So far, 2021 has been positive for UK shares. The FTSE 100 index has added almost 760 points to reach 7,218.73 points as I write, up almost an eighth (11.8%). But while some Footsie stocks have done well, others have declined this year.
The FTSE 100’s summer slowdown
During the summer, the FTSE 100 is generally weaker than usual. A lack of liquidity and lower trading volumes often lead to volatility and price declines. Hence, over the past six months, the Footsie has risen by just 6.9%. Despite this slowdown, some large-cap stocks have performed brilliantly since mid-February. Indeed, 78 of the 101 stocks in the FTSE 100 (one is dual-listed) have climbed over the past six months. These gains range from 0.2% to 45.3%. The average gain across these 78 winners was almost a sixth (16.5%). This leaves 23 losers with declines ranging from 0.3% to 29.7%. The average fall across these 23 losers was 8.9%.
The top three shares over six months
Now for the FTSE 100’s top-performing stocks over six months. Since Valentine’s Day, these three have soared by more than two-fifths (40%):
Ashtead Group (equipment hire) +45.3%
BT Group (telecoms) +45.3%
Entain (betting and gambling) +44.8%
One of these FTSE 100 winners is a household name, while the other two are less well-known. Ashtead Group (LSE: AHT) is a leader in renting out industrial equipment, mostly in the US, UK, and Canada. Founded in 1947, Ashtead had a solid 2020/21, generating £5bn in revenue and £936m in pre-tax profit. With the majority (85%) of its revenues from the US, Ashtead is winning in America’s economic rebound. Its shares trade on a price-to-earnings ratio of 36.4, an earnings yield of 2.7%, and a dividend yield of 0.8% a year. I don’t own Ashtead shares and, as a value investor, their fundamentals look a bit pricey for my blood. Hence, I’ll skip Ashtead stock at the current price of 5,648p and market value of £25.5bn.
The third of these three FTSE 100 champions is Entain (LSE: ENT), a global provider of sports betting and gambling. Its familiar brands include bwin, Coral, Ladbrokes, and PartyPoker. As a growth company with large digital operations and US exposure, Entain is booming. Its share price is up 147.3% over one year, 248.9% over two years, and 179.7% over five years. At the current share price of 1,961p, the group is valued at £11.5bn. As a go-go growth stock, Entain trades on a price-to-earnings ratio of 72.5 and earnings yield of 1.4%. Although I think Entain has substantial future growth potential, its shares are too richly priced for my boring value portfolio.
I like the look of BT
Second in the list of FTSE 100 winners is UK telecoms giant BT Group (LSE: BT.A) — London-listed since 1984. A couple of months ago, I reviewed BT’s progress in bouncing back from Covid-19 and earlier setbacks. Back then, I said I would be a cautious buyer of BT at 175.95p. Subsequently, BT shares surged to their 2021 high of 206.7p on 23 June. They have since fallen back to trade at 176.85p as I write, valuing BT at £17.5bn. BT shares trade on a price-to-earnings ratio of 12.1, an earnings yield of 8.3%, and a dividend yield of 4.4% a year. I didn’t BT stock, but I’d buy it at these levels.
Finally, the futures of these three businesses could be hit by three factors. First, rising consumer prices (‘hot’ inflation). Second, increasing coronavirus infections and, third, slowing economic growth. Thus, I’ll keep a close watch in 2021/22!
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Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.