Over the last 10 calendar years, the FTSE 100 index has delivered a return of about 6.2% a year (including dividends). Relative to the returns from other major stock market indexes, that’s not so flash.
There are plenty of stocks within the index that have generated far higher returns (which highlights the power of stock picking). Here’s a look at two that have returned more than 15% a year over the last decade.
A company with a cult-like following
Let’s start with Games Workshop (LSE: GAW) because the performance here have been phenomenal. Over the last decade, it’s returned about 40% a year, before dividends (the yield is near 3% today).
This company designs and manufactures miniature war games (eg Warhammer) and figurines. And it’s had a lot of success over the years, thanks to a cult-like following.
Over the last decade, revenues have jumped from £119m to £526m – growth of 342%. As sales (and profits) have climbed, so has the share price.
It’s worth noting that this company wasn’t actually in the FTSE 100 for a lot of this period. It was only added to the index in late 2024 (when its market-cap got up to around £4bn).
This is a good reminder that if an investor’s seeking big returns, it can pay to look at smaller companies outside the major indexes. Often, there are lucrative opportunities to be found in the small-cap space.
Is the Footsie stock worth considering today? Potentially – this is a high-quality company that’s expected to continue growing in the years ahead as it releases new products.
It could pay to wait for a pullback though. Currently, the valuation’s quite high (the price-to-earnings (P/E) ratio’s near 30) and it doesn’t leave much room for setbacks such as a slowdown in sales or a profit hit from import taxes.
I think there may be better buying opportunities to consider in the months ahead.
A FTSE technology star
Another FTSE 100 stock that’s generated blockbuster returns over the last decade is London Stock Exchange Group (LSE: LSEG). It’s returned about 16.5% a year before dividends.
This company’s name can be a little deceptive. Because today, there’s much more to the business than simply the London Stock Exchange.
In recent years, it has transformed itself into one of the world’s leading financial data companies (thanks to the acquisition of Refinitiv). Today, it provides crucial data to most of the world’s largest banks and a large proportion of the world’s top asset managers.
This evolution’s helped to drive the share price higher. Now that it’s primarily a data company, with a large amount of recurring revenues, it can command a higher valuation.
Is this stock worth considering today? I think so. The company’s growing at a healthy rate. In Q1, total income was up 7.8% year on year.
Meanwhile, the valuation seems reasonable (for a high-quality software/data company). Currently, the P/E ratio using next year’s earnings forecast is about 26.
I’ll point out that a downturn in the financial markets is a risk. This could result in investment firms spending less on FinTech solutions.
Taking a five-year view however, I think there’s quite a bit of potential here. I’ve bought the stock for my own portfolio and I think it will do well.
