Market appetite for SSP Group (LSE: SSPG) is showing no signs of slowing down just yet. The company, which operates food and drink outlets in airports and railway stations across the globe, has seen its share price explode 38% since the start of 2017 alone.
And it is not difficult to see why share pickers want to load up on the London-based business. It announced last month that, at constant currencies, revenues surged 14.7% between April 1 and June 30, or 3.6% on a like-for-like basis. Factoring-in the positive impact of sterling weakness, sales actually soared 21.7% in the period.
These numbers beat analysts’ forecasts and I believe there is plenty of opportunity for the FTSE 250 stock to continue growing revenues at a stratospheric rate as passenger numbers chug higher across its global markets.
The City’s army of brokers certainly expect SSP to keep growing earnings at double-digit rates, and have chalked-in rises of 19% and 10% for the years to September 2017 and 2018 respectively.
A subsequent forward P/E ratio of 29 times is fair value, in my opinion, given the strong chance that profits could keep growing at a blistering rate.
What’s more, predictions that dividends will continue blasting higher also make SSP worthy of serious consideration, in my opinion. The 5.4p reward doled out in fiscal 2016 is predicted to stomp to 6.6p in the present period — yielding 1.2% — and to 7.2p next year, yielding 1.3%.
Like SSP, Domino’s Pizza Group (LSE: DOM) is also expected to serve up decent earnings growth in the medium term, even if profits are likely to cool from the double-digit rises of recent years.
City analysts have chalked-in a 5% bottom-line swell in 2017, and an 8% advance in the following 12 months.
Domino’s has seen its share price collapse by a third since March’s full-year numbers, as fears of a prolonged sales slowdown have intensified. The company announced then that like-for-like sales crept just 1.5% higher during the first nine weeks of the year (comparable takings rose 7.5% in 2016), and patchy releases since then have hardly boosted investor sentiment.
But I believe Domino’s has what it takes to hurdle these current troubles and deliver brilliant sales growth in the years ahead. The company hiked its target for the number of UK outlets back in the autumn to 1,600 from 1,200, of course, while it has also invested heavily to bolster its position overseas.
As such, I reckon the pizza play remains a brilliant selection for long-term investors, even if it trades on a slightly-toppy forward P/E ratio of 18.7 times.
In fact, the prospect of delicious dividend growth in the years ahead adds an extra layer of appeal to Domino’s. Last year’s 8p per share payment is predicted to increase to 8.6p in 2017, and again to 9.2p next year.
These projections create chunky yields of 3.2% and 3.4% respectively.