The FTSE 100 may have flat-lined over the last six months, but the top three risers during that period — International Consolidated Airlines Group (LSE: IAG), Barratt Developments (LSE: BDEV) and Friends Life Group (LSE: FLG) — have delivered an average gain of 40%.
In this article, I’ll explain what’s driven these impressive gains, and ask whether shareholders should now lock in their gains, or hold on for more.
International Consolidated Airlines
Shares in IAG have risen by 47% over the last six months and the firm, which owns British Airways and Iberia, had a stonking year in 2014.
Passenger capacity rose by 9.3% and revenue rose by 8.0%, driving an 80% increase in operating profit before exceptional items. IAG also benefited from the falling price of oil: fuel costs fell by 7.8% during the year.
IAG expects operating profits to rise by around 60% to more than €2.2 billion in 2015. Current forecasts give IAG shares a fairly modest 2015 forecast P/E of 12.0 — I’d be tempted to hold on for more.
Friends Life Group
Friends Life’s share price really took off when Aviva made a bid for the firm in November. The all-share deal meant that the value of Friends Life shares became pegged to those of Aviva.
I sold my Friends Life shares soon after the bid was announced, but this has proved to be a missed opportunity: Aviva shares have risen by 8% since then, while Friends Life shares have done even better, rising by 13%.
However, if you don’t want to end up owning shares in Aviva, you might want to think about selling quite soon, as the last day of dealing for Friends Life shares is 9 April.
Barratt Developments
Housebuilder Barratt has taken the number three slot behind IAG over the last six months, gaining around 35%, thanks to a 12.5% increase in completions, and a 75% rise in pre-tax profits over the period.
Barratt shares now offer a 2015 prospective yield of 4.4%, rising to 5.5% in 2016.
However, while it’s impossible to know when the housing market will peak, several housebuilders have already flagged up slowing sales growth and rising land, labour and materials costs.
Barratt shares now trade at nearly twice their tangible book value, and have risen by 350% over the last five years — compared to a gain of only 200% between February 2002 and 2007. The income remains attractive, but I’d be tempted to take some money off the table.