We’re six weeks into 2026, and already it feels like a lot has happened in the stock market. There’s been a divergence between winners and losers. The FTSE 100 is up 5% this year, but I spotted a growth share that has rocketed out of the gates. If someone had invested £2k at the beginning of January, here’s what it’s worth now.
Number crunching
I’m referring to Saga (LSE:SAGA). The stock is up 42% so far this year. That’s 364% annualised! Of course, I’m not claiming it’ll keep up this crazy pace of growth for the rest of the year. But already, £2k would have grown to £ 2,840 in less than two months. That’s seriously impressive.
Saga sits in the FTSE 250, so it’s not a small, penny stock either. For comparison, the FTSE 250 is up 4.3% this year, highlighting the scale of Saga’s outperformance.
It’s not as if all of Saga’s peers are going the same way. Aviva is a competitor, yet the stock is down almost 9% in 2026.
Company-specific drivers
Last month, the firm provided a trading update that seriously impressed investors. It said profit before tax for the full year is now expected to be above the guidance from the previous half-year report. What has helped is the fact that all divisions are performing well. Travel, insurance, holidays, and other areas are in high demand among consumers.
Looking ahead, it spoke about optimism surrounding recent partnerships “with Ageas in Insurance Broking and NatWest Boxed in Money.” Tapping into the expertise of other financial services companies could help this part of the business grow rapidly in the coming year.
The stock also jumped after the update revealed net debt will be “significantly lower than the prior year, an improvement on previous guidance.” This is always a positive for investors, as it reduces financing costs that can eat into cash flow and profits.
The pace of growth from here
For investors who missed the recent surge, the question is how much further this run can go. Over the past year, the stock has been up 335%. Valuation is one risk going forward, as the price-to-earnings ratio is 23.66, well above the index average and above my fair value benchmark of 10.
However, the company’s market cap is £790m, which means it has scope in the medium term to grow further as it’s not a massive firm. This could include promotion to the FTSE 100, something that would attract even more investor attention.
One risk to note is the cyclical nature of the travel industry. For this division of Saga, an economic downturn could hit bookings and profitability.
I still think the company is a good long-term purchase, but I believe investors might want to consider allocating a small amount, which can be increased if there are any short-term corrections to aim for a better average purchase price.
