While the bears are holding the FTSE 100 just back from the 7,000 level, the bulls behind some top companies are fighting back — the index has been as high as 6,983 points today! Which are the winning stocks? Here are five that seem unstoppable:
Barratt Developments
Recoveries don’t come much better than housebuilding, and Barratt Developments (LSE: BDEV) typifies the sector. Its share price is up 24% over the past 12 months to 532p, and has multiplied seven-fold since August 2011! The recession hit housebuilders hard, but they snapped up lots of cheap land while they could and the results are clear to see.
Even after the climb, Barratt has one of the lowest P/E ratios of the FTSE 100 at 11, and one of the best prospective dividend yields at 5.2%. Time to take profit? Not at all — it’s time to hold on for plenty more.
SKY
Shares in satellite telly firm SKY (LSE: SKY) haven’t done quite so well, but they’re still up 21% since mid-November to 1,026p as communications and content providers have been through a good patch — BT is up 27% over a similar period and ITV up the same over 12 months.
Valuations are arguably a bit steep now, with a forward P/E of 19 and a dividend yield of a modest 3.3% — but it’s a growth business and should continue to do well.
Legal & General
Insurers have been resurgent, with Legal & General (LSE: LGEN) up 38% to 293p in the past year, and up 240% over five years compared to the FTSE’s meagre 22%. Legal & General had to cut its dividend modestly during the crisis, but since then it’s come bouncing back and provided a 4.5% yield last year — and there’s 4.6% on the cards for this year and 5.1% next.
Legal & General might even be my favourite of these five.
Marks and Spencer
The travails of Marks and Spencer (LSE: MKS) are long and well documented, but the high street name is slowly coming back. Since a nadir in late 2008 the shares have regained 150% to today’s 520p, and that’s easily beaten the FTSE 100’s 84%. Dividends have also provided better yields than the FTSE average, so M&S’s reputation as an underperformer is clearly ill deserved.
P/E ratios are still perhaps a little high for me at this stage, at 16 for March 2015, but writing off M&S would be foolhardy.
Old Mutual
We’re back to in insurance with Old Mutual (LSE: OML), and a 30% bull run since mid-December to reach 230p. Old Mutual canceled its dividend entirely in 2009, but since then it’s quickly come back to a 4.6% yield in 2014 with similar expected this year and next.
Results for 2014 showed a 16% rise in adjusted operating profit at constant currency, with the firm telling us it has “appropriate and resilient levels of capital, liquidity and leverage“. I see no danger here.
