Two FTSE 100 super stocks crushing the index that could help you retire early

Domestic investors hearing about rip-roaring returns for American stocks will be rightly disappointed with the desultory 12.1% return for the FTSE 100 over the past five years. But looking past see-sawing performances from miners and oil & gas giants, and the usual disappointment from banking shares, there were quite a few great performers over this period.

Small volumes, big profits

One was speciality chemicals firm Croda (LSE: CRDA), whose share price has risen 85% during the period. The key to success for Croda has been shifting its focus from making more commoditised chemicals for cyclical industrial end-uses towards making more profitable inputs for consumer goods like make-up as well as agricultural products.

In the first half of this year, a strong performance from these two divisions led group-wide sales up 3.76% on a constant currency basis, although forex headwinds led to a small 0.6% dip in statutory sales. Looking ahead, there’s great potential for the business to continue growing though as management increases its focus on the personal care division, which led the way in H1 with a 6.1% uptick in constant currency sales and group-leading adjusted operating margins of 34%.

Aside from high growth and bumper profitability, investors should also love this shift towards supplying the personal care industry as it isn’t very cyclical. After all, consumers keep buying moisturiser, make-up and hair products right through the business cycle – something which can’t be said for some of Croda’s other end markets such as the construction and automotive industries.

With global economic growth strong and Croda’s management team consistently growing sales and profits, I see no reason for the company’s share price not replicating recent success and proving a stellar long-term holding. However, with a valuation of 28 times forward earnings, much of this growth is already priced-in, so I’ll be waiting for a dip in its share price before I consider taking the plunge.

Benefiting from a ‘Trump bump’

An even more spectacular performance has come from equipment rental firm Ashtead (LSE: AHT). Strong demand growth from the US business has seen its share price increase over 280% in the past five years.

Judging by the company’s Q1 results to 31 July, its share price could have much further room to climb. During the period, revenue rose 22% to £1,047m with operating profits inching up by the same amount to a whopping £316m, which goes to show just how profitable renting out construction equipment can be.

Encouragingly, I still see plenty of growth opportunities for the firm in the long run as it uses its financial heft and considerable economies of scale to gain market share in the US organically and through acquisitions, and invests in new markets like Canada.

Of course, another economic downturn will strike eventually but the group’s high exposure to the US, which provides over 90% of group operating profit, should stand it in good stead right now with the American economy growing nicely. Furthermore, with the group’s net debt-to-EBITDA ratio down to 1.6x at quarter-end, its balance sheet is in good health.

At 14 times forward earnings while kicking off a decent 1.3% yield and returning lots of cash via a share buy-back programme, investors who reckon the US economy will continue to grow strongly may find now an attractive entry point to one of the FTSE 100’s best performers of recent years.

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Ian Pierce has no position in any of the 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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