A lot has happened over the course of the past year. It’s interesting to think back to the stock market crash last March. It’s certainly taught me a few lessons, both good and bad. One of the points I noted was the severity of the crash in such a short space of time, and the speed with which the market recovered. If we go back exactly one year and look at the best performing FTSE 100 stocks since then, there’s some impressive returns!
The top FTSE 100 stock prize goes to…
The best performing FTSE 100 stock in this period was Entain (LSE:ENT). Over the past 12 months it’s up a cool 332%. In the FTSE 100 index, there are 17 stocks that have posted a share price growth of over 100%. This in itself tells me some interesting points.
First, that it’s possible to make large returns without having to resort to speculative penny stocks or other high-risk investments. It also shows me the benefit of staying calm under pressure and not selling out on a short-term dip. If I had sold out in March, I could have missed out on these kind of bounce backs.
I want to move back to Entain, given that the return is considerably higher than its peers. Entain owns gambling brands such as Ladbrokes and Coral. Although the share price dipped in March 2020, the long-term performance has been meant that if I had bought the stock a decade ago, I’d have generated a 10 times return.
The main reason for the long-term success of Entain is down to the increase in the accessibility of gambling around the world. Entain has taken advantage of this via strategic acquisitions over the years. In 2012 it bought Sportingbet. In 2016 it bought Bwin.party, and the following year it bought Ladbrokes Coral.
One element that has supported accelerated growth over the past year or so has been a surge in online activity and also growth in the US.
Thanks to a deal struck a couple of years ago with MGM Resorts in the US, Entain has benefited from the relaxation of online gambling restrictions there. 2020 results showed the partnership is now live in 12 states, with market share growing by 18%.
The online growth can also be seen here in the UK. This has grown exponentially over the past year, a key element in making Entain the best performing FTSE 100 stock. Although largely thanks to lockdown, Entain does deserve credit for being in a position to allow it to take advantage of people being bored at home. This is one risk going forward though, as easing lockdown measures could easily see online revenues slow down.
The online growth last year helped Entain to post a profit of £113.8m. This was a bounce back from the loss of £131.2m in 2019.
I think Entain may struggle to keep the crown of being the best performing FTSE 100 stock over the next year, but this doesn’t mean I wouldn’t buy it. I think the outlook remains promising, and that share price growth is still there. So I would look to buy Entain shares now.
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jonathansmith1 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.