3 of the best growth stocks of 2018 (so far)

Royston Wild runs the rule over three stocks whose share prices have detonated in 2018. Can they keep climbing?

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Looking for top growth stocks to buy today? Well I reckon the three shares described below are set to add to the colossal gains they have already racked up so far in 2018.


A 54% share price rise has made Softcat (LSE: SCT) one of London’s biggest winners in the year to date.

A slew of perky trading statements has kept the FTSE 250 software business well bought in recent months, its latest market update this month revealing that the company expects full-year profits to bash through its prior projections. Softcat said that “market conditions have been very favourable,” and added that “growth against [the] prior year has accelerated” since last updating investors at the end of May.

City analysts are expecting the Neil Woodford favourite to follow earnings growth of 33% in the year to July 2018 with an extra 6% rise in the upcoming fiscal year. I can see fiscal 2019’s estimates receiving hefty upgrades as we move through the rest of the year and into the next, taking the edge off a conventionally-expensive forward P/E ratio of 27 times.

Dechra Pharmaceuticals

It isn’t a surprise to see Dechra Pharmaceuticals (LSE: DPH) take off in 2018, either, its share price storming 43% higher since the turn of the year.

The FTSE 250 company, which provides pharmaceutical products for companion and farm animals, has continued peppering the market with a steady stream of positive trading updates, the last of which this month revealed a 14% increase in group revenues (at constant currencies) in the 12 months to June.

Dechra Pharmaceuticals’ acquisition-led growth strategy which has boosted its product pipeline and geographic footprint has proven integral in sending profits skywards in recent years. And so news of further significant acquisitions in January, i.e. those of Netherlands-based AST Farma and Le Vet, have been greeted with fanfare by the investment community.

Indeed, City analysts have been upgrading their forecasts in recent months and an 18% earnings jump is currently forecast for fiscal 2019, matching the expected increase for last year (results are due on September 3).

A forward P/E ratio of 33.2 times may be expensive on paper, but I don’t see this as an obstacle to further stock price gains in the weeks and months ahead.


I also reckon Homeserve (LSE: HSV) should continue the exceptional share price run that has seen it gain 25% in value since the turn of the year.

The home emergency specialist didn’t get off to an auspicious start in 2018 but investor appetite came alive following a blockbuster trading update in May in which it announced that sales jumped 15% in the year to March, a result that pushed pre-tax profit up by a quarter. As a consequence Homeserve decided to hike the annual dividend by 25% too.

The newsflow has remained positive since then, the FTSE 250 firm reiterating its prediction of “continued strong organic growth” in North America last week, with recent acquisitions likely to give sales at group level an extra leg-up.

With revenues exploding across all of the company’s territories, the City expects earnings to jump 9% in fiscal 2019 and 11% in the following year. In my opinion Homeserve’s rising might across the globe makes it worthy of its premium valuation, a forward P/E multiple of 27.2 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 recommended Homeserve. 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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