These 2 hot growth stocks could turbo-charge your pension

Harvey Jones reckons these two growth prospects will continue to shine.

| 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.

A balanced portfolio of stocks and shares is a great way to save for retirement. Amid the solid blue-chips and income stocks, you also need a bit of acceleration. These two could help you hit the gas.

Going for growth

Infrastructure and support services company Stobart Group (LSE: STOB) has just published its interim results for the six months ended 31 August, and rewarded investors with a big juicy dividend. The FTSE 250 firm upped its dividend from 3p to 4.5p per quarter, a rise of 50%, as it increased its underlying EBITDA to £131.8m. However, today’s profits are mostly made up of £123.9m from the partial disposal of its stake in Eddie Stobart Logistics (ESL), which generated £112m in net cash. The company’s revenue almost doubled to £124.6m in the period, compared to £65.3m a year earlier.

CEO Warwick Brady said the group continues to work towards its clear targets for its three growth divisions – Energy, Aviation and Rail & Civil Engineering, and is also “driving growth in cash generation and returns to our shareholders”

Losing power

Stobart Aviation saw good progress, with passenger numbers at London Southend Airport up 25% year-on-year to 610,492. However, Stobart Energy experienced delays in the commissioning of new third party biomass power stations which have impacted short-term volumes by 33%, although EBITDA per tonne is ahead of target and long-term volume unaffected.

Stobart Rail & Civil Engineering is on track to deliver target EBITDA on rail and non-rail civil engineering projects, against a reduction in external revenue. Stobart Infrastructure and Stobart Investments benefitted from the partial disposal of the investment in ESL, in which the group retains a 12.5% stake.

Shine on

The stock currently yields a healthy 5%, forecast to hit an even more tempting 6.5%. That is pretty impressive, especially when you take into account its rampant share price growth, soaring 193% in the last three years.

City forecasters predict a 74% drop in earnings per share in the year to 28 February 2018, but never fear, they are pencilling in a whopping 276% growth in 2019. However, there is a price to pay for its turbo-charged prospects, with the stock valued at a hefty 34 times earnings.

High energy

Kingspan Group (LSE: KGP) has also had a strong year, its share price up an impressive 50% from 24p to 36p in the last 12 months. The firm, which provides insulation products for roofs, wall and floors, posted a solid first half, with revenue up 19% to €1.75bn, and trading profit up 6% to €177.8m. Revenues have been rising particularly strongly, up 20% from €1.47bn to €1.75m year-on-year.

Kingspan’s growth is being drive by increasing demand for greater energy efficiency, the robust European recovery and surprisingly resilient UK despite Brexit. Its strong balance sheet allows it to invest in the business and drive growth with €14m earmarked for acquisitions. It recently entered the lucrative South American market.

The group has posted five consecutive years of double-digit earnings per-share growth, including a spectacular 77% in 2015, and another 35% last year. City forecasters reckon this will slow, to 8% in both 2017 and 2018, but its prospects still look bright to me.

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 considered so you should consider taking independent financial advice.

Harvey Jones 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

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I invest in the FTSE 100 – or try to beat it?

Our writer has the option of investing in a FTSE 100 tracker fund. So why does he choose to buy…

Read more »

Young black woman walking in Central London for shopping
Investing Articles

£1,500 to invest in a Stocks and Shares ISA? Here’s how I’d do it

Our writer has been investing in his Stocks and Shares ISA. Here he details how he could put £1,500 in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top FTSE 100 shares I’d buy before the market rebounds!

Christopher Ruane identifies a pair of FTSE 100 shares that have both tumbled in the past year and that he…

Read more »

Business development to success and FTSE 100 250 350 growth concept.
Investing Articles

Here’s why the next bull market may have already begun

The UK stock market has taken the Bank of England's interest rate hike in its stride and green shoots suggest…

Read more »

Gold medal
Investing Articles

No contest! Here’s my stock of the week

An update from this company offered some relief from the economic gloom. It's this Fool's stock of the week.

Read more »

Cogs turning against each other
Investing Articles

Scottish Mortgage shares are back on the rise: is now the time to jump onboard?

Scottish Mortgage shares have risen over 25% in the past 30 days. This Fool takes a look at why and…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Why do Lloyds shares seem so cheap?

Lloyds shares have been losing ground and now look cheap on some valuations. So why has our writer removed the…

Read more »

Investing Articles

How to invest in shares to help beat inflation

Soaring prices could well outstrip our investing returns this year. I think it's more important to find shares to beat…

Read more »