I’m scouring the FTSE 100 for the best growth shares to buy for the next 10 years. Here are two I think are worth serious consideration from savvy investors.
Good omens
Ashtead Group (LSE:AHT) is the second-largest provider of rental equipment in the US. It has a market share of 13%, and has plenty of room for growth through further acquisitions in this highly fragmented industry.
Trading conditions have been tough for the business more recently. High interest rates have weighed on revenue growth across its end markets. And if inflation remains above central bank targets, this could remain a problem.
But positive signs from the global construction market suggest the tide could be turning for Ashtead. Building materials supplier CRH noted last week that, “our operations in North America [in 2024] are expected to benefit from significant infrastructure activity in our markets and increased investment in key non-residential segments, while in Europe, we expect good underlying demand in infrastructure and key non-residential markets“.
This bodes well for Ashtead, whose Sunbelt Rentals brand spans the US, Canada, and the UK.
A report from the American Rental Association and S&P Global Intelligence certainly expects the North American rentals industry to grow sharply in the next few years. It reckons the sector be worth $94bn by 2027. That’s up significantly from $77bn last year.
Against this backdrop, City analysts predict that profits at the FTSE firm will detonate in the next two years. A 6% bottom-line rise for this year to April 2025 is predicted to heat up to 16% in financial 2026.
As we saw during the 2010s, I think Ashtead could be one of the index’s best-performing shares again this decade.
Another FTSE star
The possible persistence of high interest rates pose a risk to housebuilders like Taylor Wimpey (LSE:TW.) as well. The knock-on effect this would have for homebuyer demand could be a significant drag on profits growth.
The sector outlook is already highly uncertain as the British economy struggles and unemployment edges higher.
But for long-term investors, I believe the growth picture for Taylor Wimpey and its peers remains encouraging. This is because demand for new homes is predicted to continue outpacing supply.
National House Building Council (NHBC) data today showed housebuilding activity slump 20% in the first quarter of 2024. Construction rates have been damaged by tough economic conditions and those high interest rates. But strict planning rules also remain a long-term drag on build activity.
Encouragingly, Savills expects house prices to rise strongly as this supply/demand imbalance rolls on. Indeed, the estate agent raised its five-year growth forecast to 21.6% from 17.9% last week.
Taylor Wimpey is tipped to endure a 15% fall in annual earnings in 2024. But the bottom-line is expected to rebound 27% next year and then rise 19% in 2026. I think it could be a great way for investors to profit from the UK’s steadily rising population.
