£10k invested in 2025’s best-performing FTSE 100 inventory one month in the past is now value…

We’re one month into the 12 months and I’d by no means have guessed which FTSE 100 inventory can be main the cost in 2025.

It’s not final 12 months’s double-your-money winners British Airways proprietor Worldwide Consolidated Airways or progress monster Rolls-Royce, however African telecoms operator Airtel Africa (LSE: AAF).

The shares surged 27.1% in January. It swept to the highest of the 2025 leaderboard after posting a powerful set of outcomes on 30 January, whereas its second $100m share buyback added gasoline to the rally.

Somebody who had put £10,000 into Airtel Africa shares in the beginning of the 12 months would now have £12,710. That’s a powerful return in just some weeks, however sufficient of that nonsense. At The Motley Idiot we see investing as a long-term process, not a get-rich-quick sport. 

So can the £5bn firm now construct on its stellar outcomes, or will profit-takers whittle the expansion away within the weeks forward.

What’s driving the Airtel Africa share value surge?

Airtel Africa has been on my radar for some time, and Thursday’s (30 January) fab outcomes jogged my memory of its enormous potential. The corporate operates throughout 14 fast-growing African markets, the place demand for telecoms and cellular cash providers continues to develop.

Within the 9 months to 31 December, the group’s whole buyer base rose 7.9% to 163.1m, whereas knowledge buyer numbers surged 13.8%. 

Income jumped 20.4% in fixed forex phrases, with cellular cash income alone rising 29.6%. Revenue after tax skyrocketed from simply $2m to $248m 12 months on 12 months.

CEO Sunil Taldar was bullish about Airtel’s prospects, highlighting the corporate’s “concentrate on pace and high quality execution”.

Not all of the alerts are optimistic. Foreign money devaluations stay a difficulty. Notably the devaluation of the Nigerian naira, which hit the group’s revenues as soon as transformed again into sterling phrases. This stays a difficulty, with Thursday’s outcomes exhibiting income declined by 5.8%, largely due to the embattled naira. They’ve been indicators of African forex stabilisation recently.

Can the FTSE 100 group proceed to fly?

The shares are up 27.1% this 12 months and 97% over 5 years, albeit with plenty of volatility in between. So is that this the precise time to purchase?

It’s at all times tough investing after a sudden surge, as profit-taking can result in pullbacks. Airtel Africa nonetheless appears to be like attractively valued on a ahead price-to-earnings ratio of simply 10.6 for the monetary 12 months beginning in April 2025. Nevertheless, that’s primarily based on gross sales rising nearly 200% over the 12 months forward. Any earnings miss might be punished.

The corporate additionally gives a good trailing dividend yield of three.3%, including an earnings aspect to its attraction. And its ongoing growth and rising smartphone adoption in Africa does create a compelling long-term progress story.

However dangers stay. Foreign money fluctuations may proceed to hit reported earnings, however internet debt is my largest fear. This jumped from $3.28bn to $5.27bn 12 months on 12 months. That have to be set in opposition to positives resembling its rising buyer base, enhancing margins and share buybacks.

Given current efficiency and strategic investments, I’m holding a better eye on this rising star. However I received’t purchase it in February. Shares so usually retreat after a dramatic leap, and this one nonetheless has dangers. It’s not the precise name for me immediately.