2 great growth stocks that could make you insanely wealthy

Royston Wild looks at two London giants with brilliant earnings possibilities.

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Johnson Service Group’s (LSE: JSG) share price bubbled close to fresh record peaks in Tuesday business after the firm upgraded its profits expectations for the first half of 2017. The stock was last 3% higher on the day and within a whisker of May’s record summit of 133.25p per share.

JSG declared that it “has continued to trade very well in the first half with the results for the full financial year now expected to be slightly ahead of management expectations.”

The textile rental provider added that it “is very well placed for the seasonally busy summer months following the successful completion of two major investment programmes at the Southall and Chester factories.”

Textiles titan

JSG has long proven to be a reliable earnings generator, and City brokers expect this trend to continue, albeit at a slower pace. Expansion of 3% is pencilled-in for 2017, and an extra 4% rise is anticipated for next year.

Current projections create a forward P.E ratio of 16.7 times, peeking outside the widely-regarded value yardstick of 15 times or below. But I believe this still provides an attractive entry point given the strong possibility that JSG’s profits forecasts will be upgraded in the weeks and months ahead.

A combination of strong organic growth and shrewd M&A activity has helped propel JSG’s bottom line in recent times, and revenues grew an eye-popping 36% last year to £256.7m.

Indeed, the acquisition of Zip Textiles, Afonwen and Chester Textiles last year has further enhanced the company’s position in high-growth, high-margin areas like the hotel linen rental segment, not to mention bolstering JSG’s production capacity and geographic footprint.

And with the firm continuing to invest huge sums across the business, I reckon JSG should remain a go-to growth generator for some time yet.

Brand behemoth

Household goods colossus Reckitt Benckiser (LSE: RB) is another proven growth winner that should keep on pleasing investors in the years ahead.

The London manufacturer is expected to keep earnings expanding by double-digit percentages with advances of 11% in both 2017 and 2018. And in my opinion a prospective P/E ratio of 22.7 times is a bargain given the brilliant pricing power of labels like Nurofen, Strepsils and Durex. These are high-margin products that can be sure to keep group earnings marching higher even if broader economic turbulence dents consumer appetite.

On top of this, of course, it can look to its sprawling presence in developing regions to deliver stellar long-term returns. The company saw like-for-like sales in these territories rise 4% during January-March, to £869m, and I expect turnover to keep striding higher as personal wealth levels in these regions steadily improves.

Reckitt Benckiser is also engaged in massive restructuring to hive off its underperforming food business, and bolstering its position in the fast-growing consumer health segments through new product launches and acquisitions like that of US-giant Mead Johnson. I reckon the firm is in great shape to keep delivering brilliant earnings expansion.

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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.

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