2 fast-growing FTSE 350 stocks I’d buy before it’s too late

These two shares seem to offer highly enticing risk/reward ratios.

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While the outlook for the global economy is relatively uncertain, a number of FTSE 350 stocks seem to have bright futures. Certainly, their share prices could come under pressure in the near term and their forecasts may be downgraded somewhat. However, with wide margins of safety on offer, their potential rewards appear to be high. Here are two prime examples of stocks which could be worth a closer look.

Improving performance

Recruitment specialist Hays (LSE: HAS) reported a rise in net fees on Thursday of 10% for the first quarter of the calendar year. This was despite a rather disappointing performance in the UK, where net fees declined by 4% versus the same period of the previous year. This was largely the result of a 13% decline in public sector net fees, where operating conditions are showing little sign of mounting a sustained recovery.

This negative performance was offset by strong growth in the Continental Europe & Rest of World division, where Hays recorded a rise in net fees of 18%. This was backed-up by growth in net fees of 12% in Asia Pacific, where Australia continued to offer upbeat performance. Partly as a result of this, the company now expects full year operating profit to be at the top of the current range of market estimates.

With Hays trading on a price-to-earnings growth (PEG) ratio of 1.8, its shares appear to offer growth at a reasonable price. Its outlook is highly uncertain and Brexit could cause a further deterioration in its UK performance. However, with the potential for a positive currency translation from weaker sterling and a diversified business model, now could be the right time to buy it for the long run.

Growth potential

Also offering high growth potential is alternative asset and corporate administration services specialist Sanne (LSE: SNN). Its most recent annual results showed that the company’s current strategy is positively catalysing its financial performance.

Revenue increased by 40%, while underlying profit before tax was 37% higher. It has a strong pipeline of new business within its core offering. This has been at least partly impacted by recent acquisitions which have improved its geographic diversity and also opened new growth opportunities. They have provided the company with additional scale in new regions such as North America and are expected to contribute to a rising bottom line over the next couple of years.

For example, Sanne is forecast to record a rise in its earnings of 34% this year, followed by further growth of 17% next year. This puts its shares on a PEG ratio of 1.5, which indicates that they offer excellent value for money at the present time. Following the strengthening of its operational structure, the company appears to have a more stable and sustainable growth profile which could translate into a rising share price.

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.

Peter Stephens 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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