2 growth stocks I’d buy and hold for 5 years

These two shares could deliver rising valuations over the long run.

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The performance of the oil and gas industry has been challenging in recent years. A falling oil price has caused activity across the sector to decline, and this has meant that profitability in the industry has come under severe pressure. As such, oil and gas companies have generally seen their share prices fall.

However, with the oil price having risen significantly in recent months, the prospects for the industry appear to be relatively positive. Certainly, volatility may continue to be high, but there could be capital growth potential on offer. With that in mind, here are two stocks that could be worth buying today.

Improving outlook

Reporting on Monday was Rockhopper Exploration (LSE: RKH). The oil and gas company provided an update on its Greater Mediterranean portfolio, with it delivering improved production from Abu Sennan. Current production is 4,000 barrels of oil equivalent per day (boepd), with the company seeing continued strong realised pricing. It has been able to sell oil from the area at a small discount to Brent.

Looking ahead, the company is set to engage in an active exploration and development drilling programme across both of its licenses in Egypt. It is seeing an improvement in the payment situation in Egypt, with it having reduced receivables significantly. Its historic liabilities to Beach Energy are also now satisfied.

While Rockhopper Exploration continues to be a relatively speculative business which could offer volatile performance, its capital growth potential could be high. If the oil price continues to increase or at least remains close to current levels, then the company’s forecasts may improve. This could lead to impressive future returns for less risk-averse investors.

Return potential

Also offering the potential for improving share price growth over the long run is Soco International (LSE: SIA). The company has experienced a relatively challenging period, with its financial performance coming under severe pressure. The Vietnam-focused company has endured a number of challenges in recent years, with a lower oil price making its trading conditions even more difficult. However, under its current strategy it appears to have the potential to generate improving financial performance.

Encouragingly, the company appears to have a relatively strong balance sheet. This could provide it with a degree of stability in what remains a relatively uncertain industry. And with it having no debt at the present time, it may offer less risk than some of its sector peers.

As mentioned, a higher oil price would be likely to have a positive effect on the oil and gas industry. With Soco in the process of developing its asset base through continued investment, the prospects for the business appear to be relatively bright. As such, and while its share price performance could be relatively volatile, now could be a good time to buy it for the long run.

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.

Peter Stephens has no position in any 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.

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