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Two growth stocks I’d consider buying right now

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Finding shares which offer a mix of growth and value is never easy. After all, growth stocks tend to trade at premium valuations since they are in high-demand. However, it is perhaps becoming more challenging to find reasonably-priced growth shares as the FTSE 100 moves higher. Despite this, there are still a number of companies which are forecast to grow their earnings at a brisk pace, and yet trade at fair valuations.

Improving performance

Reporting on Monday was specialist outsourcing and recruitment solutions provider Servoca (LSE: SVCA). The company announced a rise in sales of 18.8% in the first six months of the year. This is substantially ahead of sales in the first half of the prior year and shows that the company’s strategy is working well.

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Its diversified business mix has helped to deliver strong growth, with profit before taxation rising by 28.6% when compared to the same period of the prior year. Encouragingly, it recorded rising revenue in each of its six distinct business units, with it now on target to deliver against its full-year expectations.

Looking ahead, Servoca is forecast to report a rise in earnings of 5% this year. Since it trades on a relatively low price-to-earnings (P/E) ratio of 10.8, it seems to offer fair value for money. That’s especially the case since it has recorded four consecutive years of double-digit earnings growth. This shows that the company’s financial performance may be more robust and resilient than many of its sector peers.

Therefore, while a relatively small and high-risk share to own, its capital growth potential may be high in the long run.

Balanced outlook

Also offering upbeat growth potential within the same sector as Servoca is Robert Walters (LSE: RWA). It has also reported four consecutive years of double-digit earnings growth, with its net profit rising at an annualised rate of 42% during the period. More growth could be on the horizon, with bottom-line growth of 13% forecast for next year.

Certainly, there is scope for this figure to be downgraded should Brexit or the political uncertainty present in the UK cause businesses to be cautious when recruiting staff. However, with a price-to-earnings growth (PEG) ratio of just 0.9, Robert Walters seems to have a robust valuation which suggests a higher share price may be warranted.

In addition to its growth potential, Robert Walters could also become a more enticing income share. It may only yield 2.4% at the present time, but its shareholder payouts are covered over three times by profit. This suggests that dividends could rise at a faster pace than profit, which may lead to a double-digit rise in shareholder payouts over the medium term.

With inflation moving higher and investors likely to seek stocks which can offer an income return that stays ahead of rises in the price level, the recruitment company could prove to be a sound place to invest.

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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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