Up 28% in a month! How 2 UK stocks smashed Rolls-Royce’s share price growth

The Rolls-Royce share price has raced ahead of the FTSE 100 for the last two years but other companies are now starting to play catch-up.

| 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.

View over Old Man Of Storr, Isle Of Skye, Scotland

Image source: Getty Images

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.

UK investors can’t take their eyes off the Rolls-Royce (LSE: RR) share price, as it’s soared 325% over the last two years. Over the last 12 months, it’s up almost 195%.

Created with Highcharts 11.4.3Rolls-Royce Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

No share can maintain this rate of growth forever, and there are signs of a slowdown. It’s still up 12.23% over the last month but nine FTSE 100 shares did better in that time. Two did notably well.

Paper and packaging firm DS Smith (LSE: SMDS) was the FTSE 100’s biggest winner, up a thumping 28%. The shares spiked after the board announced it had agreed to be bought by FTSE 100 rival Mondi for around 373p per share.

Should you invest £1,000 in Taylor Wimpey right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Taylor Wimpey made the list?

See the 6 stocks

Paper tigers show their teeth

Now we have the prospect of a bidding war with DS Smith also in talks with New York-listed International Paper, which is offering around 415p. As I write this, the shares trade at 408.8p.

International Paper has until 23 April to firm up its intentions but I won’t do anything aside from watch with detached interest. Personally, I never buy on takeover speculation. All too often, it comes to nought, and the spike turns into a dip. Plus I already have exposure to the packaging sector via Smurfit Kappa Group.

The month’s second-best performer is Chile-based Antofagasta (LSE: ANTO), up 23.43%. This is no flash in the pan, as the copper miner’s share price is up 47.3% over one year, and 121% over five.

Created with Highcharts 11.4.3Antofagasta Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Antofagasta has benefitted from the rising copper price, which has jumped 7.9% in the last month on hopes of a Chinese recovery. In February, it reported solid 8% growth in 2023 revenue and underlying earnings to $6.3bn and $3.1bn respectively.

The risk is that the global economy slows as Middle East tensions spread and the rising oil price revives inflation. That would hit demand for copper. But my biggest concern is that Antofagasta now trades at 38.58 times trailing earnings. That’s too pricey for me.

A top stock but pricey

Rolls-Royce shares aren’t particularly cheap, either, trading at 30.47 times earnings. That’s hardly surprising, given how well they’ve done. I stupidly banked my 187% gain last summer, only to see the share price double since.

I remain optimistic as the good news keeps flowing. Last month, Rolls-Royce announced it would invest £55m to meet increased demand for its large civil aircraft engines. Sales are expected to climb 40% from 2025.

2023 was a brilliant year for the company. Underlying operating profit soared 144% to £1.6bn with free cash flow up 155% to a record £1.3bn. It expects profits to climb to between £1.7bn and £2bn in 2024, with free cash flow from £1.7bn to £1.9bn. The turnaround is stunning but I’m wary of buying Rolls-Royce today.

I’m concerned that early success will go to CEO Tufan Erginbilgic’s head. His aggressive drive to hike prices has scared off long-standing customer Thai Airways. A lot of excitement is baked in but investors will punish Rolls if it doesn’t deliver.

I’m still keen to restore Rolls-Royce to my portfolio though, and plan to buy on short term weakness. But I won’t bother with DS Smith and Antofagasta.

Should you invest £1,000 in Taylor Wimpey right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Taylor Wimpey made the list?

See the 6 stocks

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.

Harvey Jones has positions in Smurfit Kappa Group Plc. The Motley Fool UK has recommended DS Smith and Rolls-Royce Plc. 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.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

Worried about the future of the Cash ISA? Consider investing like this for potentially great returns

The Cash ISA is tipped for massive changes in the coming months. This could provide fresh opportunities for savers, says…

Read more »

Investing Articles

£20k across this FTSE 100 share and ETF would have more than DOUBLED in just 5 years!

Looking for ways to supercharge your stocks portfolio? Consider a lump sum investment in this FTSE 100 share and this…

Read more »

Black father and two young daughters dancing at home
Investing Articles

Just released: our 3 top small-cap stocks to consider buying before March [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

As the British American Tobacco share price drops 10%, should investors buy the dip?

A share price slump has pushed British American Tobacco's dividend yield over 8%. Should investors consider buying this FTSE 100…

Read more »

Investing Articles

Prediction: this investment trust will easily outperform the FTSE 250

Our writer shines the spotlight on a FTSE 250 investment trust that he thinks looks set up for strong long-term…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Should I buy more BAE Systems shares for my Stocks and Shares ISA?

This investor in BAE Systems shares takes a look at the FTSE 100 defence firm's annual results to decide if…

Read more »

Investing Articles

Does this news mean a fresh start for the Centrica share price?

The Centrica share price has gone nowhere over the last year. But the stock has spiked following strong results and…

Read more »

Investing Articles

2 UK dividend shares that aren’t what they seem

Investors need to look carefully when it comes to dividend shares. Sometimes the actual yield can be higher or lower…

Read more »