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2 bargain growth stocks I’d buy right now

Finding growth stocks trading at bargain prices is never easy. After all, companies which offer above-average growth potential usually see their share prices marked up by optimistic investors. However, even with share prices generally high at present, there could be a number of compelling investment opportunities within a range of sectors. Here are two companies which could be worth a closer look.

Strong performance

Reporting on Thursday was sports betting and gaming company GVC (LSE: GVC). Its first half results show that the strategy pursued by the business is delivering an improved performance. For example, daily non-gaming revenue increased by 12% at constant currency, a performance in line with management expectations.

Its second quarter performance was particularly impressive, with non-gaming revenues rising 10% in constant currency despite a lack of a major football tournament in the current year. This reflects good momentum in the business and, with the impact of Euro 2016 excluded from the figures, non-gaming revenue was 15% higher in the second quarter of the year.

Clearly, the sports betting and gaming sector is becoming increasingly competitive. This could lead to sector consolidation, and with GVC trading on a relatively low valuation it could become a bid target. For example, due to it being forecast to post a rise in earnings of 23% in the next financial year, it trades on a price-to-earnings growth (PEG) ratio of just 0.5. This suggests that there is significant upside potential on offer over the long run.

Additionally, with the company yielding 3.7% from a dividend which is covered 1.7 times by profit, its income potential is also high. At a time when inflation is moving higher, this could open up the company’s appeal to a wider range of investors, which could act as a further catalyst on its share price.

Growth potential

Also offering an enticing investment outlook within the same sector is Playtech (LSE: PTEC). The provider of gaming software is forecast to post a bottom line rise of 27% in the current year, followed by further growth of 11% next year. While these rates of growth may seem rather high, demand for the company’s products and services continues to grow. As such, it could deliver double-digit growth over a sustained period.

With Playtech trading on a PEG ratio of just 1, it appears to offer a wide margin of safety. Even if its outlook is downgraded in the short run, its shares could still offer capital growth over the medium term.

As well as its growth and value appeal, Playtech also has strong income prospects. It currently yields 3.4% from a dividend which is covered 2.3 times by profit. This suggests that dividends could increase at a faster pace than profit over the medium term – without putting the company under financial difficulty.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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.