Should I buy the best-performing FTSE 100 stocks of 2021 (so far)?

Most FTSE 100 stocks have made decent progress so far in 2021. The blue-chip index is up 11%. However, some stocks have raced well ahead of the field, with gains of up to 68%.

As you’ll see, these outperformers listed below are a mixed bag of businesses. Do they have qualities and valuations that could make them particularly good investments for me? Let’s have a look.

The high-flying FTSE 100 stocks

This table shows the Footsie’s top five performers since the start of the year. For perspective, it also shows their longer-term returns:

Lucrative convergence

I see a lot of growth potential in Entain. It’s a cutting-edge business with market-leading technology. And it’s positioned at the heart of what looks like being a lucrative convergence of media, entertainment and gaming. Growth is expected to really kick in next year.

Regulatory risk, in areas such as licencing and player protection, is something I need to be aware of. Nevertheless, with its shares at 1,910p, I’d be happy to buy this FTSE 100 stock on a 2022 price-to-earnings (P/E) ratio of 21 and prospective dividend yield of 2%.

Beneficiary of infrastructure spending

I like Ashtead’s simple business model, economies of scale and diverse customer base. I’ve written positively about it in the past, albeit when its shares were trading at a much lower level (1,950p) than today (5,614p).

At the current price, its 2022 P/E is above 30 and prospective dividend yield is below 1%. It’s set to benefit from post-pandemic infrastructure spending by governments, but for a company that serves largely cyclical industries, I think the P/E is quite demanding. If I owned the shares, I’d hold them at this level, but it would take a lower valuation to interest me in buying.

The other three FTSE 100 stocks

I’m less keen on the businesses of Royal Mail, St James’s Place and Glencore. Royal Mail’s UK letters business is unique, but also in structural decline. With this drag, and the parcels market being highly competitive, I’m not surprised City analysts see a future of low growth and pressure on margins.

Even on a single-digit P/E, at a share price of 490p, it’s not a stock for me. But I can see a prospective dividend yield of over 4% could interest income-focused investors.

I may be underestimating the ability of St James’s Place to continue extracting high fees from its wealthy clients. And the willingness of its clients to pay them. But as I’ve doubts about the long-term sustainability of its charges, a P/E of 29 and 3% dividend yield (at a 1,604p share price) don’t have great appeal for me. I think there are more attractive wealth managers for me to invest in.

Finally, I’ve never really got to grips with what I see as part-natural-resources producer, part-commodities-trading hedge fund Glencore. Certainly it’s a differentiated business, and a number of my Motley Fool colleagues are keen on the stock (P/E of 9.5 with a 4.5% dividend yield at a share price of 333p).

But whenever I look at the business, it goes back on what Warren Buffett’s partner Charlie Munger would call my ‘too hard’ pile.