FTSE 100 Gainers and Chance For More Upside

August has been a positive month for the  last week, as the market rotated into defensive stocks with more attractive valuations. However, some firms stand out not just for their growth but also for their potential to sustain the streak.

FTSE 100 Firms That Gained Over 10% in August

• Fresnillo (FRES) +25.5%
• Smith & Nephew (SN) +17.8%
• Spirax Group (SPX) +16.1%
• Airtel Africa (AAF) +14.5%
• Melrose (MRO) +13.6%
• St James's Place (STJ) +12.2%
• Endeavour Mining (EDV) +11.0%

Why the Strong Performance?

Fresnillo: Rising with gold

Miner Fresnillo is the top performer on the UK stock market after on 5 August. The company disclosed that its profit had tripled from the previous year, thanks to a combination of higher silver prices and lower operating costs. Its share price jumped 9% in the immediate aftermath. Fresnillo also boosted its gold production guidance for the year, expecting to produce 550-590K oz (previously 525-580K).

With the Fed expected to ease rates this year, which is likely to support gold prices, the company is poised for a strong second half of performance. this month, with both JPMorgan and Berenberg citing expected growth in precious metals prices that could improve the company's free cash flow. Fresnillo committed to paying out a special dividend amid higher prices, a sign of additional payouts if gold and silver prices remain high.

Smith & Nephew: Returning Profits to Shareholders

The medical devices manufacturer also rose after reporting earnings on 5 August. following the announcement of a $500 million share buyback. The company achieved an impressive 54% increase in cash generation, with profits rising 37% year-over-year.

The improvement is the result of a turnaround programme that involved cutting costs and launching products in its biggest market, the US elective surgeries. The company generates 41% of its revenue from orthopaedic products and 30% from sports medicine. CEO Deepak Nath highlighted the importance of its innovation strategy, pointing out that "New products launched in the last five years accounted for three-quarters of our first half growth." Smith & Nephew affirmed its guidance for the year, including a "higher cadence" of product launches.

Melrose: Capturing Defence Investments

The UK aerospace company appears well-positioned to capitalise on the increased defence spending in Europe amid the US pullback from supporting Ukraine. as of 1 August, with profits rising 24% compared to the same period last year. Its Engine division saw the fastest growth at 11%, supported by strong aftermarket demand.

What seems to have impressed investors is the significant growth in its underlying free cash flow, from £54 million a year ago to £ 145 million. This allowed the company to increase its interim dividend by 20% to 2.4p, while affirming its guidance for the whole year on a constant currency basis.

Closing Summary

The Footsie’s record-breaking run in August reflects renewed investor confidence, with supportive macro trends like potential Fed rate cuts and sector-specific growth keeping the chances of repeated record highs alive.