1 top FTSE 100 growth stock to consider buying before the end of May
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One FTSE 100 progress inventory with wonderful previous operational and share value performances is Compass Group (LSE: CPG).
This factor simply appears to maintain going up! Subsequently, the corporate deserves a better look.
Constant efficiency
It’s the world’s largest contract caterer and operates in additional than 50 international locations. The enterprise is concerned in formal eating companies, eating places, cafés, merchandising and different hospitality companies. Nevertheless it additionally provides assist companies comparable to venture administration, safety, transport, upkeep, logistics, cleansing and different issues.
All these things goes on in leisure venues, faculties, hospitals, oil rigs, company headquarters, and different locations the place folks collect.
This isn’t a whizzy-dizzy tech operation, or some biopharmaceutical enterprise that’s going to vary the world. Nevertheless, there’s nothing boring in regards to the firm’s buying and selling and monetary efficiency over the previous few years.
For a big-cap operation, it’s acquired one of the constant and spectacular monetary progress information I’ve seen. This desk tells the story:
12 months to September | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024(e) | 2025(e) |
Normalised earnings per share | 74.3p | 83.8p | 23.4p | 31.9p | 65p | 80.1p | 94.7p | 105p |
Earnings per share progress | 4.27% | 12.8% | (72.1%) | 36.5% | 104% | 23.2% | 18.1% | 10.7% |
Dividend per share | 37.7p | 40p | 0 | 14p | 31.5p | 43.1p | 47.7p | 53.2p |
Dividend progress | 11.1% | 6.1% | (100%) | N/A | 125% | 36.8% | 10.7% | 11.6% |
The enterprise was affected in 2020 when the pandemic struck, as we’d anticipate. However earnings and the dividend have come storming again.
A progress runway forward
There isn’t a yr of contraction in any of the figures, aside from 2020. By 2023, earnings and the dividend exceeded pre-pandemic ranges.
The agency’s good efficiency reveals within the share value chart:
I feel its previous glories are vital to contemplate. However what actually issues for shareholders is what’s going to occur subsequent.
final week’s half-year outcomes announcement accommodates extra sturdy buying and selling and monetary figures, and chief govt Dominic Blakemore delivered a optimistic outlook assertion.
The corporate raised its steering for underlying working revenue progress to round 15% for the total yr.
Past that, Blakemore stated the agency will doubtless obtain mid-to-high single-digit share natural income progress. That can doubtless allow revenue to broaden forward of income progress.
Progress has been each natural and by way of bolt-on acquisitions. Nevertheless, the corporate’s debt stage’s modest. That implies the administrators have been ploughing the agency’s gushing torrent of rising money movement again into operations to finance progress.
Valuation
Up to now, so good. Compass seems to be prefer it’s been doing precisely what profitable, rising companies must be doing as they broaden. So what’s the catch?
One danger for brand new shareholders is the valuation. With the share value close to 2,248p (16 Could), the forward-looking price-to-earnings (P/E) a number of is simply over 21 for 2025. That compares to the FTSE 100’s P/E of simply over 14.
Constant progress is reassuringly costly, it appears. However Compass demonstrated its cyclical vulnerability throughout the pandemic. If we see one other comparable financial shock, and even only a downturn, buyers might lose cash on the inventory.
Nonetheless, regardless of the dangers, I feel Compass shares are value contemplating for a diversified portfolio earlier than Could is over.