having success selling direct to consumers.

In a year where war raged in the Ukraine and had repercussions around the world, it’s no wonder that investors flocked for opportunities in the defence sector. As one of the largest players in this space, BAE Systems (BA.) was a magnet for investors looking to buy shares in a company that could see a big uplift in future earnings.

During the year, BAE was among the elite to show confidence in trading and improved profit margins. In November, BAE said many countries where it operates have either announced increases or are making plans to increase defence spending. These factors explain why analysts steadily upgraded 2022 and 2023 earnings forecasts throughout the year, helping to drive a 51% rise in the share price.

British Gas owner Centrica (CNA) has been a beneficiary of rising energy prices throughout 2022, helping to power a 33% gain in the shares. Earnings per share estimates have risen by a mighty 200% since the start of the year according to Refinitiv data.

A strong performance from the firm’s electricity and gas production businesses and its energy trading arm prompted Centrica to raise profit guidance on 10 November towards the top end of market expectations.

The strong showing for BP (BP.) and Shell (SHEL) reflects the surge in energy prices caused by the conflict in Ukraine. What’s perhaps more impressive is both companies have largely held on to their gains despite recent oil price weakness. On Shell, Berenberg analyst Henry Tarr says: ‘Ongoing capital discipline combined with high commodity prices point to attractive free cash flow generation, enabling further material buybacks into 2023.’

Shares in Imperial Brands (IMB) advanced 30% during the period, outperforming the FTSE 100 with investors drawn to the cigarettes-to-vaping company’s cash generation and pricing power during uncertain times for equity markets and the global economy.

Steered by chief executive Stefan Bomhard, the company behind Davidoff, Gauloises and Lambert & Butler cigarettes as well the blu vape brand delivered market share gains in its top five priority tobacco markets, while its five-year strategy generated an improved operational performance.

Also lighting up the investment case was the start of an ‘ongoing, multi-year’ share buyback programme on top of the ordinary dividend and continued investment in the competitive positioning of the business.

£2 billion to £5 billion market cap

US oil producer Kosmos Energy (KOS), which has a secondary listing in London to go with its primary listing in New York, enjoyed a strong 2022 thanks to rising energy prices and robust operational progress across its portfolio assets in West Africa, Latin America and the US.

A big development over the 12 months has been a reduction in the group’s debt pile, down from $2.5 billion at the start of the year to $2.1 billion by the end of October, funded by strong cash flows from the Jubilee and TEN fields offshore Ghana. The company has signalled this might enable it to commence a new shareholder return programme in the second half of 2023, with investment bank Berenberg implying it has a preference for share buybacks over dividends.

Shares in diversified international private healthcare services company Mediclinic International (MDC) advanced 56% in the year, making it one of the best mid-cap gainers. The rise follows a sweetened takeover offer from a consortium led by the Johannesburg-listed investment firm Remgro pitched at a 35% premium.

The consortium had previously made an unsolicited cash offer at 463p per share which Mediclinic rebuffed on the basis it undervalued the company.

Drug addiction and mental illness treatment company Indivior (INDV) had a stellar year with the shares rising by a third in value. Gains were driven by the rollout of its lead drug Sublocade, used to treat severe opioid use disorder.

Analysts have steadily increased their earnings estimates throughout the year as the company beat expectations and increased full year guidance.

The company is also building a pipeline of drugs to treat adjacent disorders such as alcohol abuse and schizophrenia. In 2023 Indivior plans an additional stock market listing on the US Nasdaq index alongside a five-for-one share consolidation.

Other takeover activities in the mid and large cap space included Homeserve (HSV) which received a £4.1 billion bid from Brookfield Infrastructure. The deal is expected to complete by early 2023 at the latest. Yamana Gold (AUY) received several takeover bids, with a joint offer from Agnico Eagle and Pan America Silver set to seal the deal. A shareholder vote is scheduled for 31 January 2023 and if approved the stock could delist from the London Stock Exchange soon after.

Shares in UK defence company QinetiQ (QQ.) advanced by a third in value, buoyed by positive sentiment towards the sector and increased growth prospects.

In April, QinetiQ set out its ambitions to reach £2.3 billion of revenues by 2027 and double the size of its US and Australian businesses. In August, the company took a huge stride towards its goals after a transformational deal to buy Avantus, a US cyber, data analytics and software development company which doubled the size of its US business.

Property and casualty insurer Hiscox (HSX) performed well this year due to a combination of a better underlying performance, a higher investment yield on its bond portfolio, smaller than feared losses from Hurricane Ian and the prospect of higher insurance rates in 2023.

Losses from Hurricane Ian were $135 million, at the low end of estimates, while the rise in rates due to the weather event means the company can deploy more of its capital in catastrophe reinsurance next year, generating more income.

£500 million to £2 billion market cap

Coal producer Thungela (TGA) was so out of favour when it was first spun off from Anglo American (AAL) in 2021 that it traded on a rock-bottom valuation. ESG (environmental, social and governance) considerations held sway at the time.

It then saw a spectacular rally in 2022 as the world worried less about reducing emissions and more about keeping the lights on, sending Thungela’s share price up 248%.

Earnings have been continually upgraded thanks to stronger coal prices and so the shares still trade on less than two times earnings and yield an astonishing 49.3% based on consensus forecasts for 2023. Liberum’s forecast year end net cash of $938 million accounts for more than 40% of the current market cap.

The soaring dollar this year is no secret and that has made UK companies look even cheaper to overseas buyers, and takeovers have been plentiful this year across all parts of the market cap spectrum. Many investors see a takeout premium as a great solution for many stocks, especially smaller ones, but the knockdown valuation of some stocks led to eye-watering premiums being offered for some companies. This applied to healthcare software firm EMIS (EMIS:AIM), sausage skin maker Devro (DVO) and consultancy RPS (RPS), prompting cheers from investors.

This year’s energy crisis has been bleak for consumers, but it played well for multi-utility Telecom Plus (TEP), which trades as Utility Warehouse. Its gas, electricity, home and mobile phone and other service packages saw it pick up customers as under-funded energy suppliers like Bulb, Orbit and Igloo went to the wall.

Lesser-known financial stocks including Bank of Cyprus (BOCH), Bank of Georgia (BGEO) and Irish insurer FBD Holdings (FBH) have been among the best-performing smaller companies this year.

The banks have benefited from higher interest rates, which have boosted their net interest margins significantly after years of famine.

Bank of Cyprus reduced its bad loan book, putting it on a firmer footing, while Bank of Georgia was helped by a domestic economy which is growing at a double-digit rate. Meanwhile, FBD delivered strong underwriting profits and kept costs down to record a 79% combined operating ratio.

£10 million to £500 million market cap

The top performer from the small cap ranks of the London market in 2022 was artificial intelligence-led bank Tintra (TNT:AIM), up 367% according to data from SharePad. It aims to remove the barriers of moving money between developing and emerging markets, in its own words allowing clients to ‘send money directly without human inaccuracies’.

Tintra is something of an outlier with the other spots in the list of best smaller company stocks taken by resources firms.

South African coal miner Bisichi (BISI) has been in the doldrums for the best part of a decade, not helped by coal falling out of favour due to mounting concerns about associated pollution. Coal has this year soared in value amid the disruption to the energy market caused by Russia’s invasion of Ukraine. That saw Bisichi’s shares trade at their highest levels since 2008. 

In the first half of 2022 the company posted pre-tax profit of £21.2 million compared with a loss of £700,000 for the same period a year earlier and unveiled a 10p per share dividend.

Lithium explorer Premier African Minerals (PREM:AIM) is poised to capitalise on strong prices for the element as it gears up for pilot production from its Zulu project in Zimbabwe.

Oil and gas outfit Prospex Energy (PXEN:AIM) has enjoyed a strong second half of the year in share price terms as it builds towards first gas from the Podere Maiar project in Italy’s Po Valley. Another stock in demand with investors in recent months was Angus Energy (ANGS:AIM) as it drills for gas in the UK.

In something of a blast from the past Borders & Southern Petroleum (BOR:AIM) has seen its shares rebound strongly in 2022 as the possibility of finally exploiting the potential for hydrocarbons off the Falkland Islands moved a bit closer thanks to strong demand for oil and gas.

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