Investing £5k in each of these 3 FTSE stocks in January 2023 would have created a £55k ISA!

Our writer highlights a trio of UK shares that have absolutely rocketed recently, boosting any ISA that held them along the way.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Midnight is celebrated along the River Thames in London with a spectacular and colourful firework display.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

When looking at the meagre share price returns of the FTSE 100, it may be tempting to ignore the index altogether. Why bother with it in an ISA when all the really sexy returns are being generated in New York?

However, overlooking the Footsie in favour of higher potential returns elsewhere can be a mistake. For proof, consider these three blue-chip shares. Five grand invested in each of them just two years ago would now be worth around £55,000 in total!

Rolls

The star of the show has been Rolls-Royce (LSE: RR). Since the start of 2023, shares of the iconic engine maker have soared 520% higher!

Should you invest £1,000 in Intercontinental Hotels Group Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Intercontinental Hotels Group Plc made the list?

See the 6 stocks

Created with Highcharts 11.4.3Rolls-Royce Plc PriceZoom1M3M6MYTD1Y5Y10YALL12 Jan 202012 Jan 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '2520212021202220222023202320242024www.fool.co.uk

That was when CEO Tufan Erginbilgiç took the helm. Since then, international travel has bounced back and there’s been a significant rise in defence spending. Rolls’ profit margins and balance sheet have improved massively.

Looking ahead, the company forecasts underlying operating profit of £2.5bn-£2.8bn by 2027, up from an expected £2.1bn-£2.3bn last year.

However, the stock now trades at 27 times this year’s forecast earnings, which isn’t cheap. It suggests to me that much of the anticipated growth is priced in.

Therefore, if earnings come in light — because of ongoing supply chain issues, for example — then the stock could fall sharply.

M&S

Perhaps surprisingly, the next stock is Marks and Spencer Group (LSE: MKS). Shares of the posh supermarket are up by a whopping 178% since January 2023.

Created with Highcharts 11.4.3Marks And Spencer Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL12 Jan 202012 Jan 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '2520212021202220222023202320242024www.fool.co.uk

I don’t follow M&S too closely, but clearly I should, since it returned to the FTSE 100 in mid-2023. The reinvigorated company has achieved market share gains across clothing and food categories for four consecutive years.

On 23 December, it recorded its biggest ever day of food trading, while its online joint venture with Ocado is now delivering a record number of orders per week.

However, one risk worth noting here is the recent rise in the National Insurance and minimum wage announced in the UK Budget. To preserve profits, M&S may be forced to pass these higher costs on to customers. This might prevent it taking more market share in the ultra-competitive supermarket industry.

IHG

Finally, shares of InterContinental Hotels Group (LSE: IHG) have been on fire, surging 111% in the past two years to sit just off an all-time high.

Created with Highcharts 11.4.3InterContinental Hotels Group Plc PriceZoom1M3M6MYTD1Y5Y10YALL12 Jan 202012 Jan 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '2520212021202220222023202320242024www.fool.co.uk

Like Rolls, IHG has enjoyed a strong recovery in travel since the pandemic. It owns a diverse range of brands, including Crowne Plaza, Holiday Inn, and InterContinental (luxury).

In Q2, global revenue per available room (RevPAR) grew 3.2%, then ticked up another 1.5% in Q3. Impressively, the latter was achieved despite a 10.5% drop in RevPAR in Greater China. This highlights the strength and quality of the firm’s diverse global portfolio.

After its two-year doubling, the stock is trading at 24 times this year’s forecast earnings. That valuation doesn’t leave much room for error if, say, weakness in China spreads to the Americas and Europe.

Foolish takeaway

Admittedly, there was an element of cherry-picking here. Yet all three shares are well-known blue-chips, not obscure names.

Moreover, 3i Group stock (up 172%) actually did better than IHG, as did International Consolidated Airlines Group (up 148%).

So this proves that there are likely plenty of wealth-building UK stocks about, just waiting to be found.

Should you buy Intercontinental Hotels Group Plc shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

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.

Ben McPoland has positions in Rolls-Royce Plc. The Motley Fool UK has recommended InterContinental Hotels Group Plc and Rolls-Royce 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.

More on Investing Articles

Elevated view over city of London skyline
Investing Articles

The M&G dividend yields over 10% — and could get higher!

Christopher Ruane explains why he's upbeat about the long-term outlook for the M&G dividend yield and would happily buy the…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

2 popular UK growth stocks I wouldn’t touch with a bargepole in today’s market

Buying growth stocks can deliver market-beating returns, but this FTSE 250 pair doesn't look like a convincing investment for our…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

10 FTSE shares falling today after President Trump’s tariffs bombshell!

Our writer explains why JD Sports Fashion from the FTSE 100 and a diverse bunch of other UK stocks are…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

With value investing back in vogue, I’m taking a leaf out of Warren Buffett’s playbook

With tariffs and trade wars resulting in heightened market volatility, Andrew Mackie takes comfort in Warren Buffett’s words of wisdom.

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Around a 1-year high, is there enough value left in Next’s share price to make it worth me buying?

Next’s share price has risen a lot in eight months, but there could still be a lot of value left…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

OMG DYOR but IMO this ‘cool’ FTSE 100 stock offers bangin’ VFM!

Despite being one of the least trendy 50-somethings around, our writer considers how Gen Z could help push this FTSE…

Read more »

Investing Articles

2 cheap FTSE 100 and FTSE 250 growth stocks to consider as stock markets sink

I think these Footsie and FTSE 250 growth shares could be very shrewd buys to consider in the current climate.…

Read more »

Investing Articles

3 shares I’ve bought in the 2025 stock market sell-off

The stock market has experienced a lot of turbulence in recent weeks. Edward Sheldon has been taking advantage and buying…

Read more »