Are these the FTSE 250’s hottest growth stocks?

Royston Wild runs the rule over two white-hot FTSE 250 (INDEXFTSE:MCX) growth bets.

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Shares in Just Eat (LSE: JE) took off again last week after full-year financials underlined the fast food favourite’s terrific growth outlook. The stock is a mere whisker from printing fresh record highs around the 600p marker.

Just Eat advised that revenues shot 52% higher in 2016, to £375.7m, a result underpinned by a 42% surge in orders. The company took a staggering 136.4m orders from hungry customers last year.

Consequently pre-tax profit galloped 164% in 2016 to £91.3m.

As well as enjoying breakneck sales growth in its home UK market, Just Eat is also witnessing excellent demand growth overseas. Indeed, the company noted that “international businesses also go from strength to strength… and now represent over one-third of group revenues.

There is no doubt the takeaway market is riding on the back of favourable structural developments in recent years, and in particular the ‘Netflix phenomenon’ that is seeing people increasingly staying in to chill with a movie and friends rather than venture out for a bite.

But surging customer numbers also underline the soaring success of Just Eat’s global expansion programme. The business made further acquisitions across Spain, France and Mexico in 2016, and announced plans to buy Canada’s SkipTheDishes and HungryHouse of the UK in December. And these steps should keep orders on a steep upward curve, in my opinion.

City brokers certainly share my optimism, and have chalked-in earnings growth of 32% and 39% in 2017 and 2018 respectively.

While subsequent P/E ratios of 35.7 times and 25.8 times may appear conventionally expensive, Just Eat’s sub-1 PEG numbers — at 0.9 for this year and 0.6 for 2018 — actually suggest the foodie is great value relative to its growth prospects.

Sports star

A rising geographic footprint also promises to deliver bumper earnings growth over at sportswear specialist JD Sports Fashion (LSE: JD).

The company advised in January that like-for-like sales growth in the latter half of the current financial year had been maintained around the 10% mark, matching growth posted during the initial six months and representing an exceptional performance in the face of strong comparables.

Consequently it said that headline profit before tax “will exceed current consensus market expectations of £200m by up to 15%.”

The retailer has thrown vast sums at boosting its presence across Europe, and in recent days has announced its intention to merge its operations in Spain and Portugal with those of fellow sports retailer Sonae. The move will create the second biggest sportswear seller on the Iberian peninsula with a combined turnover of $450m.

But JD Sports’ ambition stretches beyond the continent, the company also announcing this month plans to launch in Australia, starting with a maiden store in Melbourne slated to open in April.

The number crunchers expect JD Sports to record a 15% earnings rise in the year to January 2018, and a further 8% advance in fiscal 2019.

These figures result in P/E ratios of 17.8 times and 16.5 times respectively, very reasonable value in my opinion given that JD Sports’ foreign invasion promises exceptional revenues opportunities.

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 owns shares of and has recommended Netflix. The Motley Fool UK has recommended Just Eat. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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