2 growth stocks that could make you brilliantly wealthy

Royston Wild looks at two London stocks capable of delivering exceptional earnings growth.

| 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.

For those seeking electric earnings growth in the near term and beyond, Marlowe (LSE: MRL) could be just the ticket.

The business, which specialises in the acquisition and disposal of firms that provide critical asset maintenance services, announced on Friday that trading during the first half of the fiscal year had been “in line with our expectations.”

Marlowe said that both of its Fire Protection & Security and Water Treatment & Air Hygiene divisions had “performed well” during April-September, with the four acquisitions made in the period “proceeding to plan and synergies in line with those anticipated on acquisition.”

On top of this, the AIM company advised that net cash clocked in at £3.1m as of the close of September, putting it in good shape to continue its acquisition-led growth strategy.

This should create plenty of optimism that Marlowe can churn out exceptional profits growth in the years ahead. Its aggressive M&A programme is steadily building its list of blue-chip clients, bolstering its territorial footprint, and providing the business with exceptional cross-selling opportunities.

And as the support services star itself alluded to today, the abundance of health and safety regulations that industry must now abide by provides plenty of scope for it to deliver excellent sales growth.

Fearsome growth forecasts

City brokers are certainly predicting big things for Marlowe’s bottom line. Current forecasts are putting earnings for the period ending March 2018 at 12.6p per share, which would mark a significant improvement from last year’s result of 1.1p.

And this rampant rise is not expected to be a flash in the pan — earnings are expected to bulge again next year, a 22% rise predicted to 15.4p.

What’s more, these stunning predictions are expected to encourage Marlowe to start chucking out dividends. A 4p per share reward is anticipated for the current period, yielding a handy 1.1%. And the London business is then predicted to keep rewards moving higher at quite a lick, jumping to 5.2p next year and yielding 1.4%.

I reckon Marlowe’s bright growth and income prospects make it worthy of its conventionally-high forward P/E ratio of 28.8 times.

Sticky star

Those seeking scintillating earnings expansion should also take a look at Scapa Group (LSE: SCPA) right now.

The Mancunian business has a rich history of doling out double-digit annual earnings increases and, thanks to its impressive work to improve margins across the business, is setting itself up to continue this trend.

And the firm — which manufactures adhesive products for healthcare and industrial markets – can rely on its position as a leading provider of turnkey solutions to the defensive medical market to keep pushing group sales higher. Revenues at its Healthcare unit punched 7.9% higher (or 2.1% at constant exchange rates) between April and September.

My view is backed up by City forecasts which point to profits growth of 15% and 11% in the periods ending 2018 and 2019.

I reckon Scapa’s impressive growth record makes it deserving of a weighty prospective P/E ratio of 27.9 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

Investing Articles

The National Grid share price nosedived 21% in 2 days! Is it time to take advantage?

The National Grid share price tumbled after the company surprised shareholders by revealing plans to raise more money via a…

Read more »

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

How I’d try to ironclad my second income before interest rates fall

Jon Smith explains a couple of tactics he's looking to implement in his dividend portfolio to try and protect his…

Read more »

Investing Articles

The FTSE 100 still looks cheap to me. But don’t just take my word for it!

The FTSE 100 (INDEXFTSE:UKX) has increased 7.5% since the start of 2024. But I think there’s evidence to suggest that…

Read more »

Investing Articles

What should the Vodafone share price be? Here are 3 possible answers

Our writer uses a number of popular financial measures to come up with an estimate of a fair value for…

Read more »

Investing Articles

Here’s how much I’d have if I’d bought 1,000 shares in this FTSE 100 defence stock 5 years ago

I could have made a pretty penny investing in this leading FTSE 100 defence stock. Now I’m looking at a…

Read more »

Investing Articles

1 potential millionaire-maker UK stock I’d like to buy for the long haul

For long-term investors, here’s 1 UK stock to consider buying right now with the potential to help power a growth…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

These cheap UK shares look way too good to ignore right now

With the UK stock market reaching new highs recently, this Fool plans to grab these two remaining cheap shares before…

Read more »

Young Woman Drives Car With Dog in Back Seat
Investing Articles

This unloved UK stock could rise 120%, according to a City broker

Some City analysts reckon a once-popular UK stock can recover from its massive recent decline and go on to more…

Read more »