These 2 FTSE 100 shares have leapt over 20% in 30 days. Which would I buy?

Over the past month, these two FTSE 100 shares have soared by 21% and 29%. But which of these very different stocks would I want to own?

| 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.

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.

The first month of 2021 has seen the FTSE 100 leap and then slide as share prices fell back. Eight days into the year, the Footsie had gained almost 415 points (6.4%), one of its strongest starts in decades. However, it has since slipped back and is now under 45 points ahead (0.7%) for 2021. But some FTSE 100 shares have had a cracking month, with these two in particular surging over the past 30 days.

FTSE 100 winner #1: Ocado

The biggest riser in the FTSE 100 so far in 2021 is online grocer Ocado Group (LSE: OCDO). The Ocado share price has soared by more than a quarter (28.8%) in 30 days. What’s more, Ocado has been an outstanding share to own since 2016. Its shares are up 125.1% over one year, 455.5% over three years and 956.8% over five years. As a result, Ocado has also been the best-performing FTSE 100 share over all three of these time periods.

Of course, the Ocado share price may continue to thrash the Footsie, but I am sceptical. Since floating in mid-2010, Ocado has released a decade of results as a public company. As it gets larger, Ocado burns through yet more cash and generates greater losses, including a pre-tax loss of £214.5m in 2019. At the current share price of 2,854p, Ocado is valued at £21.4bn. That’s over 12 times its 2019 revenues. Even though Ocado’s revenues are growing fast, this makes its shares among the most highly priced in the FTSE 100. Also, loss-making Ocado has never paid a dividend. Hence, as a value investor looking for cheap shares and decent dividends, I would not buy this FTSE 100 share today. For me, Ocado looks like a bubble waiting to burst.

Johnson Matthey is up 21%

My second surging FTSE 100 share is Johnson Matthey (LSE: JMAT). Although not a household name like Ocado, Johnson Matthey has been around since 1817 and has a 204-year pedigree. Matthey is a world leader in the production of specialist chemicals and precious metals. Its products are used in the production of industrial chemicals, emissions controls, batteries, medical products, and and pharmaceuticals.

Over the past 30 days, the Johnson Matthey share price has leapt by more than a fifth (20.8%). For the record, its shares are up 13.2% over one year, down 6.7% over three years and ahead 22.3% over five years. To me, this is no bubble stock and, indeed, may be one FTSE 100 share ripe for re-rating. At the current share price of 2,985p, Matthey is valued at £5.8bn. That’s almost double its valuation during the March market meltdown of 10 months ago. Matthey’s earnings per share took a hit in 2020, but are expected to bounce back this year on rising revenues. For now, they pay a dividend of 1.7% a year. As a precaution, the dividend was cut in 2021, but may be restored to previous levels this year.

Last April, I saw a once-in-a-decade opportunity to buy into this British success story at 1,972p. The shares have since soared by over £10, leaping by more than half (51.4%). But with exposure to the coming electric-vehicle boom, I see a solid future for Matthey. Of course, I could be wrong. After all, Matthey had a difficult 2020, cancelling its dividend as its first-half underlying earnings per share halved. If earnings don’t return to growth, then this could be painful for its shareholders. Even so, I would choose this high-quality FTSE 100 share over frothy Ocado any day!

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.

Cliffdarcy has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »