3 hidden winners in the FTSE 100

Hidden in the FTSE 100, our writer has found some stocks that have been producing exceptional returns for investors over the last five years.

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.

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Key Points

  • Returns from the FTSE 100 have lagged the S&P 500 over the last five years
  • While the index itself has underperformed, some of its constituents have produced returns in excess of the S&P 500's

Returns from the FTSE 100 have been fairly uninspiring recently. The index has returned just 21.45% over the last five years with dividends included. Compared to the S&P 500, which is up 88% on the same basis, that’s a relatively weak result. 

The FTSE 100’s weak performance might lead investors to think that none of its constituents are worth investing in. I think that’s a mistake. For investors who are prepared to scratch beneath the surface, the FTSE 100 includes some stocks that have put up stellar returns over the last five years. 

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Don’t believe me? If I’d invested £1,000 in the S&P 500 five years ago, my holding would now be worth £1,880 (dividends included). Here are three stocks from the FTSE 100 with which I could have done better.

Halma

The first stock is Halma. Based in Amersham, the company is a collection of businesses involved in making safety equipment products.

Over the last five years, Halma’s stock price has gone up by 127%. In addition, the company has paid out 80.27p in dividends per share.

Five years ago, Halma’s stock traded at £10.89, meaning that I could have bought 91 shares for £1,000. If I’d done that, my investment would now be worth £2,252. In addition, I’d have received £75 in dividends, giving me a total return of £2,327.

Croda International

Another FTSE 100 winner is Croda International. The company is based in Snaith and produces a variety of speciality chemicals used as dietary supplements and in cosmetics creams.

Croda’s stock has increased by 98% over the last five years. On top of this, the company has distributed dividends totalling £4.83 per share.

£1,000 invested in Croda International shares five years ago would have bought me 25 shares. Now, my shares would be worth £1,988. I’d also have received £120 in dividends, meaning that my investment would have returned £2,108 in total.

Spirax-Sarco Engineering

Last on the list is Spirax-Sarco Engineering. The company is a specialist in manufacturing steam, electric thermal, and peristaltic pump equipment. It’s based in Cheltenham.

Shares in Spirax-Sarco have increase by 132% since 2017. The company has also paid out dividends totalling £5.75

Based on the price of the stock five years ago, I could have bought 19 shares for a £1,000 investment. Today, they would be worth £1,319 and I’d have also received £109.25 in dividends, taking my total return to £1,428.25.

Will I buy?

The FTSE 100 has lagged its US counterpart significantly over the last five years. But while the index as a whole has faltered, Halma, Croda, and Spirax-Sarco have done extremely well. 

Will they continue to outperform? I’m not quite confident enough of that to buy the shares for my own portfolio just yet. But I’ll be watching these three closely for the right moment. The FTSE 100 has some stocks that have put up stellar results despite the underperformance in the index in general. That’s why I prefer individual stocks to the index in its entirety.

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Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Croda International and Halma. 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.

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.

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