Two super growth stocks I’d buy today

These two shares appear to be undervalued by the stock market.

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While the stock market may be relatively high at the moment, some stocks seem to be undervalued by investors. Certainly, there may not be as many widespread bargains as there were before the current bull market commenced. However, a number of stocks with high growth rates continue to appear undervalued. Here are two prime examples which could be worth buying right now.

Strong performance

Reporting on Tuesday was international software company, Oxford Metrics (LSE: OMG). It announced a rise in revenue of 17% for the first half of the current year, which represents record performance. Its adjusted profit before tax was £1.6m, which was in line with expectations after focused investments. With cash flow generation being strong and the company receiving the remainder of the 2d3 consideration, its cash balance increased to £11.1m from £5.8m a year earlier.

Oxford Metrics seems to be making encouraging progress with its five-year plan. It is on target with its goal of doubling profits and tripling recurring revenues by 2021, with the annual value of recurring revenues moving 13% higher in the first half of the year. With the launch of Yotta’s new software platform, Alloy, and the opportunity to strengthen and protect Vicon, the company appears to have a clear growth strategy for the medium term.

Looking ahead to next year, Oxford Metrics is forecast to record a rise in earnings of 57%. This puts its shares on a price-to-earnings growth (PEG) ratio of only 0.3. While still a relatively small company which is therefore relatively risky, its potential rewards could prove to be significant.

Improving prospects

Also offering upbeat growth potential is IG Design (LSE: IGR). The gift packaging and greetings card specialist is forecast to report a rise in its bottom line of 41% this year, followed by additional growth of 11% next year. This follows four consecutive years of profit growth, which suggests the company has a relatively resilient business model. Given the uncertain outlook for the UK economy, this could prove to be a positive for the company’s investors.

While it has a relatively bright outlook, IG Design continues to trade on a fairly enticing valuation. For example, it has a PEG ratio of 1.7. Given its consistent track record of profit growth, this seems to be a relatively appealing price to pay. It suggests that further share price growth could be ahead after the company’s 42% rise since the start of the year.

As well as growth prospects, IG Design could also become a strong income play. It may have a dividend yield of only 1.2% at the present time, but its shareholder payouts account for only 23% of profit. This indicates that rapid dividend growth could lie ahead – especially when the company’s forecast profit growth rate is factored in. Therefore, from an income, value and growth perspective, IG Design could be a shrewd buy.

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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