Here are the top five stocks on the FTSE 100 this year
As the first quarter of 2024 comes to an end, City A.M. looks at the top five best-performing stocks on the FTSE 100 so far this year.
As the first quarter of 2024 comes to an end, City A.M. looks at the top five best-performing stocks on the FTSE 100 so far this year.
Honourable mention: Natwest
After a bruising year for its stock price in 2023, banking giant Natwest has seen a rapid rebound amid strong results and the UK’s improving economic picture. Shares are up 21 per cent this year, outperforming high street rivals Lloyds, HSBC and, by a narrower margin, Barclays.
Its shares were weighed down by disappointing third-quarter results last year, on top of a “debanking” row with former Ukip leader Nigel Farage that triggered the resignations of group chief executive Dame Alison Rose and Coutts boss Peter Flavel.
However, the Bank of England’s interest rate hikes helped push Natwest’s annual profit to its highest level since 2007, causing shares to jump after its results announcement in February. It also confirmed that interim boss Paul Thwaite would permanently take over as group chief executive.
Investors are now looking forward to the government’s planned sale of part of its remaining stake in Natwest to the general public, which it is aiming to launch this summer.
5. Antofagasta
Shares in Anglo-Chilean mining giant Antofagasta are up 23 per cent so far this year. The stock is closely tied to global commodity markets, which can prove particularly volatile.
Antofagasta is one of the world’s major copper producers, with its activities concentrated mainly in Chile where it operates four copper mines – with full ownership stakes in three of them.
The firm expects to expand its copper production, with the metal integral for electrification as countries transition to net zero and green energy – providing a long-term window of profitability.
Copper prices have proven more stable over the last 12 months, driving a boost in full-year earnings for Antofagasta and a steady rise in the company’s stock price.
It announced last month that revenue and earnings before interest, taxes, depreciation, and amortisation (EBITDA) both ticked up eight per cent and five per cent to $6.3bn and $3.1bn respectively in 2023.
4. Intermediate Capital
Asset manager Intermediate Capital burst onto the FTSE 100 in December after its shares were boosted by a strong set of results the prior month. After further positive trading announcements, its shares are up 24 per cent so far this year and up 73 per cent over the last 12 months.
The company announced in January that its assets under management swelled 13 per cent year-on-year to $86.3bn in the final three months of 2023, of which $68.4bn was fee-earning – a 10 per cent rise.
Meanwhile, the firm said it had surpassed its medium-term fundraising target of $40bn since April 2021 three months early, hitting $41bn.
Intermediate Capital added that it saw “momentum continuing into [the] final quarter of [the] financial year”.
3. Beazley
Insurance firm Beazley has jumped 27 per cent so far this year on the back of upgraded guidance and plans for bumper shareholder returns.
It was only in January that the firm came at risk of being eliminated from the FTSE 100 as its stock price sank in the middle of the month.
However, shares surged in February after the company announced it had raised forecasts for its undiscounted combined ratio, a measure of profitability used by insurers, to be in the mid 70s from its previous expectation of the low 80s.
A ratio of below 100 per cent indicates underwriting profitability, while anything above 100 per cent indicates losses from underwriting.
Beazley confirmed earlier this month that it would launch a share buyback of up to $325m after notching a record annual profit in 2023. Its pretax profit more than doubled on 2022 to reach $1.25bn last year.
The firm has been among a host of insurers to rake in cash over the past 12 months as geopolitical jitters and economic troubles lifted insurance premiums.
2. DS Smith
Takeover deals and counter-bids have a way of causing drastic share price moves – as recently seen by Wincanton and Spirent Communications on the FTSE 250.
Packaging firm DS Smith is the second-biggest riser on the blue-chip index this year amid a brewing international bidding war. Its shares are up 30 per cent in the year to date.
News broke in February that DS Smith’s bigger UK rival Mondi, also part of the FTSE 100, was considering making a takeover offer that could create a combined group worth more than £10bn, with both firms agreeing to a £5.14bn deal in principle earlier this month.
At the time, some analysts suggested that Mondi’s valuation of DS Smith was too cheap and could leave room for a rival bid.
The speculation became reality this week, and DS Smith’s share price received another boost after news that New York-listed giant International Paper had gatecrashed Mondi’s deal with a £5.7bn takeover proposal.
Pressure is now on Mondi to consider whether to raise its offer, although a full-on bidding war remains to be seen.
1. Rolls-Royce
After topping the FTSE 100 last year, British engineering and defence giant Rolls-Royce remains comfortably ahead in 2024.
The firm’s shares are up 43 per cent so far this year and have surged 189 per cent over the last 12 months.
Investors have been impressed by chief executive Tufan Erginbilgic, who joined the firm last January and is leading a turnaround plan to boost Rolls’ profits after years of losses.
The firm announced in February that its underlying operating profit surged to £1.6bn last year from £652m in 2022, well ahead of analysts’ expectations and driven by the group’s Civil Aerospace segment. Analysts had forecast gains of £1.4bn after Erginbilgic raised expectations last July.
Rolls’ defence order book swelled to a record £9.2bn last year, boosted by submarine contract awards for the Aukus defence pact between Australia, the UK and the US.
It now has more than 1,000 jobs in the pipeline in Derby on the back of a fresh £2.4bn in funding from Australia to the UK over the next decade. The funding aims to ensure Rolls’ production line can supply nuclear reactors for submarines built in Adelaide by fellow FTSE 100 defence giant BAE Systems, which is up 21 per cent this year.
Rolls’ CEO has also embarked on a massive cost-cutting drive, including slashing up to 2,500 jobs worldwide, or nearly six per cent of the firm’s 42,000-strong workforce, to “create a more agile business that is better able to serve customers and continue to create and maintain world class products”.
