Regardless of a robust begin, the FTSE 100 climbed solely 5.8% in 2024. Most of these positive aspects had been made within the first 4 months, so naturally my top-performing shares had been ones I’d held since January.

After making my final-year portfolio evaluation for 2024, I recognized two shares that powered me by the 12 months: 3i Group (LSE: III) and Marks and Spencer (LSE: MKS).

They weren’t the best-performing shares on the Footsie final 12 months however they’re across the high 10. Did they only have a fortunate 12 months or is that this progress sustainable within the long-term? I made a decision to analyze.

A retailer in restoration

Marks and Spencer bounced again in late 2022 after an extended interval of losses. It’s continued performing effectively over the previous two years and is now at an eight-year excessive.

Each its meals and clothes sectors improved following a enterprise overhaul. Earnings per share (EPS) had been up 50% in final 12 months’s ultimate report and are anticipated to climb additional to 29p per share. Income’s anticipated to succeed in £13.77bn within the ultimate outcomes this March, up from £13.11bn final 12 months.  

For 2025, it’s prioritising digitisation and enlargement into new worldwide markets. Nonetheless, it faces stiff competitors from opponents and dangers dipping once more if inflation spikes. It should proceed to seek out new methods to supply aggressive pricing with out threatening its backside line.

It’s price-to-earnings (P/E) ratio’s at present at 13.8. It’s anticipated to say no to round 12 as earnings enhance, under that of Tesco. There could also be a gross sales droop following Christmas however I count on progress will decide up once more in February.

Regardless of a rocky previous, Marks and Spencer stays a favorite of mine in 2025. I count on one other 12 months of strong efficiency with regular progress, so I’ll proceed including to my funding.

A hovering personal fairness agency

Whereas 3i Group’s technically a personal fairness investor, it additionally advantages largely from retail. The corporate’s the bulk proprietor of Motion, a series of non-food low cost shops throughout Europe. Hovering gross sales have helped enhance 3i’s earnings, pushing the share price up 167% up to now two years.

For the 9 months to September 2024, Motion’s web gross sales reached €9.56bn with an working EBITDA of €1.344bn. However Motion isn’t the one winner, with 94% of property in its personal fairness portfolio experiencing earnings progress in 2024.

Trying forward, 3i doesn’t plan on slowing. Key property reminiscent of Motion will proceed to drive progress whereas it’s actively exploring new alternatives for funding.

Nonetheless, it’s vital to stay conscious of potential challenges. Market volatility and financial uncertainties are one factor however my primary concern is the uneven weighting in direction of Motion. If one other low cost retailer pops up and captures the market, 3i would take a giant hit.

What’s extra, some buyers have questioned 3i’s valuation strategies for Motion, suggesting it might be overinflated. 3i has refuted the allegations however it’s one thing to regulate. 

Nonetheless, with a robust monitor file and strong funding thesis, I believe it’s well-positioned to proceed the sturdy efficiency. It’s a part of a portfolio I plan to proceed drip feeding all through 2025.