If I’d invested £1k in Marks and Spencer shares at the start of 2023, here’s what I’d have now

If I had invested £1,000 in Marks and Spencer shares at the start of 2023, I would now have this

When it comes to predicting which investments will perform best in 2023, I'm not sure many people would have the foresight to suggest Marks and Spencer (LON: MKS ) shares. I know I wouldn't! However, the retail bellwether's return since January has been surprisingly good. Marks and Spencer shares are up 75% year-to-date (at the time of writing). So a £1,000 investment would now be worth around £1,750.

For simplicity, I ignore any associated costs.

Any positive dividend impact can also be ignored as the company has not paid out any cash to its owners since the start of 2020! Now, a 75% return in eight months is undoubtedly great. This is especially true for a very large company that is often accused of having a tired and stale brand that only appeals to more "mature" consumers.

However, this gain is even better compared to the 5% decline seen in the domestically focused FTSE 250. Again, we have evidence that stock picking has the potential to fill a person's fortune if they buy the right stocks through luck or skill.

Why did it happen?

I think it's safe to say that the rise of M&S is due to a number of reasons. First, investors seem to be increasingly interested in buying bombed-out value stocks over anything focused on growth. Look at the share price performance of Rolls Royce and Centrica for further evidence. But there have also been signs that, after many failed attempts, the current turnaround plan is indeed bearing fruit. Like-for-like sales grew in both the Clothing & Home and Food divisions.

There are certainly reasons to think this dynamic may continue.

In its latest update, the company said it expects earnings to grow in the current financial year. He added that interim results in November would show "significant improvement over previous expectations". That sounds pretty bullish to me! I think this makes a return to the FTSE 100 when the next realignment happens in September increasingly likely. As well as confidence in retail investors, this means index funds targeting only the UK's biggest companies will be forced to buy.

On the other hand, the outlook for the UK economy is not exactly great. Even if the £4.5bn cap does everything right, external events can come together to drag shares down. Most importantly, the fact that Marks has been a long-term market laggard cannot be ignored. If I had invested that £1,000 in the same share five years ago, I would have been almost £250 poorer (again, ignoring dividends and costs). Past performance is no guide to the future. But it shouldn't be completely ignored either. And that's why Marks and Spencer shares are still not for me.

Paul Summers has no position in any of the stocks mentioned. The Motley Fool UK has no position in any of the stocks listed. The opinions expressed about the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights does

In the ever-evolving financial investment landscape, stocks have always been a popular choice for investors looking for substantial returns. Marks and Spencer, a renowned name in the retail sector, has caught the attention of many investors in 2023. In this article, we will delve into the potential outcomes of investing £1,000 in Marks and Spencer shares earlier this year, examine the current state of the investment and discuss the factors that affected its performance.

Marks and Spencer: Slide

Marks and Spencer, a leading British multinational retailer, has a rich history dating back to the late 19th century. Known for its quality clothing, homeware and food products, the company has maintained a strong position in the market. 2023 brought a new wave of interest among investors, prompting many to consider allocating funds to its shares.

Investing £1,000 in early 2023: The current outlook

If an individual were to invest £1,000 in Marks and Spencer shares at the start of 2023, the current state of the investment would undoubtedly be interesting. As of the current date, the investment would fluctuate in line with broader market trends and company performance.

Performance analysis

The performance of any investment depends on many variables. Factors such as market sentiment, company earnings, industry trends and macroeconomic indicators play a vital role in determining a stock's value. Marks and Spencer's performance in 2023 was influenced by several key factors:

Economic Conditions: The overall economic health of a nation directly affects consumer spending patterns, which in turn affects retail companies such as Marks and Spencer. Positive economic growth is often correlated with increased consumer confidence and higher retail sales.

Company strategy: Marks and Spencer's strategic decisions, including its product offering, expansion plans and e-commerce investments, can significantly affect its share performance. A well-executed strategy can lead to increased investor confidence.

Market Competition: The retail sector is highly competitive and companies compete for market share. Marks and Spencer's ability to navigate this competitive environment and innovate its offerings may affect its share performance.

An investment of £1,000 in Marks and Spencer shares at the start of 2023 could have produced different results based on the company's performance and wider market conditions. While historical performance can provide insight, it is important to remember that investments are subject to risk and market fluctuations. Thorough research and a deep understanding of market dynamics are essential to making informed investment decisions. As with any investment, diversification and long-term strategic thinking remain critical to managing risk and maximizing potential returns in the dynamic world of finance.

I'm also a bit wary of valuations. 13 may look reasonable compared to the market as a whole, but it's not really that cheap for the battered consumer defense sector. Could we see some profit taking in due course?