MENU

Singapore’s Fastest-Growing Blue Chips

MINOLTA DIGITAL CAMERAProbably one of the biggest misconceptions about large-cap stocks is that they don’t grow quickly.  Hence the well-trodden but, nonetheless, inappropriate stock market saying that “elephants don’t gallop”.

Admittedly, large cap stocks generally don’t grow as quickly as more nimble small caps. That is understandable given that, by and large, blue chip shares tend to be more established businesses. Consequently, their days of rapid growth are likely to be behind them rather than something to look forward to.

But to dismiss large caps as being “past their best” may be doing them a huge disservice. A quick trawl of Singapore’s large-cap stocks reveals that growth amongst the blue chips is far from pedestrian. The average revenue growth for the 30 companies that make up the Straits Times Index (SGX: ^STI) is a not-too-shabby 11% a year.

But that’s not all.

Companies such as Noble Group (SGX: N21) have lifted their revenue from around S$2b in 2000 to S$114b in 2012. That equates to a compound growth rate of over 40% a year. Meanwhile, revenues at Jardine Cycle & Carriage (SGX: C07) have grown from about S$3b to more than S$26b over 12 years. That would suggest the company’s top line has grown at nearly 20% annually.

Thing is, these two companies are far from isolated cases. Golden Agri-Resources (SGX: E5H) has raised its revenues from S$0.7b at the start of the Millennium to around S$7.4b last year. That’s an increase of around 22% a year. Meanwhile, turnover at Olam International (SGX: O32) has jumped from S$1.3b in 2001 to S$17b in just 11 years.

Often investors believe they need to look outside the Straits Times Index for growth companies. But nothing could be further from the truth.

A company that can grow its top-line at 10% a year should see its turnover double in a little over seven years. If profits can follow suit, then there is a good chance that the market value of the company could grow too.

The Motley Fool’s purpose is to help the world invest, better. Click here now  for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better.  

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.