FTSE 100’s Top Performer for 2025: Fresnillo Shines Bright

The FTSE 100 has marked a significant year in 2025, with the index climbing by approximately 20% since January. As the year draws to a close, the spotlight falls on Fresnillo, a Mexican-based gold and silver producer, which has emerged as the index’s leading performer. Its share price has more than tripled, driven by soaring metals prices, particularly after gold reached a record high in October.

While Fresnillo has dominated 2025, analysts suggest that replicating such extraordinary growth in 2026 may be challenging. Although some forecasts predict gold prices could rise toward $5,000, currently hovering around $4,300, the market remains unpredictable. The recent surge in Fresnillo’s stock may already reflect optimistic forecasts, meaning any downturn in the prices of gold or silver could lead to a sharp decline in the company’s shares.

Looking ahead to 2026, the search for the next top performer on the FTSE 100 presents a complex challenge. Historical trends indicate that significant fluctuations in share prices often correlate with volatile commodity prices. For instance, if energy prices spike, companies like BP and Shell could emerge as strong contenders. Conversely, a rise in demand for non-precious metals may benefit other mining firms within the index.

Despite the uncertainty, one stock not linked to the commodity sectors stands out as a potential contender: Diageo, the global spirits giant. While its performance is unlikely to mirror Fresnillo’s meteoric rise in 2025, analysts believe Diageo’s shares could be approximately 20% undervalued. For Diageo to gain traction, it must address a trend of declining sales and earnings, particularly in a market where younger consumers, notably Generation Z, are drinking less than previous generations. They are also gravitating towards premium brands, a phenomenon referred to as “premiumisation.”

Fortunately, Diageo is well-positioned to adapt to these changing consumer preferences. With a portfolio of over 200 brands, including iconic names like Guinness and Smirnoff, the company caters to various market segments. It also maintains a strong global presence, making it the world’s leading spirits company by revenue.

Despite these strengths, Diageo’s most recent trading update indicated flat sales, and its annual report for June 2025 revealed an increase in borrowings, complicating its recovery efforts. The responsibility for reversing the company’s fortunes will soon fall to its new CEO, Sir Dave Lewis, who will officially take the helm on January 1, 2026. Known for his robust reputation, Lewis is expected to implement strategies that could help rejuvenate Diageo’s performance.

The next significant update for investors is scheduled for February 2026, which could serve as a pivotal moment for the company’s recovery. One upside to Diageo’s current share price is that it offers a dividend yield exceeding 4%, providing a measure of comfort to potential investors as they await signs of improvement.

As the market prepares for the new year, the question remains: who will take the crown as the FTSE 100’s leading performer in 2026? While the field is wide open, all eyes will be on both Fresnillo and Diageo as they navigate the evolving landscape of the financial markets.