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I think these 2 FTSE 100 stocks look set to smash the index again this year

FTSE 100-listed food and support services provider Compass Group (LSE: CPG) is pointing in the right direction today, rising 4% after posting a 6.9% rise in organic revenue for the three months to 31 December. Management hailed strong levels of new business wins and continued good retention rates, further bolstered by new UK defence contracts and a positive sporting events calendar.

All points north

Compass delivered a strong performance in North America where revenues rose 8%, which is particularly good news as this is where it generate 60% of its earnings. Growth was very good across all sectors, particularly business & industry and sports & leisure, with the latter helped by the timing of certain events.

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European revenues grew 6.4% and by 2.8% in the rest of the world, where “ongoing good performance in developing markets [was] partially offset by the run-off of the last offshore construction project in Australia.”

High returns

Compass is constantly looking to cut costs and generate efficiencies through its management and performance programme, and this has helped offset recent inflationary headwinds. This positive trading update has left its shares trading near all-time highs, something you don’t see too often at the moment. Compass was even boosted by £43m of positive currency movements. That’s what happens when your luck is in.

Growth expectations are near the top end of its 4-6% range. Global slowdown? What global slowdown.

However, you won’t be surprised to see the £28bn company is a little pricey, trading at a forecast valuation of 19.4 times earnings, although a price-to-sales ratio of 1.1 is hardly demanding. A return on capital employed (ROCE) of 140% is particularly striking. Paul Summers offers some more compelling numbers here.

Compass rose 19% over the last 12 months, thrashing the FTSE 100, which rose just 2.34%. It might well do it again.

Ex marks the spot

Information services business Experian (LSE: EXPN) delivered even more impressive outperformance, rising 30% over the past year. Inevitably, the £18bn FTSE 100 stock also looks expensive. In fact, even more so, trading at 26 times earnings with a PEG ratio of 5. You pay a high price for success in today’s wobbly markets.

Experian is the world’s biggest credit data company, providing services for more than 230m people in the US alone, its biggest market. It also operates in EMEA/Asia Pacific, Latin America and the UK & Ireland, which gives it massive global diversification and may explain its success over the last year. While Brexit knocked many UK-listed stocks, it left this one unscathed. 

Credit where it’s due

Last month, Experian posted a 9% rise in quarterly group revenues. North America led the way, up 12%, thrashing a modest 3% for the UK & Ireland. The group, which reports in dollars, could take a hit if the US slows, but it generates plenty of cash, has a strong balance sheet, and daunting barriers to entry.

Operating margins of 23.5% and ROCE of a mighty 311.6% add to a strong buy case. My only concern is that, after a strong run, its stock may need to take a bit of a breather. Otherwise it looks a smasher.

Capital Gains

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harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group and Experian. 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.