So far in 2022, the three FTSE 100 stocks that have come out on top in terms of price performance are Pearson (LSE: PSON), Glencore (LSE: GLEN), and BAE Systems (LSE: BA). According to my calculations, the Pearson stock price is up 50.5% for the year to date. BAE stock has risen by 48.8% in price, while Glencore shareholders have seen their holdings increase in value by 48.0%.
Since I own all three of these stocks I thought it worth looking back to why I bought them at the time.
The top-performing FTSE 100 stock
Pearson was a COVID winner but had given back a lot of its gains by the time 2022 rolled around. The company provides educational and learning technologies like e-learning and computer-based testing. The increase in online interactions drove its share price higher during lockdowns, but it fell as they lifted. Investors seemed to be thinking students going back into classrooms meant Pearson had had its day.
But Pearson does a lot more than help traditional educational institutions. Online learning allows institutions to offer their services beyond the campus. People are developing lifelong learning habits, particularly as the world is becoming more complex and more interconnected, and new ways of working emerge. The opportunities for offering certification, up-skilling, and retraining will persist. This is a growth market, not a COVID fad, and Pearson is a significant player in it whose stock looked cheap when I bought it on 18 January 2022.
Mining stocks
I added FTSE 100 stock Glencore to my portfolio on 29 September 2022, so missed out on a good chunk of its year-to-date gains. I bought this company to add to my other mining stock holdings, which had been performing well. With inflation running hot, commodity producers do well. Heading into winter, and with the war in Ukraine rumbling on, exposure to energy prices seemed like a good idea, and Glencore has a gas and oil trading division.
Now I know that mining stocks are cyclical, and the Glencore stock price will trend lower at some point. But it does produce copper and cobalt, two critical metals for vehicle electrification, and it has a growing metals recycling operation. These features make this stock attractive for me in the long term.
Long-term pick pays off
I have held BAE systems in my Stocks and Shares ISA since 2017. This holding had been underwater most of that time, and I absolutely did not anticipate this year’s price performance success. But, had I not bought this stock when I thought it looked attractive and committed to holding it for the long term—so long as the business fundamentals did not deteriorate significantly—I would never have benefitted this year.
Five years ago I wanted to build a core portfolio of big, defensive dividend-paying stocks and BAE fit the bill. It has paid an increasing dividend over the years. Its revenues have steadily increased and are relatively secure because they come from governmental contracts in the main and it’s hard to replicate what BAE does.
