Nobody could call the Rolls-Royce (LSE: RR) share price boring. It’s been by far most exciting stock on the FTSE 100 over the last five years, rising a staggering 1,136%. That would have turned £10,000 into £113,600.
The aircraft engine maker and defence stock continues to skyrocket, up 125% in the last 12 months.
FTSE 100 growth star
Inevitably, every Rolls-Royce investor has been asking the same question. How long can this last? And every time the group unveils its results it’s clear there’s more fuel in the tank. First half results, published on 31 July, showed underlying revenues up 13% year-on-year to £9.06bn, while operating profits soared 50%. Free cash flow jumped 36% to £1.58bn.
Analysts remain optimistic. On 1 August, Citi increased its 2025 profit forecast by 23% and by 28% for 2029. It wasn’t deterred by today’s towering price-to-earnings ratio of 52.8 saying: “Rolls-Royce may look expensive on profit multiples, but it is in line on cash metrics, which we believe more important”.
Consensus broker forecasts suggest the shares could grow another 8% over the next 12 months, from today’s 1,070p to 1,157p. I hold the stock and won’t be selling but I won’t push my luck by upping my stake now.
Instead, I’m on the hunt for a stock with comeback potential and I’ve landed on one that’s rather less exciting.
Not exactly a Bunzl of fun
Bunzl‘s (LSE: BNZL) nobody’s idea of a high-octane, shoot-the-lights out stock. That’s partly because of what it does, which is provide lots of boring kit that keeps businesses around the world running, such as paper towels, disposable gloves, cleaning supplies and the like.
Yet it has a surprisingly aggressive growth strategy, constantly snapping up smaller rivals across the world. Last year alone, it bought 13 businesses for £883m. That tempted me but I never actually bought the stock because it always looked fully priced. Instead, I waited for a dip, without expecting to see one.
Then on 16 April, the Bunzl share price dropped 23% in a day after a shock profit warning. The culprit was a weak first quarter, due to rising costs and sluggish demand in North America, its biggest market. Europe and the UK struggled too.
The shares are now down almost 30% in a year and trade at a five-year low.
On 24 June, management reported a decent 4% increase in revenue at constant exchange rates, mostly driven by acquisitions, and said the second half should be better. But with the US struggling and tariffs an issue, it didn’t spark a recovery.
Unsurprisingly, Bunzl’s a lot cheaper than Rolls-Royce, with a P/E ratio of just 11.67%, and the yield has crept up to 3.3%. The board’s increased dividends for more than 30 years in a row, which is incredible.
Analysts anticipate a recovery. They predict the Bunzl share price will jump around 16% this year, to 2,618p (it’s at 2,262p today).
That’s twice the pace of forecast Rolls-Royce growth, if it happens. Personally, I think Bunzl may idle a while yet, but I’ll be watching like a hawk and will consider buying in the next few months. It will never do a Rolls-Royce, but with a long-term view I still think Bunzl could fly.
