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Investors often don't invest in a stock again until they see that it is already going up. here are three FTSE 100 stocks that are gaining ground and that I think could have much more to offer.
Retail Recovery
I remember seeing Marks & Spencer Group (LSE: MKS) about 20 years ago and wonders how long it will take for things to change. It seems like about 20 years.
It's still early, and the five-year stock price chart still looks a bit like those artists' drawings of the Pacific Ocean trenches.
But we're seeing a 50% gain in the last 12 months, with the stock firmly back in the FTSE 100.
Doing some on-the-spot research, I see that my local M&S has moved premises. It looks more like a modern 21st century outlet and less like Grace Brothers. And it seems that attendance is improving.
Retail has to be risky right now, as high interest rates are likely to squeeze shoppers' pockets for quite some time to come.
But forecasts show that earnings growth will reduce the price-to-earnings (P/E) ratio to just 8.5 by 2026. And dividend returns are at stake.
Engineering Excellence
The rise Rolls-Royce Holdings share price has set BAE Systems (LSE: BA.) a little in the shade.
But it has increased 40% in 12 months and 175% in five years. And the valuation still seems good to me.
The AP/E of 19 might not look cheap, especially with a dividend of only 2.5%. But forecasts show solid profit growth. The dividend should be well covered and I can see growth there too.
I think the biggest risk could come from a cooling of Rolls-Royce's share price. I rate Rolls as a solid long-term investment, but at this point I would rate the stock as fully valued. If they fell, BAE could fall too.
Still, BAE reported strong results for the financial year in February and the company has a growing order book of £70bn.
And CEO Charles Woodburn talked about the company being “well positioned for sustained growth in the coming years“.
banking bonanza
I simply can't pick three FTSE 100 stocks without including a bank. and I go for NatWest Group (LSE: NWG).
They have been some erratic years. But the stock is off to a good start in 2024 and I think it could be the start of something good.
So what's so good about NatWest? Well, the stock has a forward P/E of less than seven, falling to 5.5 based on guidance for 2026. And there's a 6.9% dividend yield on the line, and rising.
We need more?
I don't see how banks can lose in the long run. They are in arguably the most crucial sector of the economy, and the UK government simply won't let them go bankrupt.
However, that leads to one of the main threats to the NatWest share price. I am referring to the large government stake, which it seems could be sold in no time. Until that happens, I think it's likely to be a drag on the stock.
But the eventual sale could benefit the entire sector.
