Image source: BT Group plc
BT (LSE: BT.A) shares continue to be a popular investment. Often, they are among the most traded stocks Hargreaves Lansdowne. But I think there are better UK stocks to consider as buys and holds. Here is the reason.
British people love BT
I can see why UK investors love this stock. First, BT is a well-established FTSE 100 company that has been around for years (i.e British Telecom brand launched in 1980). So investors are very familiar with it.
The stock also looks cheap. Today (22 November), BT sports a forward price-to-earnings (P/E) ratio of just 8.3.
Additionally, there is a 5% dividend yield. For many investors, this combination of low valuations and good yields is probably quite attractive.
Bad long-term benefits
One thing I pay attention to though, is the stock’s long-term record in terms of shareholder returns. And BT has a terrible record here.
See the performance table below. This shows stock price returns over five, 10, and 20 years.
| Time | Share the price return |
| 5 years | -21% |
| 10 years | -61% |
| 20 years | -24% |
I’m sure readers will agree, those performance figures are not good.
Now, benefits have increased returns on the way. Therefore, long-term investors are likely to do well once these are included.
And there have been times there traders would have made a lot of money by buying and selling stocks. For example, between 2009 and 2015, stocks jumped nearly 490%.
But as a long-term investment, BT shares have not fared very well. As a result of low revenue growth and a weak balance sheet, stocks have underperformed in a big way.
I will point out that there is always a chance that BT’s performance could start, increasing its share price. However, I have found that past performance is often a good predictor of future returns (winners tend to keep winning while losers tend to lose).
Given the poor track record, I am not tempted to invest.
Top UK stocks
So, are there any stocks that appeal to me as they have strong track records when it comes to generating wealth for investors?
Well, check out a construction equipment rental company Ashtead. I have put its share price performance figures in the table below.
| Time | Share the price return |
| 5 years | 172% |
| 10 years | 487% |
| 20 years | 8,370% |
Another good example is a hotel operator InterContinental Hotels. Here are its long-term share price returns:
| Time | Share the price return |
| 5 years | 108% |
| 10 years | 180% |
| 20 years | 1,300% |
These are the types of stocks I buy for my own portfolio. Both of these companies are real winners.
Of course, there is no guarantee that future returns from these stocks will be strong. Both companies face risks that could derail their upward trajectory.
For example, Ashtead could be hurt by the recession. InterContinental hotels, on the other hand, may suffer from changes in travel spending.
Both businesses have the potential to generate strong growth in the coming years, however. So I am optimistic as a long-term investor and believe that the shares are worth considering for a long-term portfolio today.
Readers looking for more examples of high-quality UK stocks can find plenty right here The Motley Fool.
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