2 great growth stocks that could make you rich

Royston Wild discusses two stocks with hot profits prospects.

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Scapa Group (LSE: SCPA) was recently 2% lower on the day and moving further away from recent record peaks after an unexcited market reception to latest trading details.

The tape-maker advised on Tuesday that “trading performance for the first quarter is in line with the Board’s expectations, with both Healthcare and Industrial performing as anticipated.

Scapa is well positioned to make further progress this year and the Board remains confident about the Group’s outlook,” it added.

While reassuring, it is clearly no surprise to see the market fail to react significantly to this information, Scapa retreating further from June’s all-time highs above 515p per share. Still, I see it as merely a matter of time before the Manchester business reaches new summits.

Sticky business

Scapa has a long record of earnings growth behind it, and the Square Mile expects the adhesives giant to make further progress this year and next — bottom-line rises of 10% and 9% are forecast for the periods ending March 2018 and 2019 respectively.

A subsequent forward P/E rating of 28.2 times may sail north of the widely-considered value watermark of 15 times or under. But I reckon this is fair value given Scapa’s ample revenues opportunities.

The company saw sales gallop 13.3% higher in fiscal 2017, to £279.6m, it advised in May, the company benefitting from solid organic growth as well as significant FX tailwinds. Consequently, trading profit stepped to £29.2m, up 37.1% year-on-year.

And investors should take confidence from the the terrific progress of Scapa’s long-running self-help programme. Group trading profit margins moved into double-digit territory for the first time last year, marching to 10.4% from 8.6% in the prior period thanks to improvements at the Industrial division. And sales at the firm’s Healthcare arm breached the £100m barrier for the first time, rising 16.5% from 2016’s levels, to £108.7m.

I reckon there is still plenty of upside left in Scapa’s growth story.

Financial favourite

Sanne Group (LSE: SNN) is another London-listed stock forecast to deliver stonking earnings expansion in the near term and beyond.

For 2017, a 34% bottom-line rise is anticipated, continuing the firm’s record of mighty double-digit rises. And an extra 16% bounce is expected in 2018.

And these projections make Sanne decent value for money, in my opinion. While a prospective P/E ratio of 27.8 times may look expensive, a sub-1 PEG multiple of 0.8 suggests that the FTSE 250 play is actually attractively priced relative to its growth profile.

The financial giant, which provides asset and corporate administration services, saw group revenues stomp 40% higher in 2016 (to £63.8m) thanks to strength across all of its core divisions.

And Sanne has been extremely busy on the M&A front over the past year to extend its reach in both established and emerging nations to keep revenues on an upward tilt. Indeed, the business has made five deals since the start of 2016 in North America, Mauritius, South Africa, Ireland and the Netherlands.

With regulation of the financial sector becoming tighter across the globe, I believe Sanne is well placed to keep growing sales at a blistering pace.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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