1 top FTSE 100 growth stock to consider buying before the end of May

Consistent growth from this FTSE 100 performer looks set to continue, so I’d consider the shares now for a diversified portfolio.

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One FTSE 100 growth stock with amazing past operational and share price performances is Compass Group (LSE: CPG).

This thing just seems to keep going up! Therefore, the company deserves a closer look.

Consistent performance

It’s the world’s largest contract caterer and operates in more than 50 countries. The business is involved in formal dining services, restaurants, cafés, vending and other hospitality services. But it also offers support services such as project management, security, transport, maintenance, logistics, cleaning and other things.

All this stuff goes on in entertainment venues, schools, hospitals, oil rigs, corporate headquarters, and other places where people gather. 

This isn’t a whizzy-dizzy tech operation, or some biopharmaceutical business that’s going to change the world. However, there’s nothing boring about the company’s trading and financial performance over the past few years.

For a big-cap operation, it’s got one of the most consistent and impressive financial growth records I’ve seen. This table tells the story:

Year to September2018201920202021202220232024(e)2025(e)
Normalised earnings per share74.3p83.8p23.4p31.9p65p80.1p94.7p105p
Earnings per share growth4.27%12.8%(72.1%)36.5%104%23.2%18.1%10.7%
Dividend per share37.7p40p014p31.5p43.1p47.7p53.2p
Dividend growth11.1%6.1%(100%)N/A125%36.8%10.7%11.6%

The business was affected in 2020 when the pandemic struck, as we might expect. But earnings and the dividend have come storming back.

A growth runway ahead

There isn’t a year of contraction in any of the figures, apart from 2020. By 2023, earnings and the dividend exceeded pre-pandemic levels.

The firm’s good performance shows in the share price chart:

I think its past glories are important to consider. But what really matters for shareholders is what’s going to happen next.

last week’s half-year results announcement contains more strong trading and financial figures, and chief executive Dominic Blakemore delivered a positive outlook statement.

The company raised its guidance for underlying operating profit growth to around 15% for the full year.

Beyond that, Blakemore said the firm will likely achieve mid-to-high single-digit percentage organic revenue growth. That will likely enable profit to expand ahead of revenue growth.

Progress has been both organic and via bolt-on acquisitions. However, the company’s debt level’s modest. That suggests the directors have been ploughing the firm’s gushing torrent of growing cash flow back into operations to finance growth.

Valuation

So far, so good. Compass looks like it’s been doing exactly what successful, growing businesses should be doing as they expand. So what’s the catch?

One risk for new shareholders is the valuation. With the share price near 2,248p (16 May), the forward-looking price-to-earnings (P/E) multiple is just over 21 for 2025. That compares to the FTSE 100’s P/E of just over 14.

Consistent growth is reassuringly expensive, it seems. But Compass demonstrated its cyclical vulnerability during the pandemic. If we see another similar economic shock, or even just a downturn, investors could lose money on the stock.

Nevertheless, despite the risks, I think Compass shares are worth considering for a diversified portfolio before May is over.

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 assessed. Consider taking independent financial advice.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group Plc. 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.

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