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Two high-growth stocks I’d buy today

I do love a juicy growth stock, especially one that look nicely placed to continue its run of success. The following two are well worth a look.

The big one

FTSE 250-listed Big Yellow Group (LSE: BYG) is the Big Friendly Giant (BFG) of the self-storage industry. This £1.25bn cap business is a familiar sight with 92 brightly coloured UK stores offering home, business and student storage. Its share price performance has also been bold and bright too, rising 164% over the past five years, although the picture has dimmed recently.

Brexit struck the initial blow, and the share price took a second hit when the group stated in November that it faces post-referendum economic uncertainty with a mixture of “caution and confidence“. January’s Q3 update was still fairly positive, with revenues up 7% to £27.4m and like-for-like revenues rising 6% to £80.7m year-to-date, and investors are duly piling back in, with the share price up 12% in the past three months.

Mellow Yellow

Big Yellow Group remains on “heightened alert” despite the positive sales figures. That’s Brexit for you. Spring and summer are traditionally the strongest period for occupancy and revenue growth so the next few months could be key. Although a national business, almost half of its stores are within the M25 around London, and investors will be hoping that this shields it from the worst of any slowdown.

At a forecast valuation of 20.4 times earnings, this stock isn’t cheap. However, growth prospects look positive, with City analysts anticipating earnings per share (EPS) growth of 10% in the year to 31 March 2017, followed by 9% the year after and then 10% again. Dividend policy is progressive, with a 12% hike last November to 13.5p per share. Today’s 3.2% yield is forecast to top 4.3% by 2019. Operating margins of 120% also impress.

Nice little package

Corrugated and plastic packaging specialists DS Smith (LSE: SMDS) has had an even more impressive last five years, its share price almost tripling from 145p to 430p in that time. Yet it still isn’t that expensive, trading at just over 15 times earnings.

This £4.12bn company is also a recycling operation, turning paper and cardboard into corrugated packaging, and anyone who has taken receipt of a fatly-packed Amazon delivery in recent years can easily imagine how big this unglamorous sector has become.

Flexible friend

Last month group chief executive Miles Roberts reported good volume growth as the company builds on the strength of its relationships with pan-European and e-commerce customers, and successfully integrates recently-acquired businesses. Its Brexit slump was only a blip, and no doubt it benefitted from the drop in sterling against the euro and also the dollar, as it has a flexible plastic packaging operation in the US.

DS Smith has also been expanding the range of services it offers to existing customers, adding value and boosting loyalty. Recent EPS growth rates have been imprewptedoperationoperation-digits for each of the last five years, but they may slow to between 5% and 6% over the next two years. However, revenues looks set to rise steadily, and a forecast yield of 3.5% covered 2.2 times makes for an attractive package. 

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended DS Smith. 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.