Strength of franchise
One of the key drivers is the strength of the business franchise. The company must have a defensible niche in a market that has enduring demand. The 'economic moats' which give such businesses durability may not always be easy to spot.
Take BAA, which owned 95 per cent of Britain's airport capacity for nearly two decades as a public company. It levied its hefty returns on airlines which could only squeal at the price they had to pay. Although it was regulated, it still made a huge profit, particularly from the retailers who clamoured to access the well-heeled globe-trotting travellers. The contrast between two industries, the monopolistic airport operator with impregnable moat, and the airlines with none, could not be more stark.
It is ironic that regulatory authorities only seem to have woken up to the economic power of Britain's airports since BAA's takeover in 2006 by Ferrovial. The Spanish company, having been forced to sell Gatwick in 2009, has recently lost a legal appeal against having to divest more of its airports, including Stansted.
Of course, some moats are made, not inherited. Coca-Cola has through decades of heavy advertising reinforced the impression that any of the other thousands of types of sugared water out there really don't match up to the taste and refreshment of its own. There is of course now scale in Coca-Cola's position, something that Tesco also shares.
Although the supermarket operator has enormous cash-generating potential and buying power, plus superior growth and staying power in overseas markets, it may be close to the ceiling of store density in its home market. Although it has performed well by any standards, it doesn't fall into the top drawer of total returns.
The following list of 10 stocks with growth stamina has been drawn up using total return data since 1990, but with an eye to what we might expect in the next 20 years, too.
In a few cases, top-performing stocks like Capita, whose 20-year return was the best of all, have been left out because recent performance has been less than sparkling. The same is true of Reckitt Benckiser, another previously strong performer. What we are looking for are the sparkling exceptions to the rule that past performance is no guide to the future.
Watching what the big boys buy
One simple way to find shares with stamina is to replicate the holdings of the best managed long-term funds. That won't work if the fund makes its money by taking advantage of trading opportunities, of course, but it will most definitely work for funds that are long-term buy-and-hold investments.
If the returns rely on picking the best-placed companies and sitting tight, then any investor can ride at least part of the way along the coat-tails without incurring any of the annual charges that might be levied.
Take the Invesco Perpetual stable of equity income funds, overseen by star manager Neil Woodford. "Stocks which can deliver on income are not large in number, and it is quite difficult to find value. But where you can find this, it is profound," he told a recent online conference.
Putting your money where Mr Woodford's mouth is would find us looking closely at AstraZeneca, which makes up a hefty 10 per cent of Perpetual's income. Likewise, BAT, one of the best-performing stocks of the past 20 years is there too. Mr Woodford says he has held a position in tobacco throughout his career. As well as BAT, he holds another cigarette firm, Reynolds American.
Other top holdings include GlaxoSmithKline, Vodafone, BG Group and National Grid. Mr Woodford's Invesco Perpetual Income and High Income funds have each returned over 14 per cent a year over the past 10 years, which has roughly quadrupled them. Not bad!
