2 magnificent FTSE stocks that turned £20,000 into more than £1 million!

Our writer looks at two amazing FTSE shares that have turned a reasonably small sum of money into £1.2m-£5m over the past 20 years.

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Many investors might associate millionaire-making stocks with New York rather than London. The likes of Nvidia, Tesla and Monster Beverage may spring to mind. Yet some FTSE stocks have created riches too.

Indeed, a £20k investment in either of these two UK shares would have grown into a small fortune as they transitioned from small-cap stocks to blue-chip companies in the FTSE 100.

But are they still worth buying today?

JD Sports

First up, we have JD Sports Fashion (LSE: JD). Shares of the sportswear retailer have moved from a split-adjusted 2p in June 2004 to 126p today.

That’s a mammoth 5,909% gain that would have turned £20k into around £1.2m!

On top of this, our hypothetical investor would also have bagged a load of dividends.

So what has gone so right at the company over the past two decades?

Well, unlike many high street retailers, JD embraced e-commerce early on. It developed a seamless omnichannel experience, allowing customers to shop online, pick up in-store, or return online purchases in person.

And it developed strong partnerships with major brands like Nike to sell limited-edition releases and promote trends. This helped it carve out a strong brand image with a younger, fashion-conscious demographic.

Another significant factor in the firm’s success has been global growth, both organically and through acquisitions. Revenue rocketed from £471m in 2004 to £10.5bn in the latest financial year. Profits have soared alongside this.

Today though, the company has hit a growth speed bump, with economic weakness to blame. This has sent the share price down 23% year to date.

Weak consumer spending remains the main risk here, I’d say. We don’t know if and when growth will be kickstarted again.

Having said that, the stock now looks cheap, trading on a forward price-to-earnings (P/E) ratio of 10. I think it might be worth considering and it remains on my watchlist.

Ashtead

Next, we have Ashtead Group (LSE: AHT), whose long-term returns have been truly epic. Shares of the equipment rental company have gone from a mere 22p in early June 2004 to 5,560p today.

That’s a mind-boggling gain of 25,172%! In other words, a £20k investment back then would now be worth around £5m. There would have been a rising dividend too, boosting the total return.

Both of these examples really demonstrate how powerful buy-and-hold investing can be.

Similar to JD Sports, the company has grown tremendously through international expansion and numerous acquisitions.

Indeed, Ashtead is now the second-largest plant hire firm in North America, up from the fourth-largest in 2004. And it continues to hoover up smaller competitors to build market share.

However, with the vast majority of its operations now across the pond, it’s exposed to any cyclical slowdowns in construction there. That’s always a risk with Ashtead.

Nevertheless, I would still buy the stock today if I wasn’t already a shareholder. That’s because the company is poised to benefit from the construction boom in the US, where massive government spending has been approved to upgrade infrastructure and to onshore manufacturing currently outsourced to Asia.

The stock’s millionaire-minting days may be behind it, but I reckon it will still outperform the FTSE 100 long term. It’s one of my favourite Footsie shares.

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.

Ben McPoland has positions in Ashtead Group Plc and Tesla. The Motley Fool UK has recommended Monster Beverage, Nike, Nvidia, and Tesla. 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.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

3 UK stocks I reckon could benefit from the upcoming general election

As the general election hurtles towards us, this Fool wonders which UK stocks could benefit, and focuses on three picks…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

At 11%, this dividend share pays the biggest yield in the FTSE 100

When a dividend share offers a big yield, we need to be cautious of the risks. But I reckon this…

Read more »

British Isles on nautical map
Investing Articles

I reckon Hiscox shares could be one of the best bargains on the FTSE

I've been investing in FTSE companies for years, but after a major decline I've not seen a company with as…

Read more »

Grey Number 4 Stencil on Yellow Concrete Wall
Investing Articles

4 reasons I’d still buy National Grid shares in a heartbeat despite the recent wobble!

As National Grid shares plunged on the news of a right issue, I’m not flinching, and reckon it's a top…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

After gaining 45% in 12 months, is the Amazon share price now overvalued?

Our author thinks the Amazon share price might be too high. While the long-term future of the business looks bright,…

Read more »

Investing Articles

2 hot dividend stocks I’d buy and hold for 10 years

Our writer reckons these two dividend stocks could help her bag juicy dividends for years to come and explains why.

Read more »

British Pennies on a Pound Note
Investing Articles

2 dividend-paying penny shares I’d happily own

These two penny shares have caught our writer's eye for a combination of income prospects now and business growth potential…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

This FTSE 250 share looks like a bargain to me!

This FTSE 250 share has seen its price tumble due to chaotic local economic conditions in a key market. But…

Read more »