Tired of the FTSE 100’s low returns? Consider these large-caps that’ve doubled in just two years

The FTSE 100 (INDEXFTSE: UKX) may be famous for its income focus, but these constituents show it also harbours growth stars.

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With the FTSE 100 returning a miserable 12.5% over the past five years, growth investors would be forgiven for ignoring the large-cap index entirely in favour of riskier mid- or small-cap stocks. However, within this mediocre-at-best performance, a few large-cap stocks have more than doubled in just the last few years.

A sea change in opinion

One is online grocer Ocado (LSE: OCDO), whose share price has risen 130% in the past five years… and over 200% in just the past 12 months. The key to this rapid share price run-up is the long-term potential from the proprietary systems the group has developed to run highly-automated grocery delivery logistics facilities.

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Understandably, investors are more enamoured with this part of the business that involves patent-protected technology, the potential for high profitability, and ability to sell anywhere in the world than the cost-sensitive, low-margin online grocery delivery business that it’s still best known for in the UK.

That said, the future for Ocado from here is unlikely to be all sunshine and butterflies. The company’s market cap has rocketed to £6.1bn, while analysts are expecting losses for each of the next two years as management builds out the delivery warehouses for international partners. As operations are still loss-making, this means investors could be tapped for funds once again, as they have been twice over the past year.

Also, with its valuation built almost entirely on its long-term potential, there could be significant share price volatility over the next few years if any international contracts are cancelled, delayed, or end up being too expensive.

Ocado is in a better position than it has been in years as long-promised international agreements are being signed, one after the other. But with a sky-high valuation, recent share sales by insiders, and little information on the particulars of its distribution agreements, I’m happy to sit on the sideline for the time being.

A Middle East money spinner 

An even more impressive performer than Ocado has been Middle East healthcare firm NMC Health (LSE: NMC), whose share price has risen nearly ten-fold in just the past five years. That’s thanks to soaring demand for its healthcare facilities across the Emirates and Saudi Arabia, plus a series of acquisitions that have added to its clinic numbers and expanded its offerings into everything from IVF treatment to home nursing.

In the half year to June, the group’s revenue rose 20.2% to $932m, while higher occupancy rates at its hospitals and acquisition synergies boosted EBITDA by 32.1% to $225.5m. A recently-announced joint venture to bulk up the group’s offerings in Saudi Arabia should also provide significant growth potential over the medium term as healthcare spending in the Kingdom is relatively low compared to Western nations. But it’s rising fast as incomes increase and rates of chronic disease rise.

Looking forward, the group still has considerable potential to grow by increasing occupancy rates at its facilities, branching out into extra services, and expanding into neighbouring countries. While net debt of $1,152m at period-end is worryingly high, and its valuation of 32 times forward earnings is lofty, investors looking for a cash-generative business with long-term tailwinds at its back, plus plenty of expansion opportunities, may find NMC Health an interesting growth option to back for the long-term.

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