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10 super-shares that have soared in the crisis

Tuesday - 7/10/2012, 4:36pm  ET

LONDON -- The past five years have produced pretty pathetic returns for owners of U.K. shares.

The blue-chip FTSE 100 index of elite U.K.-listed companies reached its boom-time peak of 6,732 on June 15, 2007. Then along came the credit crunch that started in mid-August, followed in 2008-09 by the U.K.'s longest and deepest recession on record. Fears of eurozone solvency have kept share prices under the cosh since 2010.

Hence, as I write, the Footsie stands at 5,662, which is 1,070 points below its 2007 peak. In other words, after more than half a decade, the U.K.'s main stock market index is still nearly a sixth (16%) below its previous peak.

The good news is that five years of decent dividends above, say, 3% a year will have helped investors in U.K. stocks to make a small positive return since mid-2007. Even so, near-zero growth over five years is nothing to be happy about. Indeed, cash deposits would have produced superior returns over the same period.

The FTSE 350's super- shares
Despite five years of lurching from one financial crisis to another, some U.K. shares have performed incredibly well since the boom, which ended in 2007. To demonstrate this, I used the Fool's Bloomberg terminal to find the "super-shares" of the past five years.

Over the five years ending July 9, 2012, Bloomberg found 29 current members of the FTSE 350 index whose share prices have at least doubled in this half-decade. Of these, 13 FTSE 350 constituents have seen their share prices at least triple -- rising 200% or more -- since July 2007.

The 10 top performers
Here are the 10 top performers among these super- shares, sorted from highest to lowest growth:

Company

Share Price (pence)

5-Year Return (%)

Market Value (million pounds)

Forward Rating

Dividend Yield (%)

Dividend Cover

Randgold Resources 5,9104225,42316.1 0.69.7
Dialight1,029406 32826.31.13.3
Oxford Instruments1,28134673219.0 0.86.2
Telecom Plus861.5320 61523.73.51.2
Carclo 44728527937.20.64.7
BTG418.82531,377 49.4--
Booker Group92.8 2471,60220.72.71.8
Petrofac 1,4392395,074 12.02.83.0
Croda International 2,2912353,20517.02.62.2
Aggreko 2,0332345,568 19.21.24.5
Average  2992,42024.11.63.7

Source: Bloomberg, 07/09/12; Digital Look, 07/10/12.

As you can see, the average return from these 10 shares in the five years to July 9, 2012, was 299%. In other words, had you invested equally across all 10 companies, you would have almost quadrupled your money in the past five years. Now that's what I call a rip-roaring return!

However, it's also worth noting that -- with the possible exception of Petrofac -- these are very much go-go growth shares, rather than value stocks. Indeed, the average forward price-to-earnings ratio for these 10 shares is over 24, which is almost twice the market's overall rating. What's more, their average dividend yield is a modest 1.6%, which is less than half of the market yield.

Next, I'm going to review the four largest companies from this list, all of which enjoy membership of the top-notch FTSE 100 club. Here they are, ranked by market capitalization:

1. Aggreko
With a market value of nearly 5.6 billion pounds, Aggreko is the giant of our super- shares. The firm describes itself as "the global leader in the rental of power and temperature control," with 100 locations in 29 countries.

Aggreko has built itself a very profitable niche renting power, temperature-control, and compressed-air systems to businesses all over the world. It is also a supplier to the London 2012 Olympics. Then again, thanks to its share price tripling over the past five years, it trades at 19 times expected earnings. Despite this above-market rating, I reckon Aggreko is worth running the rule over.

2. Randgold Resources
The second heavyweight on our list (with a market cap of 5.4 billion pounds) is gold miner and explorer Randgold Resources, which digs for multimillion-ounce gold deposits in west and central Africa.

Following several major discoveries, Randgold operates four gold mines: three in Mali and another in Cote d’Ivoire. A fifth mine -- in the Democratic Republic of the Congo -- will begin producing gold by the end of 2013.

Randgold tops our list of winners, thanks to its blow-out return of 422% since July 2007. Even so, its shares are not ridiculously overpriced, as they trade on a little over 16 times forecast earnings. If the gold price can climb and hold above $1,600 an ounce, then Randgold could continue to be a winner.

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