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2 FTSE 100-beaters that could fund your retirement

With the FTSE 100 having risen by 3% in the last six months, it has generally been a prosperous period for investors. Certainly, there has been relatively high volatility, but capital growth has nevertheless been in line with long-term expectations. Over the same time period, two stocks have significantly outperformed the wider index. Looking ahead, more growth could be on the horizon.

Sound performance

Releasing an AGM statement on Friday was connected healthcare software and services specialist EMIS (LSE: EMIS). The company’s trading for the year to date has been in line with its expectations. This has benefited from its strong revenue visibility, growing market share, as well as solid order books and pipelines across all of its key sectors.

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The structural reorganisation of the business is now mostly complete. This has brought together Primary Care, Secondary Care and CCMH, which could provide greater efficiencies and higher growth prospects in the long run. The costs of the restructuring will be expensed in the first half of the year, which should provide an uplift to the company’s performance later in the year.

Clearly, the change in the company’s CEO could bring a degree of risk. However, EMIS seems to have a sound strategy through which to deliver improving growth in future years. For example, it is expected to report a rise in its bottom line of 4% in the next financial year.

While in the current year the company’s earnings growth rate is expected to move into the red, the growth potential from its restructuring means it should deliver FTSE 100-beating performance in future. Investor sentiment seems high following its 12% rise in the last six months, which could continue over the medium term.

Volatile growth

Also offering upside potential is trading and risk management software provider Brady (LSE: BRY). Its share price has risen by 3x the amount of the FTSE 100 in the last six months, with more growth set to be recorded in future.

Certainly, Brady has a rather chequered track record of financial performance. In the last five years its bottom line has fallen by around 40%, yet it has been able to deliver a couple of standout years where earnings have doubled versus their prior year on a per share basis. This trend looks set to continue over the next two years, with the company expected to report a fall in its bottom line of 46% this year, followed by growth of 143% next year. This could stimulate investor sentiment through 2017 and 2018.

With Brady trading on a price-to-earnings growth (PEG) ratio of 0.2, it appears to have a sufficiently wide margin of safety to merit investment at the present time. Investors seem to have priced in the potential for highly volatile growth, meaning now could be an optimum time to buy the shares for the long run.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Emis Group. 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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