Investors often won’t get back into a stock until they see it’s already climbing. Here are three FTSE 100 stocks that are gaining ground, which I think could have a good bit more to give.
Retail recovery
I remember watching Marks & Spencer Group (LSE: MKS) around 20 years ago and wondering how long it might take for it to turn things round. About 20 years, it seems.
It’s still early days, and the five-year share price chart still looks a bit like those artists’ drawings of Pacific Ocean trenches.
But we’re looking at a 50% gain in the past 12 months, with the stock firmly back in the FTSE 100.
Doing on-the-ground research, I see my local M&S has moved premises. It looks more like a modern 21st century outlet, and less like Grace Brothers. And it seems to be getting better footfall.
Retail has to be risky right now, with high interest rates likely to squeeze shoppers’ pockets for a fair bit longer.
But forecasts show earnings growth pushing the price-to-earnings (P/E) ratio down to just 8.5 by 2026. And the return of dividends is on the cards.
Engineering excellence
The soaring Rolls-Royce Holdings share price has put BAE Systems (LSE: BA.) in the shade a bit.
But it’s up 40% in 12 months, and 175% in five years. And the valuation still looks good to me.
A P/E of 19 might not look cheap, especially with only a 2.5% dividend. But forecasts show solid earnings growth. The dividend should be well covered, and I can see growth there too.
I think the biggest risk could come from a cooling Rolls-Royce share price. I rate Rolls as a solid long-term investment, but right now I’d rate the shares as fully valued. If they should slip, BAE could drop too.
Still, BAE posted a strong set of FY results in February, and the firm has a growing order backlog of £70bn.
And CEO Charles Woodburn spoke of the company being “well-positioned for sustained growth in the coming years“.
Banking bonanza
I just can’t pick three FTSE 100 stocks without including a bank. And I’m going for NatWest Group (LSE: NWG).
It’s been an erratic few years. But the stock is off to a good start in 2024, and I think it might just be the start of something good.
So what’s so good about NatWest? Well, the stock’s on a forward P/E of under seven, falling to 5.5 on 2026 forecasts. And there’s a 6.9% dividend yield on the cards, and rising.
Do we need any more?
I can’t see how banks can lose in the long term. They’re in possibly the most crucial sector of the economy, and the UK government just doesn’t let them go bust.
That does lead to one of the main threats to the NatWest share price, though. I’m talking of the government’s big stake, which it looks like it could sell off before too long. Until that happens, I think it’s likely to put a drag on the stock.
But the eventual sale could benefit the whole sector.
