“The FTSE 100 has enjoyed its best year since 2021 with an 11.4% total return, driven by a mixture of companies delivering good news and takeover activity,” says Dan Coatsworth, investment analyst at AJ Bell, as he shares his latest analysis looking back at some of the footsie’s leaders and laggards over the past year.
“Eighteen FTSE 100 stocks have generated a total return in excess of 30% and approximately half of the index (48 stocks) has produced a double-digit return. Nearly two-thirds (63 stocks) made investors money if held all year, factoring in share price movements and dividends.
“The UK stock market doesn’t deserve its unloved reputation. While it may lack the glitz and glamour of the US market, it’s still full of interesting companies offering steady earnings growth. Fundamentally, the FTSE 100 can help provide ballast to an ISA or pension portfolio, particularly as the index has a rich source of dividends and a good mix of cyclical and defensive companies.
“The average total return for the index is 7.1% over the past decade. It has achieved double-digit returns in five of the past 10 years.”
| FTSE 100 annual performance | |
| Year | Total return (%) |
| 2024* | 11.4 |
| 2023 | 7.9 |
| 2022 | 4.7 |
| 2021 | 18.4 |
| 2020 | -10.2 |
| 2019 | 17.3 |
| 2018 | -8.7 |
| 2017 | 11.9 |
| 2016 | 19.1 |
| 2015 | -1.3 |
| Source: AJ Bell, ShareScope. Total return. *Data to market close on 6 December 2024. | |
The UK stocks beating the S&P 500
“Many people favour the US as a place to make money, yet the S&P 500’s 29.3% total return year-to-date was eclipsed by 18 stocks on the FTSE 100. Many of these UK stocks delivered two to three times the return as the US index. For example, anyone holding NatWest or Rolls-Royce for the entire year would have nearly doubled their money.
“Admittedly, there were some duds as well. Quite a few well-known retailers hit a bump in the road, namely JD Sports, B&M and Frasers. Housebuilders struggled despite the introduction of a new government with pro-housing policies and interest rates starting to come down. We also saw a few companies previously hailed for their ‘quality’ characteristics fail to live up to their reputation, being Croda and Spirax.
“Despite some weak spots, 2024 will go down in a history as a solid year for the UK market.”
| FTSE 100: best performers in 2024 | |
| Company | Total return (%) |
| NatWest | 99.3 |
| Rolls-Royce | 95.7 |
| DS Smith | 87.8 |
| International Consolidated Airlines | 85.2 |
| Barclays | 79.3 |
| Beazley | 60.7 |
| Hargreaves Lansdown | 55.8 |
| 3i Group | 55.8 |
| Standard Chartered | 50.4 |
| Imperial Brands | 49.8 |
| Source: AJ Bell, ShareScope. Data to market close on 6 December 2024. Total return with dividends reinvested. | |
NATWEST
“NatWest was a beneficiary of regular upgrades to earnings forecasts during the year. It delivered impressive results thanks to improved margins and growth in lending and savings deposits.
“A major share overhang was lifted as the government accelerated the sale of what was a large stake in the business following a bailout in the global financial crisis. The stake is now less than 11% versus 38% a year earlier and the government has indicated it will be out completely next year.
“A decade ago, everyone was talking about challenger banks eating the legacy players’ lunch, yet NatWest is one of the big banks to have shaken off this competition. It has found ways to run the business more efficiently and growth has more recently been augmented by the acquisition of assets from Sainsbury’s Bank and Metro Bank.
“For a sector that is often mired in mis-selling scandals and the ever-increasing weight of regulation, it feels as if NatWest has shown that banks are still capable of doing well. It’s no wonder investors have been happy to keep bidding up the shares.”
ROLLS-ROYCE
“Rolls-Royce is a true phoenix from the ashes story. Having disappointed for years on cash flow, Warren East laid the foundations for running a tighter ship at Rolls-Royce, but his successor Tufan Erginbilgiç is the one basking in all the glory for this grand turnaround.
“Upgraded earnings forecasts can be a powerful share price catalyst and analysts have found reason time and time again over the past few years to nudge up their expectations for the British engineer.
“A recovery in the aviation industry has helped. The amount of time planes fly in the sky has a direct impact on the amount Rolls-Royce makes on spares and repairs contracts for a large installed base of aircraft engines. This installed base itself is also growing. Airlines are investing heavily to expand their fleet as they add new routes and seek more energy-efficient planes.
“The company’s defence business is benefiting from an improved outlook as countries prioritise military spending thanks to heightened global tensions.
“The new UK government is pro-nuclear power which plays to Rolls-Royce’s strengths as Labour has shown interest in small modular reactors, something the engineer has been developing. It has designed a factory-built nuclear power plant that it believes will offer clean, affordable energy ‘for all’.
“The growth opportunities are big and the company is on a roll, so it is understandable why investors might feel they want to stick with the shares even after a 730% rise since October 2022.
“Smashing expectations with its half-year results in August went some way to justifying its premium share rating, but it also means this feat has to be repeated again and again, otherwise investors might take anything less as a reason to bank their profits.”
INTERNATIONAL CONSOLIDATED AIRLINES
“The owner of British Airways is flying high after a delayed recovery in the travel sector post-pandemic has finally put its earnings and finances in a better shape.
“Revenue growth mixed with stronger margins has given a nice boost to profit and cash flow and continued International Consolidated Airlines’ journey in strengthening its balance sheet. That puts it in a stronger position to crank up shareholder returns or start thinking about acquisitions.
“At the start of the year, analysts had forecast €0.385 per share for 2024. The consensus estimate now stands at €0.531. It’s not often you see near-40% earnings upgrades for a stock in a year, but International Consolidated Airlines has done it.
“Investors have also been willing to pay a higher multiple of earnings for the stock, another reason why the shares have soared.
“In August, International Consolidated Airlines traded on four times 12-month forward earnings. The stock has now re-rated to six-times. That’s still in bargain basement territory which might explain why 13 analysts have a ‘buy’ rating on the stock, only five have a ‘hold’ and there are no ‘sell’ ratings.”
| FTSE 100: worst performers in 2024 | |
| Company | Total return (%) |
| JD Sports | -36.4 |
| B&M | -31.4 |
| Croda | -30.8 |
| Frasers | -29.9 |
| Spirax | -29.4 |
| Vistry | -27.0 |
| Prudential | -23.7 |
| Schroders | -22.1 |
| Barratt Redrow | -20.1 |
| Mondi | -19.2 |
| Source: AJ Bell, ShareScope. Data to market close on 6 December 2024. Total return with dividends reinvested. | |
JD SPORTS
“JD Sports started the year with a profit warning caused by mild weather and heavy discounting affecting pre-Christmas 2023 sales. The share price took a beating and only started to recover in earnest during the summer. The retailer was subsequently knocked for six by more weather problems and complaints that the US election hurt demand.
“What was a trusted name in retail is now churning out more excuses than a schoolboy who hasn’t done their homework.
“Cracks have appeared in the athleisure market this year as consumers become more selective over where they spend money. Previously, they might have been happy to splash the cash on the latest must-have trainers but for many people footwear is now having to last longer before replacement. Similar trends have been seen in sporty clothing. Investors need to decide if this is a short-term blip or the new normal.”
B&M
“The pandemic winner has gone from stock market darling to pariah after a slowdown in growth. A poor first quarter was followed up by soft trading in the second quarter, leading investors to ask if the company has gone off the boil. After all, the discounter should be thriving in a period where consumers are watching their pennies.
“Brothers Simon, Robin and Bobby Arora bought B&M 20 years ago as a struggling chain of 21 stores. They worked their magic and made B&M into a UK and French retail giant with more than 1,000 sites. Simon Arora bowed out in 2022 after 17 years running the business, Robin Arora seems to have become hands-off and now Bobby Arora is preparing to leave in 2025.
“It’s the end of an era for the business and investors might be wondering where the company goes next, particularly as it has just been demoted from the FTSE 100.”
