This FTSE 100 stock’s turned £1k into £50k! I’d buy it for my Stocks and Shares ISA

Looking to load your Stocks and Shares ISA with firms that’ll help you retire in comfort? This FTSE 100 (INDEXFTSE: UKX) share is worth serious attention, thinks Royston Wild.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Ashtead Group’s (LSE: AHT) proven to be a dream ticket for investors looking to make electrifying returns.

Over the past 10 years, the firm’s share price has risen at a compound annual growth rate of 39.9%, from less than 80p per share in 2009 to around £23 now. So an investor buying £1,000 worth of stock a decade ago has seen the value of their investment boom to a quite-brilliant £50,658!

But of course a supercharged stock price is only part of Ashtead’s great story. Thanks to its progressive dividend policy shareholders, who bought £1,000 worth of stock a decade ago, have also received total dividends worth around £2,266 in that time.

No one-trick-pony

Many years of double-digit annual earnings growth have been the bedrock of Ashtead’s share price surge. And this is down to a number of factors.

Firstly, the business — which rents out a vast range of industrial equipment in North America and the UK — has considerable exposure to a strong US economy. The FTSE 100 company has long sourced the lion’s share of its sales from American customers and as of today, makes 85% of group revenues from its Sunbelt division in the States.

Secondly, Ashtead carries great strength thanks to its diversified operating model. The company services a broad range of sectors from construction and entertainment to emergency responders, and also boasts a highly-diversified fleet. It counts aerial work stations, forklifts, pumps and power generators among its catalogue of hardware.

The Stateside juggernaut

And finally, the brilliant bottom-line growth of recent years is also due to Ashtead’s efforts to expand its footprint across the US, achieved via a combination of heavy organic investment and an insatiable appetite for acquisitions (it made 24 bolt-on buys in the past year alone).

From operating fewer than 400 stores just a decade ago, the number has swelled to around 770. And this has in turn more than doubled its market share in the States to 9% from 4%, leaving all of its rivals (bar United Rentals) in its wake. And through its Project 2021 plan it aims to have 900 stores up and running in the next two years to generate more than $5bn worth of sales, a strategy it hopes will drive its share above that of its bitter rival.

It’s no surprise that City analysts expect these plans — combined with strong end markets in its core US territory — to underpin more sensational profits growth over the medium term. Earnings are expected to rise 18% and 11% in the fiscal years to April 2020 and 2021 respectively.

And these figures make it a bargain too, Ashtead dealing on a forward price-to-earnings (P/E) ratio of just 11.2 times. For a stock with such a terrific growth record, this makes it an irresistible buy, in my opinion, and one which I plan to buy myself in the days ahead.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer 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 makes us better investors.

More on Investing Articles

Smartly dressed middle-aged black gentleman working at his desk
Investing Articles

3 reasons why the Darktrace share price is up 61% over the past month

Jon Smith outlines three of the main reasons in his opinion for the strong bump higher in the Darktrace share…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I snap up GSK shares at £14?

The GSK share price has slumped. Should investors pile in or steer clear? Roland Head investigates.

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

As NIO stock continues to fall, should I buy the dip?

Jabran Khan looks at why NIO stock has dropped in recent months and decides if the shares have fallen enough…

Read more »

Close-up Of A Piggybank With Eyeglasses And Calculator On Desk
Investing Articles

How I’d aim for £10,000 a year in passive income, from £100 per month

We'd all like to have a bit of passive income coming in to supplement our retirement, wouldn't we? Here's how…

Read more »

Storytelling image of a multiethnic senior couple in love - Elderly married couple dating outdoors, love emotions and feelings
Investing Articles

Here’s a cheap FTSE stock with a 6% dividend yield. Should I buy it?

Vodafone is a FTSE stock with an attractive dividend yield, which looks to be on the path to recovery. Here's…

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

As the Centrica share price continues to climb, am I too late to buy shares?

This Fool documents the recent rise of the Centrica share price and decides if adding the shares to his holdings…

Read more »

British Pennies on a Pound Note
Investing Articles

Even at 10p, I see the Cineworld share price as expensive. Here’s why

The Cineworld share price has crumbled to around 10p. But the cinema chain still holds no appeal for our writer…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

Should I buy Aviva shares now?

With Aviva shares near 440p, here's what I'd do about this stock now as the business throws off cash and…

Read more »