Is Ashtead Group plc the FTSE 100's best kept secret?

FTSE 100 company Ashtead Group(LSE: AHT) has delivered astronomic returns for its shareholders over the last decade. Indeed, 10 years ago, the stock could be bought for just 70p. Today, the shares change hands for 1,950p, an increase of almost 2,700%.

Often, when a stock delivers that kind of gain, it can become a household name. However, in Ashtead's case, the company is still relatively unknown to many investors. So what does the company do and can it generate further gains?

Powerful growth

Ashtead is an international equipment rental company with a market capitalisation of £10bn. The company operates in the US and the UK and rents a full range of construction and industrial equipment that can be used to lift, power, dig and drill. As hurricanes in the US have inflicted billions of dollars worth of damage in recent years, strong demand for Ashtead's rental equipment has fired revenues and profitability higher.

Indeed, over the last five years, revenue has increased from £1,135m to £3,187m, a compound annual growth rate (CAGR) of 23%. At the same time, net profit has climbed from £89m to £501m, a CAGR of 41%. No wonder the company's share price rise has been stratospheric. Can this growth trajectory continue? Let's take a look at today's trading statement for a clue.

This morning's Q3 trading statement doesn't look bad at all, in my opinion. For the first nine months of the year, rental revenue increased a healthy 21% and operating profit climbed 22%. Free cash flow jumped from £68m to £179m, and earnings per share on an underlying basis rose an impressive 30% to 102.4p.

Chief Executive Geoff Drabble commented: "All our divisions continue to perform well in supportive end markets. While currency continues to be a headwind, we expect this to be mitigated by the strong underlying performance in North America. Therefore, we anticipate full-year results to be line with prior expectations."

The market seems unimpressed with today's update, with the shares down around 4% at present. Investors are most likely concerned about the impact of a weaker dollar on profits, as 80% of the company's revenues come from the US. The CFO stepping down probably hasn't helped sentiment either.

However, I believe the growth story here is intact, and on a forward P/E of 15.1, there could be more gains to come for long-term investors.

Under the radar

Another FTSE 100 stock that has enjoyed a strong rise in the last half decade yet remains under the radar is paper and packaging company Mondi(LSE: MNDI). Its shares have risen around 125% and are up 4% today on the back of M&A activity in the sector and an upgrade to 'outperform' from Credit Suisse.

Mondi released a positive full-year update on Friday, with group revenues rising 7% for 2017 and profit before tax increasing 5%. The packaging specialist also announced a special dividend payout of 100 euro cents per share. The company said there had been "strong upward momentum" in its pricing, and the CEO described the group's outlook as "positive."

I'm quite bullish on the long-term prospects of the packaging sector, due to the global e-commerce boom, and I believe Mondi shares represent an excellent opportunity for long-term investors right now. Trading on a forward P/E of 13.8 with a prospective yield of 3.1%, the shares offer value, in my opinion.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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