The Motley Fool

2 growth stocks I’d buy and hold for 10 years

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.

Image: GKN: Fair use

Buying shares which offer a mix of good value and strong growth credentials has generally been a sound strategy for long-term investors to pursue. However, now that the FTSE 100 is close to its record high, finding such stocks is proving more difficult. While growth potential may still be high, in many cases valuations have become over-inflated.

Despite this, there are still stocks which could be worth buying now for the long run. Here are two prime examples.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Record performance

Rising 8% on Tuesday was recruitment specialist Robert Walters (LSE: RWA). The company reported a record third quarter, with group net fee income growing 21% versus the same period of the prior year.

All of the company’s regions delivered strong net fee income growth, with the UK’s performance being highly impressive. Net fee income rose 15%, which was above the 12% rise recorded by Asia Pacific. However, both were behind the performance of Europe, where net fee income growth was 31% as the region benefitted from a continued loose monetary policy being pursued by the ECB.

With Robert Walters forecast to post a rise in its bottom line of 17% in the current year and a further gain of 12% next year, it has strong growth credentials. The company appears to be benefitting from its diverse geographical spread, and may even be able to enjoy a foreign currency translation boost should the pound remain weak.

Since the company trades on a price-to-earnings growth (PEG) ratio of just 1.3, it appears to offer growth at a very reasonable price. While the business is cyclical and its outlook may be relatively uncertain, it offers diversity and a wide margin of safety. Therefore, now could be an opportune moment to buy it.

Low valuation

Also offering growth at a reasonable price is global engineering company GKN (LSE: GKN). The company has a diverse geographical spread which means it may be a sound place for investors who are concerned about the outlook for the UK economy to put their money.

GKN is forecast to post a rise in its earnings of 8% in the current year, followed by further growth of 5% next year. The company has a price-to-earnings (P/E) ratio of just 10.6, which suggests it has a wide margin of safety. Certainly, its growth prospects may not be all that different to those of the wider index, but with the FTSE 100 at a record high, GKN may be one of the cheaper stocks in the index.

Furthermore, the company has dividend growth potential. Although it yields just 2.7% at the present time, shareholder payouts are covered 3.5 times by profit. This suggests that the company could double its dividend without hurting its capacity to reinvest for future growth. It could also mean that the stock has growth, value and income potential over the long term.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of GKN. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.