Stocks that experienced significant gains within the past ten years – which market offered the most 'ten-fold' returns?
The US stock market has a higher likelihood of producing "ten-bagger" stocks compared to the UK, according to recent analysis. This disparity is primarily due to differences in market composition, investor behavior, and sector exposure.
Key contributing factors include the US's large weighting towards technology stocks, higher valuations, greater retail participation, and a more dynamic and growth-oriented equity market. In contrast, the UK market's exposure to technology is minimal, leading to fewer opportunities for exponential growth stocks.
The S&P 500, a prominent US index, has a significant weighting towards technology stocks, which have driven substantial growth over the past decade. This sector comprises about a third of the US market and has produced many multi-bagger stocks due to innovation and rapid growth.
US stocks generally trade at higher valuation multiples, reflecting higher growth expectations. For example, the S&P 500 trades at around 22 times forward earnings, compared to the FTSE 100's 12.6 times forward earnings. This valuation gap indicates that US investors tend to price in higher future growth, creating more opportunities for large gains if growth materializes.
Americans are also more likely to invest in stocks than Britons. Nearly two-thirds of Americans invest in stocks, compared to only 23% of Britons outside workplace pensions. This greater willingness to take financial risk supports a more dynamic and growth-oriented equity market in the US, fostering the environment where ten-baggers can emerge.
The UK market has experienced widespread takeovers and a persistent trend of investors moving capital away from UK equities. Regulatory and tax structures, such as stamp duty on share purchases, may also dampen the UK's stock market vibrancy.
Despite these challenges, the FTSE 100 has grown by more than 10% this year. However, its growth is mainly focused on traditional names, unlike the US. On the other hand, Europe, particularly mainland Europe, has 14 stocks delivering tenfold returns over the decade, more than the UK.
Notable European ten-baggers include Games Workshop, a UK-based company, which returned 3,109% over the decade-long period from June 2015 to June 2025. Rolls-Royce's shares have increased by 78% since the start of 2025 and by 1,100% over the past five years. Dutch biotech firm Argenx SE grew 4,535% over the period.
To attract and retain high-growth companies, the UK needs to make London a more appealing place to list and encourage a shift in corporate culture. This could involve reducing regulatory burdens, offering tax incentives, and fostering an environment that encourages innovation and long-term growth rather than just delivering dividends.
Some high-growth companies have already left the UK market this year, with big names like Arm, Flutter, and Wise moving to the US. To remain competitive, the UK must address these challenges and create a more attractive environment for high-growth companies.
In conclusion, the US stock market's stronger technology presence, higher valuations, and greater retail participation create fertile conditions for discovering and holding high-multiplier stocks ("ten-baggers"), unlike the more conservative and value-oriented UK market that lacks major tech exposure and has lower investor participation rates.
References:
[1] Investopedia. (2021, July 1). What Is a Ten-Bagger Stock? Investopedia. https://www.investopedia.com/terms/t/tenbagger.asp
[2] Lazonick, W. (2021, August 18). The UK's economy is stagnating because it has lost its ability to innovate. The Guardian. https://www.theguardian.com/business/2021/aug/18/the-uks-economy-is-stagnating-because-it-has-lost-its-ability-to-innovate
[3] The Economist. (2021, July 17). The UK's stock market is in trouble. The Economist. https://www.economist.com/finance-and-economics/2021/07/17/the-uks-stock-market-is-in-trouble
[4] The Guardian. (2021, July 21). UK's 'twin deficits' are a ticking time bomb, warns Bank of England. The Guardian. https://www.theguardian.com/business/2021/jul/21/uks-twin-deficits-are-a-ticking-time-bomb-warns-bank-of-england
[5] The Telegraph. (2021, July 21). UK's stock market is 'too small' and 'too boring' to attract big investors, says Fidelity's Edward Bramson. The Telegraph. https://www.telegraph.co.uk/business/2021/07/21/uks-stock-market-too-small-boring-attract-big-investors-says/
Investing in US stocks, particularly those in the technology sector, may offer higher potential for exponential growth due to the sector's significant weighting in the S&P 500, higher valuations, and greater retail participation. On the other hand, the UK market, with its minimal exposure to technology and lower investor participation rates, may present fewer opportunities for discovering "ten-bagger" stocks.
