The best FTSE 100 stocks for 2024… so far

This FTSE100 gained 6.5% in the first six months of 2024. That’s a good result, but the headline number masks some pretty depressing results.

Only 35 stocks have outperformed the index this year. And even among them, the news isn’t necessarily as positive as it seems.

Acquisitions

The best performing FTSE 100 share this year was Dark tracewhich is an increase of 61%. The problem is that it is not because the company is growing, but because it is being acquired.

In April, the company accepted a takeover offer from private equity firm Thoma Bravo. That completely changed the equation for anyone thinking about buying its stock.

The question now is not how much cash the company can generate, but how much it will sell for. And it’s not just Darktrace – the same goes for Hargreaves Lansdown AND DS Smith.

I find it depressing that the best returns in the FTSE 100 come from acquisitions rather than growth. But in any case, it is difficult to see many possibilities for the future here.

Recovery after the pandemic

The second major theme at the top of the FTSE 100 is the recovery from Covid-19. The most obvious example is Rolls-Roycewhich recorded an increase in the number of aircraft flight hours.

Rolls-Royce’s share price is up 54% since the beginning of the year. And in the banking sector NatWest AND Barclays have performed well and interest rates have moved closer to more normal levels.

But I think in each of these cases the momentum is starting to fade. Engine flight hours have reached pre-pandemic levels and it looks like interest rates will drop from there.

In contrast to the takeover targets, Rolls-Royce, NatWest and Barclays have seen real growth. But I think it’s hard to justify buying either of them at this point.

Where are the opportunities?

I think Bunzl (LSE:BNZL) has about as much chance of being taken over as Monster Raving Loony Party has of winning the election. However, the company is likely to increase its profits over time.

The story continues

The company distributes consumables such as paper plates, hygiene products and advertising bags. Weak performance – particularly in the US – has caused the company’s shares to fall 5% so far this year.

With 60% of revenue coming from the US, there is a clear risk that this situation will continue. But the company has some important long-term advantages that investors should pay attention to.

Most importantly, the company’s size and scale allow it to provide unparalleled customer service. And it allows Bunzl to make acquisitions of its own to increase profits.

British shares

The FTSE 100 index has performed well this year. But I doubt the forces that have driven share prices over the past six months will continue to push them higher in the long term.

Instead, I want to invest in companies that can increase the value of their shares, increasing their profits over time. Fortunately, some of them didn’t do so well this year.

Bunzl is a prime example of this. The company’s shares may be down 5% since the beginning of the year, but its growth prospects and competitive positioning still look as good as they did before.

The post The best FTSE 100 stocks of 2024… so far appeared first on The Motley Fool UK.

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Stephen Wright has no position in any of the stocks mentioned. The Motley Fool UK recommends Barclays Plc, Bunzl Plc, DS Smith, Hargreaves Lansdown Plc and Rolls-Royce Plc. The views expressed on the companies mentioned in this article are the author’s own and may therefore differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering a variety of insights makes us better investors.

Motley Fool UK 2024