At the halfway point through 2023, it’s worth taking a look at the performance of some stocks within the FTSE 100. The difference in six-month performance between the best and worst stock is over 100%.
This is quite remarkable. Yet it also highlights the size of potential profits that could be made in the second half of the year if the loser retraces ground or the current winner pushes on higher.
Engines fully on
Let’s start with the best performer over the past months. I’m referring to Rolls-Royce (LSE:RR). The stock has jumped by 68% over this period. Over the past year, it has gained 79%.
A large part of the success in the stock came in Q1 when the full-year results for 2022 were released. The financials were much better than excepted, with profit before tax jumping from £36m the year before to £206m.
The report also gave investors reason for optimism going forward. The new CEO was upbeat in his remarks, with demand recovering and a further push ahead with the savings from the transformation.
By lunchtime of the release, the stock had jumped over 20%.
One risk going forward is that even though debt has been reduced, it still sits at £3.3bn. Any refinancing of this debt (or taking on new debt) is going to be a lot more expensive than in the past, due to the interest rate hikes from the Bank of England.
Even though I think the stock is a good long-term buy, I think investors might prefer to wait for a few weeks when the half-year results are due out and digest them first.
Losing the shine
At the other end of the spectrum we have Fresnillo (LSE:FRES). The silver and gold miner has struggled in 2023, with the share price down 32%. Over a one-year period, it has fallen by 25%.
The problem came earlier in the year when full-year results showed profit last year drop 59.4%. That’s a considerable dip for a business of this size. Naturally, this didn’t fill investors with confidence. Costs were higher as the impact of inflation was felt, along with labour reform conditions in Mexico.
Speeding back up to the present, gold and silver prices are both at three month lows. This isn’t going to help the business to perform if the end selling price is depressed.
On the other hand, production volumes are starting to increase. The Q1 figures from April showed silver production up 5.1% versus the previous quarter, with gold up 3%. This should help to offset some of the price fall via higher output.
Ultimately, I don’t feel the business is in a great spot right now and don’t see this changing any time soon. Therefore, I feel investors can find better opportunities than buying Fresnillo shares right now.
