These FTSE 100 stocks are flying! Can they keep it up?

The FTSE 100 has posted a healthy gain in the last year. This Fool investigates two stocks to see if they can carry on rising.

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The last few years have been miserable for some stock markets, especially in the UK. I’m hoping that we’re slowly but surely turning a corner. Should FTSE 100 stocks continue to soar, the times ahead could be a prosperous for us retail investors.

These two stocks have soared this year. So, can they keep their strong form moving forward?

Next

I haven’t paid much attention to fashion and lifestyle retailer Next (LSE: NXT) this year and I’m regretting it.

Year to date its share price is up 16.1%. Over the last year, it has climbed a magnificent 43.1%. I thought the FTSE 100’s 8.3% rise over the last 12 months was impressive. Next has outdone that, and then some.

The threats to the business are fairly obvious. We’re in the middle of a cost-of-living crisis, which is an ongoing threat to Next’s sales. If the economy takes a dive, that will no doubt impact the firm.  

Next earlier warned that sales were expected to slow down in the remaining three quarters of its year due to factors including wet spring weather. With its shares trading on 14.2 times earnings, above the Footsie average of 11, it could be argued its stock is on the expensive side.

Nevertheless, annual profit is still expected to rise nearly 5% to £960m this year. And I like the moves the business has made as it continues to invest in future growth. For instance, it has increased its equity stake in Reiss from 21% to 72%, while also taking a 97% stake in FatFace.

Its yield of 2.2% sits below the Footsie average. But there’s scope for growth, and with the business returning £425m to shareholders last year through a combination of dividends and share buybacks, there seems to be an appetite among management to reward shareholders.

Next seems to be going from strength to strength. The stock’s firmly on my radar now. I’ll be digging deeper into the company in the weeks to come.

Lloyds

Like Next, high street banking behemoth Lloyds Banking Group (LSE: LLOY) is off to a flying start in 2024. Year to date, it has jumped 14.4%. Over the last 12 months, it has risen 20.9%.

But just like Next, can it keep this up? It’s easy to make an argument both for and against.

On the one hand, Lloyds stock looks cheap. Investors can buy its shares trading on 7.3 times earnings, comfortably below the Footsie average. Its price-to-book ratio of 0.7 is also below the benchmark for fair value of 1.

To me, that shows the stock has growing room. Then again, it’ll face obstacles in the months to come. Interest rates are one. They’ll squeeze its margins. Like Next, it’s also vulnerable to a downturn in the UK economy.

But while I reckon we’re set to endure more bouts of volatility this year, looking past that I see a bright future for Lloyds. And to go alongside its cheap valuation, it has an impressive 5% yield covered comfortably by earnings.

I’m already a shareholder. Despite its rally, I still think its shares look attractive and I’m keen to increase my position.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. 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.

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