Buying a share and seeing it increase in value by 1,000% is an investor dream. But a few UK shares do indeed become what are known as “10 baggers” due to increasing in value by a factor of 10. What sort of indicators do I look for when choosing shares for my portfolio that might have the potential to offer me a 1,000% return?
Some UK shares that have grown 1,000%
What sort of shares have grown by 1,000% in value over the past decade? There are not many — but there are some. Plant hire group Ashtead is up 1,965% over the past decade – even after losing ground in the past couple of months! Another strong performer is scientific instrument maker Judges Scientific. Over the past decade, it has seen a share price increase of 1,536%.
Meanwhile, the sweetest thing for shareholders in sweeteners group Treatt has been its financial performance. The shares are up 1,237% in a decade. Like Ashtead, that growth is actually after a fall. If I had bought Treatt a decade ago and sold it at the end of last year, I would have benefited from a 1,000% increase in its share price.
What drives phenomenal share price growth
Are there any common themes to help understand why these three shares showed such phenomenal growth?
Interestingly, none of them started the period as massive companies. For the biggest companies, such huge business growth gets harder – and that affects share price growth potential. It is not impossible, though. If I had bought Apple at the beginning of 2012 when it was already a large company, I would have started this year with the shares showing a return in excess of 1,000%. But in general, dramatic growth is easier to sustain from a small or medium base than a large one.
None of the trio of companies above was in a new business area. They were operating in industries with proven customer demand and profitable competitors. Not one of the three companies is what I would call high-tech. They had simply identified industries with strong demand that was likely to continue, with profitable selling prices and an ability to differentiate their own offering from competitors. Whether that was equipment availability in a certain geography or proprietary product technology, it gave each of the companies pricing power. That can be very good for profits.
Hunting for shares to buy now
Growth rarely happens by accident. All three companies had a clear vision for business growth.
Here is what Ashtead said in its 2012 annual report: “We aim to extend our industry leading position and deliver superior returns for shareholders.” That year, Treatt said it was about to “realign its strategy to ensure that it is well placed to grow profit sustainably over the coming decade.” In 2012, Judges was barely a decade old — but reported its seventh consecutive year of growing revenue and profits.
So, these future success stories were hiding in plain sight a decade ago. They had clear growth strategies and focused on shareholder returns. It is very hard to find shares to buy now for my portfolio that will end up rising 1,000% in a decade. Many shares would show far more modest price growth. Others could lose me some of my capital. But using lessons from past share price growth, I think I can improve my chances of success.
The post Can I find shares to buy now that could rise 1,000%? appeared first on The Motley Fool UK.
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Christopher Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Apple, Judges Scientific, and Treatt. 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.
