The Motley Fool

Have £1,000 to invest? An expensive (but market-beating) FTSE 100 champion could help you to retire early

Image source: Getty Images.

If you have £1,000 going spare, there’s one FTSE 100 company that I believe deserves your money more than any other business.

Market-beating return

Over the past few decades, the FTSE 100 has turned out a steady average annual return of around 8%. Private hospital provider NMC Health (LSE: NMC) has smashed this record by a wide margin. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Over the past five years, the shares have produced an average annual total return of just under 64%. At this rate, if you’d invested £1,000 in the company back in 2013, today your investment would be worth approximately £12,000.

The question is, can investors expect a similar rate of return over the next five years? I believe there’s a good chance that they can.

Bigger and better

Since 2013, NMC’s management has achieved an outstanding record of earnings growth. Earnings per share (EPS) have risen by approximately 160% in five years (to the end of 2017). Analysts expect this trend to continue. EPS growth of 47% is projected for 2018, followed by an increase of 30% in 2019. 

And if the company meets these forecasts, EPS will be up just under 400% in seven years. For a PLC with a market capitalisation of £7.6bn, this rate of growth is nothing short of outstanding.

Unfortunately, NMC’s potential is well known, and the market is placing a significant premium on the shares. They currently trade at a historical earnings multiple of 49.7. However, on a forward-looking basis, the shares are trading at a 2019 P/E of 26. That’s not too demanding, but plenty could go wrong over the next two years.

Still, I’m confident that this private healthcare provider is well placed to continue to snowball, not just for the next two years but for the next several decades. The group operates healthcare facilities around the globe although its assets are primarily concentrated in the United Arab Emirates, the wealthiest country in the world on a per capita basis. 

As demand for healthcare is only going to grow, NMC is unlikely to struggle long term. So if you are looking to add to your retirement portfolio, in my opinion NMC is indeed worthy of further research.

Unlocking value 

Another business that looks as if it has attractive long-term prospects is children’s services provider Cambian (LSE: CMBN). Today, this company announced that it had achieved a 7% increase in revenues for the first half of 2018, along with a 40% jump in adjusted earnings before interest, tax, depreciation and amortization reflecting revenue growth and a reduction in overheads. 

Net cash on the balance sheet increased to £75m following the payment of a special dividend at the beginning of 2018.

These results are likely to be the company’s last as an independent business. CareTech Holdings is buying the firm for 100p in cash and 0.267 of a CareTech share, for a total consideration of 190p. The deal is expected to generate approximately £6m in cost savings. Considering the strengths of the Cambian business, I believe this could be an excellent combination. 

Cambian shareholders will end up owning approximately 34% of the enlarged business allowing them to benefit from further growth in the years ahead. City analysts believe that as one, Cambian/CareTech will see earnings growth of nearly 10% in 2019.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended NMC Health. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.