Two growth stocks I’d buy right now

Royston Wild looks at two growth greats that could make you 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.

Building materials specialist CRH (LSE: CRH) has fallen out of favour with share pickers more recently thanks to mixed trading conditions across its markets, its value slipping to 15-month lows in recent sessions. And I consider this to be a great opportunity for eagle-eyed dip buyers to slip in, and particularly so for those seeking excellent earnings and dividend growth.

City analysts are expecting annual profits expansion to cool from recent years, although this is expected to still clock in at 9% for 2017. Those hoping for the pace to hasten will not have to wait long, either, an 18% improvement being forecast for next year. And current projections leave the FTSE 100 star dealing on a relatively-cheap forward P/E ratio of 13.7 times.

Meanwhile, CRH’s recently resurrected progressive dividend policy is predicted to push the dividend to 67.5 euro cents per share in 2017, up from 65 cents last year and yielding a chunky 3%. What’s more, an anticipated 70.8-cent payment that is being forecast for 2018 nudges the yield to 3.2%.

In a promising sign for future profits generation, the company has considerable financial firepower to continue its aggressive acquisition strategy across the US and Europe, while the benefits of CRH’s busy M&A drive in 2017 are expected to begin to filter through next year.

In addition to this, pricing is expected to begin improving across these established markets from 2018 onwards, in a further boon to CRH’s bottom line. And beyond this, promising economic indicators and should continue to drive infrastructure spend and thus keep the firm’s products well bought.

Looking good

Booming global demand for Ted Baker’s (LSE: TED) fashions has caused earnings to jump by double-digit percentages over the past five years (and at a compound annual growth rate of 15.1%). I am convinced the firm, like CRH, should prove a happy pick for growth seekers.

City analysts have pencilled in rises of 12% in the year to January 2018 and 13% in fiscal 2019 alone. And as a consequence the designer trades on a forward P/E ratio of 17.7 times, excellent value in my opinion given the FTSE 250 star’s brilliant sales momentum.

But the prospect of stunning earnings growth is not the only reason to pile into Ted Baker today — indeed, the rate at which the company continues to hike dividends should attract the gaze of income seekers. The business has doubled the full-year payout during the last five fiscal years.

So the Square Mile is predicting that last year’s 53.6p per share dividend will surge to 60.4p in fiscal 2018, and again to 68.9p in the following period. These sunny projections yield 2.4% and 2.7% respectively.

I am confident that Ted Baker’s chic lines can allow it to traverse the impact of broader industry pressure, a belief underlined by a recent market update in which, despite the firm warnings of “challenging trading conditions across some of our global markets,” it still managed to grind out a 7.3% year-on-year revenues improvement during the three months to November 11th.

And with Ted Baker steadily expanding to capitalise on strong pent-up demand (it opened stores and concessions in the UK, mainland Europe and across North America in the period), the business is setting itself up for solid earnings growth in the years ahead.

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 recommended Ted Baker plc. 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

Could Helium One be a millionaire-maker penny stock?

Shares of Helium One Global (LON:HE1) have soared 272% so far this year. Should I buy this penny stock while…

Read more »

Investing Articles

Are these 2 unsung FTSE blue-chips the passive income stocks I never knew I wanted?

Harvey Jones says that the FTSE 100 contains fantastic passive income stocks with deceptively modest yields. Here are two he's…

Read more »

A mixed ethnicity couple shopping for food in a supermarket
Investing Articles

Shhhh… These FTSE 250 stocks have quietly more than doubled in 2024

Forget those US tech titans. Our writer takes a closer look at two supposedly 'boring' FTSE 250 stocks that have…

Read more »

Investing Articles

As the Diageo share price flies on a double upgrade is this my last chance to buy it on the cheap?

The Diageo share price has inflicted plenty of pain on Harvey Jones in 2024, but suddenly it's serving up a…

Read more »

Investing Articles

7%+ yields! 3 choices to consider for a Stocks and Shares ISA

Christopher Ruane highlights a trio of FTSE companies each yielding over 7% he thinks investors should consider for a Stocks…

Read more »

Passive income text with pin graph chart on business table
Dividend Shares

How investors might try to turn £10,000 into a chunky passive income

Our writer Ken Hall looks at how the magic of compounding returns might help investors to create a handy second…

Read more »

Investing Articles

Here’s how to cut a coffee a day and invest in 2 stocks a month to aim for a £65k second income

Millions of us would love a second income, but it’s easier to achieve than we may realise. Dr James Fox…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Dividend Shares

Trading under 10 times earnings, is the easyJet share price too low?

Ken Hall assesses whether there's still value in the easyJet share price after recent gains following a strong annual results…

Read more »