2 growth heroes you need to check out

Royston Wild runs the rule over two white hot growth giants.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

While Fuller, Smith & Turner’s (LSE: FSTA) share price has ducked in Friday trade despite the release of bubbly trading numbers, this is not surprising given the leisure leviathan’s strong run of recent months.

Fuller, Smith & Turner announced that revenues swept 12% higher in the 12 months to March 2017, to £392m, a result that powered adjusted pre-tax profit 5% higher to £42.9m.

Toasting the results, chief executive Simon Emeny announced that “food and accommodation have driven like-for-like sales growth in our Managed Pubs and Hotels and the targeted investments we have made in both new sites and redeveloping our existing estate have generated excellent returns.”

On the march

And Fuller, Smith & Turner has seen performance improve across the board since the end of the fiscal period.

The pub operator saw like-for-like sales across its Managed Pubs and Hotels division rise 3.7% in the year to March. And it has seen takings improve since, with underlying revenues here up 6.6% in the first nine weeks of the present year.

Meanwhile, at the pub operator’s Tenanted Inns division, like-for-like profits have risen 5% in the initial nine-week period. These fell 2% in the whole of fiscal 2017.

And at its brewing operations, it has seen beer and cider volumes up 7% in just over two months. By comparison sales at The Fuller’s Beer Company fell 2% in the year to March.

Further growth in store

Now Fuller, Smith & Turner faces no inconsiderable hurdles looking ahead, from the cost pressures created by increased business rates and the introduction of the National Living Wage, through to the uncertainties created by the Brexit negotiations and now the political malaise following this week’s general election.

Still, with Britons’ spending on leisure proving relatively robust, and Fuller, Smith & Turner chucking shedloads of cash at its estate (the firm bought five new pubs and refurbished 25 in the last year alone), I reckon the company can expect earnings to keep on rising.

City analysts expect earnings to rise 2% and 6% in the years to March 2018 and 2019 respectively.

And while the booze behemoth may change hands on a forward P/E ratio of 16.9 times — peeking above the broadly-regarded value benchmark of 15 times or below — I reckon the company’s exciting growth strategy merits this premium, and expect earnings to keep chugging higher long into the future.

Brand beauty

I am convinced the evergreen popularity of hit labels like Nurofen painkillers and Durex condoms makes Reckitt Benckiser (LSE: RB) one of the FTSE 100’s most dependable earnings stocks.

While the business is currently enduring some difficulties in its so-called developed markets, the resilience of Reckitt Benckiser’s consumer healthcare stable — allied with the currency benefits created by its huge international presence — is helping to keep sales moving skywards. Indeed, revenues rose 15% in January-March, to £2.6bn despite these pressures.

And I reckon spiralling wealth levels in emerging regions should deliver splendid returns in the longer term. Reckitt Benckiser generates around a third sales from these territories right now.

The number crunchers expect earnings at the business to rise 10% in 2017 and 5% in 2018. And I reckon a prospective P/E rating of 23.7 times is more than fair given Reckitt Benckiser’s strong defensive qualities.

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 recommended Reckitt Benckiser. 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.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Could the FTSE 100 be set to soar in 2024?

The FTSE 100 keeps threatening to go off on a growth spree. And weak sentiment keeps holding it back. But…

Read more »

Investing Articles

Is this FTSE 100 stalwart the perfect buy for my Stocks and Shares ISA?

As Shell considers leaving London for a New York listing. Stephen Wright wonders whether there’s an undervalued opportunity for his…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

3 things I’d do now to start buying shares

Christopher Ruane explains three steps he'd take to start buying shares for the very first time, if he'd never invested…

Read more »

Investing Articles

Investing £300 a month in FTSE shares could bag me £1,046 monthly passive income

Sumayya Mansoor explains how she’s looking to create an additional income stream through dividend-paying FTSE stocks to build wealth.

Read more »

Investing Articles

£10K to invest? Here’s how I’d turn that into £4,404 annual passive income

This Fool explains how using a £10K lump sum can turn into a passive income stream worth thousands for her…

Read more »

Investing Articles

1 magnificent FTSE 100 stock investors should consider buying

This Fool explains why this FTSE 100 stock is one for investors to seriously consider with its amazing brand power…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but…

Read more »

Investing Articles

£8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Here's how regular investing in the UK stock market, over the long term, could help us build up some nice…

Read more »