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2 bargain growth shares on my watchlist

I have long been convinced by the long-term growth profile of BBA Aviation (LSE: BBA). And the market is increasingly cottoning onto its perky bottom-line outlook too, the stock striking fresh record peaks above 316p per share just today.

A robust US economy continues to drive the amount of corporate jets in the sky, bolstering demand for the company’s flight support and aftermarket services. On top of this, the London firm’s shrewd acquisition of rival Landmark Aviation in early 2016, as well as vast investment in its fixed base operator (or FBO) in North America and beyond, should lay the framework for stunning sales growth long into the future.

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Investor sentiment received a shot in the arm after BBA announced in early May that group revenues soared 19% in the four months ending April, a result the business advised had reflected “both the contribution from acquisitions and organic growth.”

Plane brilliant

Revenues at its core Signature flight support division galloped 26% higher in the period, the company announced, with an additional month of contribution from Landmark — on top of the impact of FBO additions during the past year — helping to boost the top line.

But this was not the only cause for celebration thanks to the company’s bubbly assessment of the aviation space. Indeed, BBA noted that “growth in the North American [business and general aviation] market has shown signs of strengthening with flight movements up 4% in the first two months of the year.”

Against this backcloth City analysts expect earnings to soar at the firm in the near-term, and a 27% rise is pencilled-in for 2017 (compared with last year’s reported 8% advance). And the bottom line is predicted to keep on swelling with a 9% advance next year.

And in my opinion these forecasts make BBA a brilliant bargain. While the flying ace deals on a forward P/E ratio of 16.8 times (nudging above the widely-regarded value watermark of 15 times), a sub-1 PEG reading of 0.6 suggests it is, in fact, attractively priced relative to its growth potential.

When you also throw in the probability of increasingly-chunky dividends as cash generation steadily improves (yields clock in at 3.3% and 3.7% for 2017 and 2018 respectively), I believe BBA Aviation is worthy of serious attention at current prices.

Trade show titan

However, it is not the FTSE 250’s only hot growth star trading far too cheaply, and I reckon value seekers also need to check out media and events mammoth UBM (LSE: UBM).

The number crunchers expect UBM to enjoy a 26% earnings uplift in 2017, resulting in a mega-cheap P/E ratio of 14.2 times as well as a PEG readout of just 0.5. And the company is expected to follow this with a 2% advance in the following 12-month period.

The commercial events provider can rely on its broad geographic and sector footprint (it operates out of more than 20 countries and covers more than 50 different industries) to keep delivering solid earnings growth. And UBM remains busy on the M&A trail to keep business ticking higher — the company announced this month that “the pipeline of bolt-on acquisitions continues to be good.”

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. The Motley Fool UK has recommended UBM. 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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