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I am touring the FTSE 100 to buy the best growth stocks over the next 10 years. Here are two that I think deserve serious consideration by smart investors.
good omens
Ashtead Group (LSE:AHT) is the second largest supplier of rental equipment in the US. It has a 13% market share and has plenty of room to grow through new acquisitions in this highly fragmented industry.
Trading conditions have been difficult for the business lately. High interest rates have affected revenue growth in its end markets. And if inflation remains above the central bank's targets, this could continue to be a problem.
But positive signs from the global construction market suggest the situation could be changing for Ashtead. Construction materials supplier CRH noted last week that “Our North American operations (in 2024) are expected to benefit from significant infrastructure activity in our markets and increased investment in key non-residential segments, while in Europe, we expect good underlying demand in infrastructure and non-residential markets clue.“.
This bodes well for Ashtead, whose Sunbelt Rentals brand spans the US, Canada and the UK.
A report from the American Rental and Rental Association S&P Global Intelligence certainly expects the rental industry in North America to grow considerably in the coming years. It estimates the sector will be worth $94 billion by 2027. That's significantly more than last year's $77 billion.
Against this backdrop, City analysts predict that the FTSE company's profits will soar over the next two years. A 6% increase in bottom lines for this year to April 2025 is forecast to rise to 16% in financial year 2026.
As we saw throughout the 2010s, I think Ashtead could once again be one of the best-performing stocks in the index this decade.
Another FTSE star
The possible persistence of high interest rates poses a risk for home builders such as Taylor Wimpey (LSE:TW.) too. The ripple effect this would have on homebuyer demand could be a significant drag on earnings growth.
The outlook for the sector is already very uncertain as the British economy struggles and unemployment rises.
But for long-term investors, I think the growth outlook for Taylor Wimpey and its peers remains encouraging. This is because demand for new homes is expected to continue to outstrip supply.
Data from the National House Building Council (NHBC) today showed that home construction activity fell by 20% in the first quarter of 2024. Construction rates have been hurt by difficult economic conditions and those high construction rates. interest. But strict planning rules also remain a long-term drag on construction activity.
Encouragingly, Savills expects house prices to rise sharply as this imbalance between supply and demand continues. In fact, the real estate agency raised its five-year growth forecast to 21.6% from 17.9% last week.
Taylor Wimpey is forecast to suffer a 15% drop in annual profits in 2024. But the bottom line is expected to recover 27% next year and then rise 19% in 2026. I think it could be a great way for for investors to benefit from the UK's ever-increasing population.
