The late great investor, John Bogle, once said that timing the market is a loser’s game. Bogle, being the creator of the very first index fund, likely knew a thing or two on the subject. His advice is why I don’t worry much about timing the market. I’m more concerned about buying great stocks that I think are trading at a discount to their intrinsic value.
However, I can’t help but look back at what has been an interesting year in the markets and imaging what could have been. Since hindsight is 20/20, here are two top-performing FTSE 100 stocks I would have bought earlier this year if I knew then, what I know now.
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The FTSE 100 leader in 2021 (so far)
Ashtead Group Plc (LSE: AHT) has had quite the run, racking up 94.6% in share price appreciation, year to date. If I had known, I would have bought this stock in early January, when it was trading closer to 3,500p. This company is widely known as the parent company of Sunbelt Rentals, the equipment rental giant in North America and the UK. Sunbelt is a leader in this field with over 800,000 individual assets available for hire to a massive customer base.
In its latest quarterly report, Ashtead updated its expected revenue growth by 2%-5% by the end of the fiscal year. This bodes well for the stock, which has consistently created good returns for investors over the past five years. As a dividend stock, there’s not much to be made here as its current dividend yield is a miserly 0.68%. If I depended on a steady flow of dividend income, this would be concerning. But as an investor with a value orientation, I can appreciate reinvesting earnings. Ashtead has seen free cash flows quadruple over the past three years to almost $2bn.
Betting on the future
I wrote an article earlier this year about the success of Entain (LSE: ENT), which has flown right in the face of the pandemic. The past year has seen this stock shoot up by 54.97%, and I wish I had been along for the ride. Entain is one of the world’s prime gambling stocks. It benefits from massive brands such as Ladbrokes, Bwin, Party Casino, and a 50% stake in BetMGM. The FTSE 100 company has actually been so successful that it has attracted the attention of the US gambling group, Draftkings. Even though the $20.4bn offer by Draftkings to purchase Entain fell through, it was evidence that many in the market believe Entain is not only a great business but also currently undervalued.
Again, if I were a dividend driven investor, I would be wary about the mere 2.8% dividend yield on this stock. Also noteworthy is the tiny bottom line this company generates considering it consistently has gross profits of over 60%. It did well nonetheless this year, and I expect it to continue to do so in 2022.