This FTSE 100 stock’s beaten the S&P 500 over the past 5 years (and so have 23 others)
With many of the world’s biggest and best companies listed in the US, it’s sometimes easy to overlook FTSE 100 stocks. But some investors might be surprised to learn that, since June 2020, there are 24 members of the Footsie that have outperformed the S&P 500.
Helped by the hype surrounding the ‘Magnificent 7’, the US index has soared 99% over the past five years. Yes, this beats its UK equivalent, which has risen 45% during this time. But some individual stocks have done much better.
For example, with a remarkable post-pandemic recovery of 600%, Rolls-Royce Holdings leads the way.
| Stock | % share price change (5 years to 10.6.25) |
|---|---|
| Rolls-Royce Holdings | +600 |
| 3i Group | +398 |
| Centrica | +273 |
| NatWest Group | +272 |
| BAE Systems | +262 |
| Airtel Africa | +234 |
But the company that most interests me is Airtel Africa (LSE:AAF), which has been the sixth-best-performing FTSE 100 member over the past period. During this time, the telecoms group has seen its share price grow by an impressive 234%.
Looking good
As its name suggests, the company operates exclusively in Africa. It provides voice, data and mobile money services to 166.1m customers in 14 countries.
During the year ended 31 March 2025 (FY25), it reported revenue of $4.95bn and basic earnings per share (EPS) of 6 cents. Over the next two financial years, analysts are expecting EPS to grow to 14 cents (FY26) and 18.9 cents (FY27).
If it was able to achieve figures like these, I’m sure the group’s share price would continue its current trajectory.
That’s because, at the moment (10 June), the stock’s trading at a very reasonable 12.5 times its forecast FY27 earnings.
Some risks
However, the group’s foreign currency exposure remains a concern.
Most of its income is received in local currencies but it reports its numbers in US dollars. It’s estimated that the full-year impact of a 1% fall in these currencies versus the dollar is a $45m drop in revenue.
To try and offset some of the potential impact, the group now has approximately 90% of its debt priced in local currencies.
But as long as it retains the dollar for its accounts, the risk of volatile exchange rates affecting its reported results is likely to remain. For example, comparing FY25 with FY24, revenue was down 0.5%. However, removing the impact of exchange rate movements, it increased by 21.1%.
Another potential issue is the group’s debt. Telecoms infrastructure isn’t cheap and it’s borrowed heavily to pay for most of it. Rising interest rates could have a big impact on earnings. At 31 March, 59% of its debt carried interest at a variable rate.
My verdict
However, despite these challenges, I think Airtel Africa looks to be in the right place at the right time.
It’s estimated that 70% of Sub-Saharan African’s are aged under 30. And by 2050, the population’s expected to double. When combined with a GDP (Gross Domestic Product) growth rate that’s three times higher than Europe’s, it seems certain that the continent’s telecoms market is likely to grow significantly by the end of the decade.
And given that the group appears to be good at what it does — it’s either the largest or second-largest provider in each of the 14 countries in which it operates — I think it’s well placed to capitalise.
On this basis, I think it’s a growth stock that long-term investors could consider adding to their portfolios.
The post This FTSE 100 stock’s beaten the S&P 500 over the past 5 years (and so have 23 others) appeared first on The Motley Fool UK.
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James Beard has positions in Rolls-Royce Plc. The Motley Fool UK has recommended Airtel Africa Plc, BAE Systems, and Rolls-Royce Plc. 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.
