The FTSE 100 Index retreated for two consecutive days as geopolitical risks soared during the weekend. It dropped to £10,700, down substantially from the all-time high of £10,943.
This article highlights some of the top FTSE 100 stocks to watch as the war in Iran continues.
BAE Systems is the top FTSE 100 stock to buy
Defence contractors will be the biggest beneficiaries of the ongoing war in Iran as they will see more orders from the United States and other countries in the Middle East and in Canada.
BAE Systems, one of the top players in the defence industry, will benefit from the ongoing war as its revenue and backlog are expected to keep rising.
The most recent results showed that its annual revenue rose by 10% last year to over £30 billion, while its operating profit soared to £2.9 billion.
Most notably, its backlog continued growing, reaching over £63 billion. These metrics explain why the stock soared to a record high this week.
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Centrica (CNA)
Centrica, the parent company of British Gas, is another top FTSE 100 stock to benefit in the ongoing crisis in the Middle East.
Indeed, its stock jumped to 201p on Monday, its highest level since October 2014. It has jumped by over 675% from its lowest level in 2020.
Centrica’s share price has soared in the past few months even as its revenue and profits plunged.
Its adjusted EBITDA dropped to £1.4 billion from £2.3 billion, while its operating profit fell from £1.7 billion to £0.1 billion.
The decline was mostly because of the lower gas prices.
Now, however, natural gas prices have soared in the past few days as Qatar shut down a key export point.
There are concerns that a new Gulf war will lead to higher prices this year.
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Shell
Shell is another top FTSE 100 Index stock to buy as the war in Iran escalates.
The stock soared to 3,250p on Monday, up sharply from the pandemic low of 685p.
The company will benefit from the ongoing crude oiland natural gas prices surge.
Brent, the global benchmark, surged to $80 a barrel, while the West Texas Intermediate (WTI) jumped to $73.
The ongoing crude oil surge is important as it dropped to $55 in December last year.
Higher oil and gas prices will lead to higher revenue and profits for Shell and other energy companies like BP and Chevron.
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Babcock International
Babcock International stock price has also rallied in the past few months, moving from a low of 592p in April last year to the current 1,375p.
The stock will likely continue rising this year because of its role in the defence industry, where it provides products like naval ships, weapons handling systems, secure military communications, and autonomous systems.
Babcock International’s results showed that its six-month revenue rose to £2.5 billion, while its operating profit jumped to £234 million from £183 million in the same period in 2024. Its backlog rose to £9.9 billion.
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Rolls-Royce Holdings
Rolls-Royce Holdings is another top FTSE 100 Index stock to buy because of its role in the civil aviation and defence industries.
Its civil aviation segment will benefit as flying from key airlines like Etihad and Emirates restarts their operations.
While civil aviation is the biggest revenue generator, the company has a large defence business that will benefit from the potential surge in spending in the coming months.
Trump has hinted that he will boost US defence spending to over $1.5 trillion, while Europe is doing the same.
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