2 great growth stocks with brilliant momentum

Royston Wild discusses two FTSE 250 chargers with electrifying growth potential.

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Helped by blockbuster trading numbers last month, Hays (LSE: HAS) has seen its share price continuing to chug merrily higher. The share has gained 17% in value since the turn of 2017 alone and hit fresh 10-year highs just today, reaching around 175p.

The recruitment firm smashed market expectations last month when it reported like-for-like sales that were up 10% between January and March.

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While underlying sales in the UK dipped 4% in the period, this was more than offset by strength elsewhere. Sales at its Asia Pacific and its Continental Europe & Rest Of World divisions vaulted 12% and 18% in the period.

Hays has seen earnings streaming steadily higher in recent times, and City brokers do not expect this trend to cease anytime soon. Advances of 12% for 2017 and 8% for next year are currently pencilled-in.

And I reckon a consequent prospective P/E ratio of 18.4 times is decent value given Hays’ rising momentum in international markets, regions that account for around three-quarters of the group’s fees. The jobs giant has plenty more left in the tank for further share price strength, in my opinion.

Measure up

Electronics giant Renishaw (LSE: RSW) has also witnessed rampant investor demand more recently, its stock value leaping 43% since the start of the year and this week striking record tops above £36 per share.

Renishaw’s share price has taken a step back in mid-week trade, however, as latest results prompted light bouts of profit taking. The stock was last dealing 2% lower from Tuesday’s close.

But Renishaw’s bubbly update leads me to believe the share price should resume its upward trek sooner rather than later. The metrology mammoth advised that revenues climbed 29% to £141.7m during January-March, while sales during the nine months to March were up 24% at £382.2m.

As a result it advised that “we are now anticipating revenue [for fiscal 2017] to be in the range of £520m to £535m and profit before tax to be in the range of £99m to £108m.” This is up from previously-predicted revenues of between £500m and £530m, and profits of between £85m and £105m.

While Renishaw has been the beneficiary of positive exchange rates more recently, this does not tell the whole story as underlying demand is charging higher across its markets in Asia, the Americas and the UK.

And with Renishaw also undergoing huge restructuring to reduce its cost base, chances are that the business can expect profits to boom beyond the current year.

This is certainly the view taken by City analysts, who expect earnings to swell 18% and 15% in the years to June 2017 and 2018 respectively.

Sure, some investors may baulk at a consequent forward P/E ratio of 31.4 times. But while expensive on paper, I reckon a backcloth of electrifying revenues growth makes the stock a sage selection even at current prices.

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