The stock market is still reeling from last year’s correction and plenty of FTSE 100 stocks are trading at discounted prices.
However, the UK’s flagship index contains plenty of businesses that have had a pretty stellar year so far, some even defying expectations and proving to be far more resilient than initially expected.
Looking at the index as a whole, the FTSE 100 is up by more than 10% in the last 12 months. That’s about 2% more than its historical annual average, and this figure doesn’t include the additional gains from dividends.
With that in mind, let’s explore which companies have been driving this upward momentum and which are seemingly being left behind.
The winners
| Company | Industry | Year-to-date Return |
| Rolls-Royce | Aerospace & Defence | +124% |
| Marks & Spencer | Consumer Staple | +87.8% |
| Centrica | Energy | +69.4% |
| Melrose Industries | Aerospace & Defence | +66.2% |
| 3i Group | Investment Services | +53.2% |
With the travel industry almost back at full pre-pandemic capacity, significant tailwinds have been blowing for this sector. That’s certainly been a sigh of relief for Rolls-Royce shareholders who weren’t sure whether the business would survive only a few years ago. It’s also proven to be quite the tailwind for firms such as Melrose, which also operate in this space.
The losers
Not all of the largest companies in the UK have had a stellar year. In fact, some have lost more than a third of their market capitalisation. And if this downward trajectory continues, they may even fall out of the index and into the FTSE 250.
| Company | Industry | Year-to-date Return |
| Fresnillo | Metals & Mining | -39.1% |
| Entain | Gambling | -30.4% |
| Anglo American | Metals & Mining | -29.3% |
| Croda International | Chemicals | -26.5% |
| St James’s Place | Investment Services | -25.3% |
Cooling inflation is obviously terrific news for consumers as price hikes start to slow. However, it’s also introduced some headwinds for raw material industries. So it’s no surprise to see that three of the top five worst performers reside within the mining and chemical industries.
Like many sectors, these are notoriously cyclical, with product pricing largely driven by demand and supply rather than branding. That’s why when inflation went through the roof, these were some of the top-performing sectors.
But with commodity prices falling, revenue is shrinking. And with operations largely running on fixed costs, profit margins are disappearing with it.
Where are the opportunities?
On closer inspection of winning and losing FTSE 100 stocks, a common theme emerges. The most successful investments since the start of 2023 have been the businesses that were sold off heavily in recent years, while the losers appear to have been overbought over the same time frame.
This isn’t exactly surprising since pessimism about a company often causes prices to fall below intrinsic value if the negativity is created by short-term speed bumps rather than fundamental problems. And therefore, when looking for opportunities right now, my interest goes to the losers.
For many of these firms, the recent downward pressure may be well justified. But in some cases, long-term bargains may have just emerged.
