A year ago today, there were some companies I just wouldn’t have expected to see in the top ten FTSE 100 performers in 2014.
Pharma star
AstraZeneca (LSE: AZN) (NYSE: AZN.US), for example, is a great company whose visionary boss Pascal Soriot was driving it back towards earnings growth, with a strategy of focusing on core strengths and investing heavily in getting the company’s drugs pipeline beefed up.
The speed of AstraZeneca’s recovery has taken most of us by surprise, and while originally nobody expected a return to growth before 2017 there’s now an outside chance we’ll see it as soon as next year. The result has been a 29% share price rise since the start of January, to 4,599p.
Some top funds are behind AstraZeneca too with ace UK investor Neil Woodford tucking some away, while his old Invesco Perpetual High Income fund still has a chunk.
High street
The 20% rise at NEXT (LSE: NXT), to 6,510p, has surprised me less, as I’ve always considered the company to be one of the very best on the high street. While rivals like Marks & Spencer have been struggling to get the right mix of clothes, NEXT just knows what’s going to sell. And while ASOS has been seen as the high-flyer in online sales, NEXT Directory has been going from strength to strength with a lot less fuss.
NEXT has its sixth straight year of double-digit earnings growth forecast for this year, which is a mark of a high quality company, and I can see another happy year ahead for shareholders.
Cash from water?
But what about United Utilities (LSE: UU), providing water services to the northwest of England and not the kind of company that many would tip to get into the top 10? What we’ve seen there is a 39% rise since the start of 2014 to 934p, the best of our three.
Political and regulatory pressure on the energy suppliers, which has led to a period of pricing stagnation, has probably helped, especially as low-interest conditions look set to continue for a long time yet. Seekers of steady income have had to look elsewhere, and United’s dividend yields of more than 4% are looking very tasty.
There are yields of 4.2% forecast for this year and next, and that’s led institutional investors to afford United Utilities a P/E ratio as high as 20 this year, rising to 22 next.