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5 stellar stocks of the last decade: why these managers back them

To mark its 10th anniversary, Citywire's Wealth Manager spoke to fund managers who picked some of the stellar stocks of the last decade.

The FTSE 100 may have only delivered a fairly modest 68% rise, exclusing dividends, over the past decade, but within that one stock, Ashtead, has rocketed by 71 times the market’s return for anyone who invested at the start of 2009.

The FTSE All-Share fared better than its blue chip counterpart, gaining 84% excluding dividends, but all the top five stocks featured here have delivered quadruple digit profits over that period.

Click through the slides to see five of the stellar stocks of the last 10 years. 

To see all the slides on the same page, click here.

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The FTSE 100 may have only delivered a fairly modest 68% rise, exclusing dividends, over the past decade, but within that one stock, Ashtead, has rocketed by 71 times the market’s return for anyone who invested at the start of 2009.

The FTSE All-Share fared better than its blue chip counterpart, gaining 84% excluding dividends, but all the top five stocks featured here have delivered quadruple digit profits over that period.

Click through the slides to see five of the stellar stocks of the last 10 years. 

To see all the slides on the same page, click here.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Key stats
Dividend yield 1.7%
Market capitalisation £9,631m
No. of shares out 474m
No. of shares floating 465m
No. of employees 16,811
Trading volume (10 day avg.) 1.4m
Turnover £3,706m
Profit before tax £1,861m
Earnings per share 117.86p
Cashflow per share 266.19p
Cash per share 3.90p

Ashtead (AHT

10-year share price return: 4,828%

Chris St John

AXA Framlington UK Mid Cap

‘Ashtead is an equipment rental business and makes the vast majority of its profits in the US. We originally invested in the company back in 2009.

 ‘Historically it was a very cyclical business, but the great financial crisis, changed the mindset around capital ownership, in a world where capital and debt were scarce.

‘Construction companies used to own their own equipment to carry out projects, but they realised that they were tying up loads of capital needlessly by owning it.

‘Going into the financial crisis, Ashtead was well-positioned, with low debt and a young fleet.

‘For the equipment rental industry to grow, there has to be a high level of trust and they’ve been very good at building that faith from its customer base. To illustrate the point, if you’re building something that needs a concrete pourer and you have the employees there to use it, the concrete needs to arrive on time because a construction company’s margins can be eroded quickly if it has workers standing around.  

‘Also, over the years, the regulatory barriers have consistently gone up, with health and safety and increased liabilities around corporate manslaughter. The equipment needs to be well-maintained and of a certain quality.

‘US economic growth has been strong and if you look at the percentage of GDP spent on infrastructure, it is at the lowest level since the 1940s. There is a big latent spend on infrastructure.’

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Key stats
Dividend yield 1.2%
Market capitalisation £399m
No. of shares out 31m
No. of shares floating 30m
No. of employees 784
Trading volume (10 day avg.) 0.1m
Turnover £166m
Profit before tax £35m
Earnings per share 64.43p
Cashflow per share 100.56p
Cash per share 150.21p

Avon Rubber (AVON)

Share price return: 3,182%

James Baker

Chelverton UK Equity Growth

‘We were relative latecomers to the Avon Rubber story, with the UK Growth fund, which launched in October 2014, making our first investment in March 2015 at 722p.

‘Avon comprises an unusual combination of businesses addressing the defence and dairy markets, linked by a common heritage in synthetic rubber engineering. Consistent product innovation has led to market leadership positions and the creation of significant business moats.

‘Its larger protection division is the lead supplier of gas masks to the US military and its allies, both for standard infantry masks and more specialist higher value products for the air force, navy and special forces – where the group has recently secured significant programme wins.

‘In dairy, Avon supplies consumables (liners) and ancillary equipment to milking parlours, and through successful product innovation. Its own patented products are winning market share by delivering higher milk yields and reducing infection risk to dairy farmers.

‘We like Avon because it ticks all the boxes in our screening process, with strong market positions supported by intellectual property, meaning it can command high margins – over 16% at the earnings level last year.

'This margin profile coupled with relatively low fixed assets and working capital to sales ratios mean that Avon is highly cash generative, giving the opportunity for self-funded inorganic growth, an increasing dividend yield and one-off cash returns to shareholders.’

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Key stats
Dividend yield 2.2%
Market capitalisation £3,076m
No. of shares out 609m
No. of shares floating 566m
No. of employees 9,044
Trading volume (10 day avg.) 1.6m
Turnover £1,404m
Profit before tax £263m
Earnings per share 29.78p
Cashflow per share 34.29p
Cash per share 38.84p

Howdens Joinery (HWDN)

Share price return: 3,631%

Elaine Morgan

Kames UK Smaller Companies

‘Looking back 10 years, there was an opportunity to invest in a proven business model with significant roll out growth potential which would also yield scale benefits to margins. Usually these opportunities are priced expensively by the market, but at the time the potential was not fully recognised in the valuation, as the outlook was clouded by market concerns over the legacy issues relating to the divestment of MFI and by the caution overhanging markets post the financial crisis.

‘As a vertically integrated supplier of kitchens and joinery, Howdens is focused exclusively on supplying builders with the right product at the right time. It has grown strongly over the last 10 years due to its strong competitive proposition, the growth in the trend of the "done for you" kitchen market and depot roll out growth.

‘Ten years ago the business had just over 440 depots, this has grown to over 650. We expect market share gain to continue as recently opened branches mature and the company works towards the 800 target. Howdens makes strong operating margins, is cash generative and has a strong balance sheet.’

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Key stats
Dividend yield 1.3%
Market capitalisation £4,274m
No. of shares out 893m
No. of shares floating 885m
No. of employees 479
Trading volume (10 day avg.) 2.6m
Turnover £243m
Profit before tax £180m
Earnings per share 15.52p
Cashflow per share 15.71p
Cash per share 2.73p

Rightmove (RMV)

Share price return: 2,638%

James Thomson

Rathbone Global Opportunities

‘We’ve held Rightmove since April 2009, and it’s delivered more than a 1,400% return. These sorts of winners don’t cross our paths often, but when they do, it’s because they’re an industry game-changer. We won’t achieve those returns again, but we think Rightmove can still deliver solid returns over the longer term.

‘Rightmove enjoys around 80% market share. It charges estate agents to list properties on its website – the key to the investment case is its ability to increase that monthly subscription by putting up prices or providing additional services. And when one agent buys the premium package, the others quickly follow suit.

‘Estate agents are only willing to pay more if Rightmove is finding property buyers and getting instructions to sell. And they are, 70% of all purchase leads are now generated online. There are competitors, but no company has ingrained itself in the psyche of the property market like Rightmove.’

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Key stats
Dividend yield 0.3%
Market capitalisation £4,398m
No. of shares out 973m
No. of shares floating 405m
No. of employees 32,125
Trading volume (10 day avg.) 0.8m
Turnover £3,161m
Profit before tax £380m
Earnings per share 23.83p
Cashflow per share 31.62p
Cash per share 35.71p

JD Sports (JD)

Share price return: 4,121%

Eustace Santa Barbara

Marlborough Special Situations

‘We first bought JD Sports in 2011 at between 40p and 50p and today it’s trading at around £4.50, so it’s been a strong performer for us.

‘Despite the woes afflicting much of the retail sector, it has bucked the trend. In January it reported double-digit sales increases and revenue growth has been achieved without resorting to discounting and margins remain strong.

‘One of its major strengths is its relationships with key brands, notably Adidas and Nike, which mean it gets large allocations of the most in-demand products, plus exclusive ranges. This draws customers to its shops and website, providing an edge that’s based on products rather than price.

‘Beyond the UK, the company has already made assured strides in Western Europe and Asia-Pacific. Last year, it acquired US chain the Finish Line. Early progress here is encouraging and evidence is mounting it may be able to replicate its success globally.’

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