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Growth stocks usually live in Silicon Valley, wear black turtlenecks, and promise to automate your trousers by 2029. Compass Group (LSE:CPG), a FTSE 100 giant, does none of these.
That sounds dull. But it’s often the sign of a business that might be worth looking at while everyone else is being distracted by Nvidia’s latest data centre chips.
Who needs food, anyway?
Compass is a world away from artificial intelligence (AI). But agents replacing humans might force AI onto the FTSE 100 firm’s radar even if it’s not a direct competitor.
If AI starts replacing humans, fewer people are likely to need lunch at work. The company has customers in tech, finance, and professional services, which are sectors right in the firing line.
The risk is real and investors can’t afford to ignore it. And there’s also the rise of GLP-1 medication to consider – especially in the US, which is the firm’s largest market.
Despite this, the business somehow keeps growing. In 2025, the firm reported organic growth of 8.7% and underlying earnings per share growth of 11.1%.
| Metric | Latest figure |
|---|---|
| FY25 revenue | $46.1bn |
| FY25 organic revenue growth | 8.7% |
| FY25 underlying EPS | 131.9c |
| HY26 revenue | $25.0bn |
| HY26 basic EPS | 72.8c |
Compared to some of the companies involved in the AI supply chain bottlenecks, that’s not high. But it might be more durable than a temporary surge in demand for memory chips.
Long-term strength
Compass operates across offices, hospitals, schools, stadiums, defence sites, and remote locations. And the firm’s scale is its big attraction and main competitive weapon.
That breadth gives it bargaining power and resilience. And this translates into the ability to win contracts from firms that would rather not discover how complicated soup can be.
Management estimates its current market share is below 15%. That’s a long runway for a company that’s bigger than its nearest competitors combined.
The hidden weapon is Foodbuy, its procurement operation. It is not glamorous, but it is devastatingly effective in how well it works.
Foodbuy USA procures more than $32bn of food and beverages a year. It helps Compass buy better, standardise where useful, and pass savings through to clients.
In a low-margin industry, procurement is not a back-office operation that nobody pays attention to. It’s the engine room, only with more chicken.
Valuation
The awkward bit with Compass is valuation. The stock isn’t obviously cheap, trading on a forward price-to-earnings (P/E) multiple around the low 20s.
For a defensive catering business, that is hardly bargain-bin territory. It also means this isn’t a sneaky UK stock trading at a massive discounts to its US counterparts.
My view, however, is that Compass is a high-quality growth stock in a resilient industry. That’s a rare combination and an incredibly sensible one.
I already own the stock in my Stocks and Shares ISA. But at today’s price, I’m happier standing near the buffet and waiting than rushing to reload right now.
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Stephen Wright owns shares in Compass Group.
This story originally appeared on Motley Fool
