Two growth heroes that could make you rich

Investor appetite for The Gym Group (LSE: GYM) has remained relatively muted in mid-week trading following the release of reassuring trading figures.

The stock was last 1% higher from Tuesday’s close, and edging back from seven-month peaks above 200p earlier in the session.

The Gym Group advised that “trading for the first five months of the year has met the Board’s expectations and profit for the full year 2017 is anticipated to be in line with consensus market expectations.”

Membership numbers at the firm — which operates the low-cost The Gym — swelled by a terrific 19.6% from the corresponding 2016 period, to 507,000.

And it remains on track to have 95 sites up and running by the end of June, it said, with the opening of six gymnasiums executed in the half year. The company added that is likely to hit the upper end of its targeted 15-20 openings for the full year.

Setting the pace

Clearly Britain’s fitness craze is showing no signs of slowing, and The Gym Group is putting itself  in a strong position to continue exploiting this trend through its low-fee model and rampant expansion. Indeed, I believe the rising pressure on Britons’ wallets could actually bolster the firm’s membership base as keep-fit enthusiasts switch down from more expensive clubs like Nuffield.

City brokers certainly expect earnings at Gym Group to continue their trek higher, and healthy rises of 35% and 18% are chalked in for 2017 and 2018 respectively.

At first glance the fitness freak may not appear a compelling value pick, a forward P/E ratio of 26.1 times sailing outside the widely-regarded value benchmark of 15 times or below. But scratch a little deeper and The Gym Group actually appears attractive value relative to its growth potential, with a sub-1 prospective PEG reading of 0.7.

I consequently reckon the share price has further room for fresh gains.

Grab a piece of the action

Just Eat (LSE: JE) has proved itself to be a tasty stock for growth hunters, the firm generating double- and even triple-digit bottom-line expansion for many years now.

And while revenues may have slowed more recently, the City does not expect this breakneck bottom-line growth to cease just yet, with earnings rises of 37% this year and 38% in 2018 currently expected.

Like The Gym Group, Just Eat also deals on what could be considered a conventionally-high forward earnings multiple, the takeaway titan dealing on a reading of 39.4 times. However, a PEG reading of one suggests the business remains attractively priced, and I would expect investors to drive the share above this month’s record highs of 683p sooner rather than later.

Just Eat saw like-for-like sales rocket 40% higher during January-March, with underlying orders exploding 25% during the period to some 39m. In the UK, total orders rose 17% while at its overseas operations, Just Eat saw orders shoot 38% higher.

Although the proposed acquisition of Hungry House may run into regulatory troubles, I reckon Just Eat can still rely on its expanding geographic footprint to deliver stunning earnings expansion long into the future.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Just Eat. 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.