Forget short term pain: 2 great growth stocks that could deliver brilliant long-term gain

Royston Wild reveals two FTSE 250 (INDEXFTSE:MCX) businesses that could make you very, very rich.

| 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.

I believe that Hochschild Mining (LSE: HOC) is a share that could be capable of delivering knockout shareholder returns.

The mining ace, which digs for precious metals across The Americas, announced this week that it chucked out record amounts of metal between July and September, with silver output clocking in at 5.3m ounces of attributable metal and gold production hitting 67,234 attributable ounces.

The company lauded a “strong performance” from its Inmaculada asset in Peru, and highlighted progress at its Pallancata site in the country which is “continuing to deliver tonnage and grades above expectations.” Group silver production in the year to date stands at an all-time peak of 28.2m ounces.

Celebrating the results, chief executive Ignacio Bustamante said: “We are firmly on track to hit our 37 million silver equivalent ounce target for the year. Costs remain under control and we can look forward to our financial position improving in the near future with good cashflow generation and a planned debt refinancing in the first quarter of next year.

Expensive but exciting

And in other developments the FTSE 250 digger announced: “The Pablo permitting process continues as expected with no major issues encountered so far.” The environmental permit expected to be received by the close of the month, it said.

Keeping the good news rolling, Hochschild added that it is now in the middle of its brownfield exploration campaign and has seen “some encouraging results from Arcata, San Jose and also at Inmaculada.” This will come as reassuring news to investors, the company’s share price having slumped in recent months on the back of worrying exploration updates.

Those expecting booming production levels at Hochschild to translate into magnificent earnings growth right away will no doubt end up very disappointed. The company is anticipated to report a 26% earnings drop in 2017 by City brokers due to the impact of heavy exploration costs.

However, the London-based miner is expected to bounce back with an 81% bottom-line improvement in 2018. And as production levels boom, operating costs come down, and a turbulent political and economic outlook likely keeps silver investment on the boil, I reckon Hochschild could prove a very savvy buy, despite its elevated forward P/E ratio of 37.6 times.

Waste not want not

Renewi (LSE: RWI) is another FTSE 250 share I am tipping to overcome some near-term obstacles to deliver robust earnings growth in the years ahead.

In the 12 months ending March 2018, the waste-to-product specialist is expected to print a 2% bottom-line decline, although it is predicted to get firing again from next year (a 73% year-on-year earnings improvement is currently forecast for fiscal 2019).

And it is not difficult to see these numbers being upgraded in the months to come as trading conditions improve in both the UK and The Netherlands. Last month Renewi advised that “overall trading for the first half is ahead of our expectations” as improving economic growth boosted waste volumes. And it again extolled the benefits brought about by the merger of Shanks and Van Gansewinkel which completed in February.

I reckon Renewi is also worth serious attention right now even given its high forward earnings multiple of 27.5 times.

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 of the 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.

More on Investing Articles

Photo of a man going through financial problems
Investing Articles

I asked ChatGPT to name the FTSE 250 share it would buy in a heartbeat – and it went mad!

Harvey Jones wondered whether artificial intelligence was up to the job of finding him a brilliant FTSE 250 share to…

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

Is the BP share price primed for lift off?

As an activist investor takes a substantial holding in BP, Andrew Mackie assesses what it will take to energise the…

Read more »

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

No savings? I’m using the 5-step Warren Buffett method as I aim to get rich

Christopher Ruane outlines a handful of investment techniques he uses, inspired by the incredible stock market record of Warren Buffett.

Read more »

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

With a spare £3,000, here’s how a new investor could start buying shares

Our writer explains how someone with a few thousand pounds and no prior stock market experience could start buying shares…

Read more »

UK money in a Jar on a background
Investing Articles

£10,000 invested in Greggs shares in 2020 has made this much passive income…

Greggs shares have struggled lately due to economic weakness and rising costs. Are they still worth considering for an ISA…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

Don’t look now, but the FTSE 100’s beating the S&P 500 in 2025…

So far this year, UK stocks have been doing better than their US counterparts. So is the FTSE 100 the…

Read more »

Investing Articles

How much would someone need in UK shares to earn £5,000 in passive income each month?

Thousands of Stocks and Shares ISA investors have built up more than a million pounds and can sit back and…

Read more »

Investing Articles

£10,000 invested in Tesla stock 1 month ago is now worth…

Tesla stock is remarkably volatile for a mega-cap company. While this presents some opportunities for investors, it’s also inherently risky.

Read more »