Billionaire investor Warren Buffett is regarded as one of the best investors of all time. And it’s not hard to see why. His value-oriented approach to the financial markets has paved the way to an average annualised return of 19.9% since the 1960s – almost double what the US stock market has achieved over the same period.

However, despite his knack for finding lucrative investment opportunities, he seems to have missed a pretty big one here in the UK. The company in question is the equipment rental giant Ashtead Group (LSE:AHT).

Since 2005, the stock’s delivered a jaw-dropping 4,880% total return for long-term shareholders. By comparison, Buffett’s investment portfolio at Berkshire Hathaway has ‘only’ delivered a 674% gain over the same period. That’s certainly nothing to scoff at, but it pales by comparison.

So what actually enabled Ashtead to deliver such explosive gains? And can the business continue to fire on all cylinders moving forward?

Investigating winners

While Buffett prefers to learn from his mistakes, learning from successes can also be a valuable exercise. After all, if an investor understands what went right, they now know what traits to be on the lookout for in the future. With that in mind, what’s been behind Ashtead’s tremendous growth?

As always, there are a lot of factors at play. But in the case of Ashtead, management was early in spotting the trend of customers preferring to rent equipment rather than own it. After all, this drastically lowers start-up costs within sectors like construction and takes away all the headaches of machine maintenance.

After leveraging this within its home market in the UK, management expanded to the United States under the Sunbelt Rentals brand. And after two decades, during which US infrastructure spending surged following the 2008 financial crisis, Ashtead now lies at the heart of many industries in America, generating close to 90% of its top line.

In short, Ashtead massively benefitted from a first-mover advantage on a new secular trend. And with profits being reinvested in bolt-on acquisitions of smaller but profitable operators, prudent capital allocation decisions paved the way for strong profit margins and consistent value creation for shareholders. These are exactly the sort of competitive advantages Buffett likes to hunt for.

Where’s Ashtead going now?

With so much growth already under its belt, can Ashtead continue to be a Buffett-beating stock? The consensus analyst forecasts certainly suggest so.

On average, it seems institutional analysts are expecting the Ashtead share price to grow by another 35% over the next 12 months. This upward trajectory’s driven by the group’s continued organic growth within the US market. However, it seems excitement’s starting to brew as the firm expands into new markets like Canada, seeking to replicate its US success.

However, not every analyst is too keen on this international expansion plan. There are growing concerns that Ashtead might be unnecessarily exposing itself to integration risk and going beyond its financial capacity if its core US market suffers an economic slowdown. After all, the bulk of equipment rental demand comes from the construction sector, which is notoriously sensitive to economic volatility.

Nevertheless, with management’s impressive track record of capital discipline, this stock seems worthy of closer investigation, even after achieving such tremendous growth so far.