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My Top 5 Growth Stocks: Unilever plc, Sports Direct International Plc, HSBC Holdings plc, Johnson Matthey PLC And Whitbread plc



While the Chinese economy has shown signs of slowing down its growth rate in 2014, emerging markets such as China still offer huge long-term potential for consumer goods companies. A great example of such a company is Unilever (LSE: ULVR) and, while its long-term future looks bright, it is also growing its bottom line right now.

Indeed, earnings at Unilever are forecast to increase by 8% next year. This is ahead of the wider market’s growth rate and shows that the vast marketing spend in emerging markets that has been a feature of Unilever’s recent past is continuing to pay off.

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Sports Direct

While other UK-focused retailers have struggled during the credit crunch, value retailer Sports Direct (LSE: SPD) has gone from strength to strength. For example, it has been able to increase profit in each of the last five years, with it averaging 33% growth per annum.

Furthermore, impressive growth numbers look set to be a feature of the next two financial years, with Sports Direct’s bottom line due to rise by 17% per annum during the period. Although a price to earnings (P/E) ratio of 17.3 may put off a lot of investors, a price to earnings growth (PEG) ratio of 1 shows that it offers growth at a reasonable price.


It may be surprising to see HSBC (LSE: HSBA) listed as a growth stock, but the diversified global bank is very much a growth play these days. That’s because it is expected to increase net profit by 7% next year and, perhaps more importantly, has the potential to deliver much higher rates of growth in future years.

A key reason for this is that HSBC has an unrivalled position in emerging markets and is extremely well-placed to benefit from further development of the banking system in developing nations. While the Chinese soft landing has posed a challenge for it in 2014, the switch towards a consumer-driven economy could mean more business (and growth) for HSBC over the medium term.

Johnson Matthey

Shares in Johnson Matthey (LSE: JMAT) have disappointed in 2014, being down 9% since the turn of the year. Despite this, they still trade on a rating that seems very rich. Indeed, they currently have a P/E ratio of 17, which seems high when you consider that the FTSE 100 has a P/E ratio of just 13.8.

However, with the chemicals and sustainable technologies business expected to deliver earnings growth of 13% next year, its P/E ratio suddenly looks a lot more appealing. When the two are combined to give the PEG ratio, Johnson Matthey seems to offer good value, having a PEG of just 1.3.


Premier Inn and Costa Coffee operator, Whitbread (LSE: WTB), has posted hugely impressive share price gains in 2014. Shares in the former pub operator are up 16% since the turn of the year, and have risen by an incredible 243% over the last five years.

However, there could be much more to come. That’s because demand for budget hotels seems to be insatiable, with the cost of rooms in city centre locations (especially London) rising at a vast rate. Certainly, Premier Inn cannot go on expanding in the UK in perpetuity but, for now at least, there seems to be considerable untapped demand for them to exploit.

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Peter Stephens owns shares of HSBC Holdings and Unilever.  The Motley Fool UK owns shares of Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.