It is no secret that the US stock market has had some spectacular success stories. From 2009 to 2019, shares in Netflix returned 4,031% according to data from IG.com. A £1,000 investment in the streaming giant made in 2009 would be worth around £41,308 now. A a £1,000 investment in Amazon would have rewarded investors with £18,321.
It is possible to hold foreign stocks in an ISA or SIPP. However, many offer a restricted range of securities and charge higher fees for holding them. There are currency conversion charges when getting in and out of a position, and fluctuating exchange rates will change the sterling value of a foreign stock. If the foreign government taxes your dividends, they need to be reclaimed (if possible) and will also fluctuate as the pound weakens and strengthens.
For these reasons, many UK investors buy funds, ETFs, or investment trusts to gain exposure to baskets of international stocks without the fuss. Does that mean that millionaire-making US tech stock (they usually are tech stocks) style returns are only possible for US investors or sophisticated UK ones?
No, it does not. Using data from AJ Bell, I have identified three UK stocks that have delivered a 10-year return of over 3,000%.
Movers and shakers
The first is Judges Scientific, a company that manufactures scientific instruments under multiple brands. A £1,000 investment in Judges made 10 years ago would be worth around £45,476 now, returning 46.48% on average each year, or 4,548% in total.
Dart Group, a leisure and tourism company that owns Jet2, delivered a 3,734% return on its share price over 10 years. A £1,000 investment would have grown by 43.62% on average for each of the last 10 years to wind up being worth £37,338 now.
And finally, a 3,734% 10-year return was possible with shares in GB Group. A £1,000 investment in this electronic identity proofing and verification services company would have grown by 43.59% on average each year to end up being worth £37,260.
All three companies trade on the FTSE AIM 100, not the London Stock Exchange’s primary market. Dart has a market capitalisation of around £2.7bn, which is the largest of the three, and Judge is the smallest at £314m.
Assuming market capitalisation grew in tandem with the share price, then Judge would have been valued at about £7m 10 years ago, and Dart Group £71m. All three were very small, risky, and not well-known companies 10 years ago. Very few investors would have made the gamble, which is what it would have been.
But at some point in the story of our three AIM companies, they were up 1,000%, then 2,000%. Unfortunately, many investors will look at a stock that has made a substantial gain and think its probably gone too far, and decide not to invest.
Catching the next one
There are fairytale stocks in the UK markets, but they may start life as small, unknown companies that are challenging to find. They will probably only gain widespread attention when their stocks have gone up a lot.
Instead of assuming the ride is over, I suggest taking a good look at these companies. Can their businesses continue to scale up? Are revenues still growing? Are they still investing in the business? If there is good reason to be confident that they will keep growing, you might just catch the next 1,000% to 2,000% – but don’t bet your house on it.
James J. McCombie has no position in any of the shares mentioned. The Motley Fool UK has recommended Judges Scientific. 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.