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The FTSE 100‘s up by nearly 5% in 2025. However, investors who tapped into some key trends earlier this year have already enjoyed much bigger gains.
The top three risers in the FTSE 100 this year have all risen by more than 50%.
A long-term winner?
Defence contractor Babcock International (LSE: BAB) has seen its share price rise by more than 60% already in 2025. This £4bn business has benefitted from a string of contract wins, including a recent £1bn deal with the British Army.
Prime Minister Keir Starmer has said he plans to increase UK defence spending to 2.5% of GDP by 2027 and then to 3%. I reckon such long-term growth in defence spending could support companies such as Babcock to invest in new capacity and growth.
Broker forecasts suggest earnings could rise by 8% for the year to March 2026. Admittedly, this sounds quite modest. But earnings forecasts for last year were upgraded several times.
If the strong momentum continues, I think it’s possible that 2025/26 forecasts could rise further.
The main risk I can see is that Babcock could suffer a repeat of problem contracts that caused it big losses a few years ago (cost overruns on Royal Navy contracts dented profits). However, my impression is that CEO David Lockwood has taken steps to make similar issues much less likely.
Babcock shares currently trade on a forecast price-to-earnings (P/E) ratio of 16. That’s a little above average for this business, but I think this could be justified by strong market conditions and long-term growth potential. I see it as worth considering.
A golden opportunity?
Mexican gold and silver miner Fresnillo (LSE: FRES) has rocketed more than 60% higher since the start of the year. Digging out precious metals has become very profitable with gold trading at more than $3,000 per ounce.
Even after these gains, Fresnillo shares still look quite reasonably priced on just 12.5 times 2025 forecast earnings. There’s also a useful 4.8% dividend yield – family ownership suggests to me the dividend will always be important here.
Of course, the main risk is that gold and silver prices might start to fall. If that happens, Fresnillo’s share price could follow.
Gold was trading at under $2,100/oz a year ago. A fall back to that level could cut Fresnillo’s annual revenue by nearly $700m. My sums suggest profits could halve.
I think Fresnillo’s worth considering for investors who remain bullish about gold. Personally, I’m not sure.
Long-term growth story
Airtel Africa‘s (LSE: AAF) one of the largest mobile services operators in Africa. The group also has a fast-growing mobile money operation with nearly 45m subscribers.
I think this business has the potential to deliver above-average long-term growth, reflecting economic development in key markets such as Nigeria.
Stock market investors also seem to have climbed onboard with this story in 2025, lifting the shares by nearly 55% so far this year.
My main concern is that I’ve always found the company’s finances quite complicated, with a lot of exposure to unpredictable currency movements. There’s quite a bit of debt too.
With the stock now trading on 18 times 25/26 forecast earnings with a dividend yield of less than 3%, I need to do more research to understand the opportunity.
