It’s been a decent little year for the FTSE 100. With three quarters of the year gone, the index has climbed 12.4%. On current trends, the Footsie is on course for its fifth-best-performing year of the century so far. Five stocks have doubled!
Had someone told me all that back in January, I would’ve been quite impressed. If someone told me that during the ‘Trump Tariffs’ correction, I would’ve been gobsmacked.
It’s the two best performers across the hundred that I’m turning my attention to now. These two have become some of the hottest properties on the London Stock Exchange. And I hold neither one. Is it time to change that? Should I buy them both?
Fresnillo
The clear FTSE 100 winner of the year is Fresnillo (LSE: FRES). The stock is up nearly four times in just nine months. A £1,000 stake in the mining firm at the start of the year would now be worth nearly £4,000.
The reason for the stunning performance is the rocketing price of gold this year. With gold making up much of Fresnillo’s mining operations, the value of the yellow metal is hard to decouple from the stock.
Indeed a price-to-earnings ratio of around 50 but a forward P/E ratio of 24 tells a story. Earnings are going to be a lot higher next year now that gold is more expensive.
It’s easy to make the case that gold could continue from here. The debt of many of the world’s biggest governments is at eye-watering levels. Spending cuts seem to be difficult to enact. Elevated inflation may be with us for the forseeable. All of this makes gold and therefore Fresnillo a more attractive investment and one investors looking for this type of hedge may want to consider.
The double-edged sword cuts both ways, however. A pullback in the gold price could bring the shares back down very quickly.
Babcock
The second top FTSE 100 performer of 2025 is Babcock (LSE: BAB). The shares are up 153.3% since the turn of the year. Anyone who put £1,000 in on New Year’s Day would now have around £2,500.
Like Fresnillo, the defence firm has been surging from sector-wide factors. The ramping up of defence spending worldwide has benefitted other defence stocks, too, like Rolls-Royce and BAE Systems. Sad as it is that conflict seems to be increasing, the reality is that more money is expected to be spent with these kind of companies.
Babcock is significantly smaller than those other two FTSE 100 defence stocks. The firm was listed on the FTSE 250 until a recent promotion. This can mean customer concentration risk, where a stock relies on a few key clients. That spells bad news if one or more chooses to spend their money elsewhere.
On the other side of the equation, Babcock is renowned for its modern products such as UAS (uncrewed aerial systems). In an age where drones are playing a greater role in conflict, I think this stock could be one to think about.
