My portfolio is dominated by high-performing FTSE 100 shares. UK blue-chips are hugely popular due to their passive income potential. They can also be great stocks to buy for investors seeking long-term capital growth.
Take the following three FTSE shares: Games Workshop (LSE:GAW), HSBC (LSE:HSBA) and Scottish Mortgage Investment Trust (LSE:SMT). These UK shares have delivered an average annual return of 19% over the last decade.
The question is, can these companies continue delivering spectacular returns? I think they can, and believe they’re worth serious consideration right now.
Great Scot
Scottish Mortgage Investment Trust has delivered an average yearly return of 15.1% over 10 years.
To put that into context, the broader FTSE 100‘s corresponding average sits back at 8.4%.
This outperformance reflects the trust’s focus on high-growth US businesses. More specifically, we’re talking about tech companies including household names like Amazon, Nvidia and Netflix.
But Scottish Mortgage’s reach extends beyond those on the S&P 500. It also takes in privately-listed businesses, including smaller ones with the potential to deliver especially spectacular earnings growth.
I like this trust because the 99 companies it holds provide wide exposure to the tech arena. This has given it the strength to harness the growth potential of e-commerce, cybersecurity, cloud computing and (more recently) AI, without being overly exposed to a single stock.
I’m expecting it to remain a winning blue-chip, but performance could be volatile during economic downturns and it has seen some big share price falls in recent years, as well as rises.
Games master
Games Workshop has delivered even better returns since 2015. At 31.6%, its annual average is actually three to four times better than the FTSE 100’s.
The company is a powerhouse in the niche tabletop gaming market. Its models, games systems, paints and books are in high demand at all points of the economic cycle. As the fantasy market’s boomed, the company’s expanded its stores to reach new customers with its Warhammer universe.
Games Workshop isn’t content to just keep growing its core business, though. It’s accelerating the licensing of its intellectual property (IP) to generate enormous revenues in its own right. Analysts think its monster TV and film deal with Amazon could herald a new period of breakneck profits growth.
The business faces growing competition from other games makers and is completely dependent on discretionary spending, which can be fragile. But I’m optimistic it can stay at the front of the pack.
Bank on it
HSBC’s delivered an average annual return of 10.2% since late 2015. That’s a pretty impressive return, and especially considering the turbulence it’s experienced in markets like China in that time.
There’s no guarantee it can continue outperforming in tough conditions, however. The outlook in its Asian regions remains uncertain as escalating trade tariffs threaten growth.
Yet I believe HSBC can remain one of the FTSE’s best performers. It has the brand power and the financial clout to capitalise on favourable demographic trends, and is expanding in fast-growing areas like wealth management to turbocharge growth.
A strong balance sheet gives it scope to invest for growth while still delivering more enormous dividends as well. Its CET1 capital ratio is a robust 14.5%.
