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2 growth stocks to buy your grandchildren for Christmas and beyond

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Shares can make excellent Christmas gifts for grandchildren as not only do they have the potential to keep rising in value over time, but they can also provide youngsters with valuable lessons on investing, which is priceless in my opinion. With that in mind, here’s a look at two fast-growing smaller companies that I believe have long-term potential and could make excellent Christmas gifts this year.

NCC Group

If I was looking to buy shares for my grandchildren, I’d be keen to capitalise on a long-term growth theme. And one that’s hot right now and has significant potential is cyber security. Indeed, with cyber attacks becoming both more prevalent and more sophisticated, cyber security is at the top of the agenda for businesses and governments around the world right now. One company leading the way in the fight against cybercrime is £560m market cap NCC Group (LSE: NCC).

NCC Group is a global expert in cyber security and specialises in protecting businesses against the ever-evolving threat landscape. Headquartered in Manchester, the company serves over 15,000 clients worldwide and has lofty ambitions to become the leading player in the global cyber security market.

After enjoying a phenomenal share price run from 50p in 2009 to over 360p in October this year, NCC Group’s shares thudded back to the 200p level recently after the company warned of setbacks relating to the cancellation of three major contracts and difficulties with services contract renewals.

However, while there’s no doubt that sentiment towards the company has deteriorated in light of these contract issues, I’m looking at a long-term investment horizon with NCC Group, and I believe the share price fall has created an opportunity to get on board a fast-growing company, in a rapidly growing industry, at an attractive valuation.

NCC Group has nearly tripled its revenues in the last five years, yet the stock can now be bought for a forward looking P/E ratio of just 16.9, which is good value in my opinion. With management recently stating that it has forward order books and renewals of £108.8m, up from £71.9m last year, and that the company remains on course to sustain double-digit organic revenue growth, I’m convinced there’s big things to come from NCC Group over the next decade. 

OneSavings Bank

Another sector that has great long-term potential to my mind, is the UK challenger banks. With high returns on equity and low cost-to-income ratios, the challengers are shaking up the banking industry and one company at the forefront of this movement is OneSavings Bank (LSE: OSB).  

OneSavings Bank targets underserved banking sub-sectors that offer high growth potential and attractive risk-adjusted returns and this strategy is working well for the bank, with revenue leaping from £71m in FY2013 to £168m in FY2015.

Obviously, the banking sector isn’t without risks, with Brexit uncertainty and government intervention in the buy-to-let market being the main risks that come to mind. However with the stock trading on a forward-looking P/E ratio of just 8.5 and supporting a healthy dividend yield of 2.6%, OneSavings Bank looks attractive as a long-term investment to me, and as such could make an excellent gift this Christmas. 

This stock could make an even better Christmas present  

While I believe the two stocks listed above have great potential, analysts at The Motley Fool reckon they've unearthed a growth stock with even more potential. 

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The company listed in the report has seen its share price rise by a huge 240% over the last five years, and yet analysts at the Fool believe there's more to come from this British company

To find out the name of this fast-growing company for FREE, click here.

Edward Sheldon owns shares in NCC Group. The Motley Fool UK owns shares of NCC. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.