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2 fast rising forgotten growth stocks with massive potential

Coca-Cola HBC (LSE: CCH) is probably what many investors would call a boring company, but while the firm’s day-to-day operations may be tedious, the returns it generates are anything but. Indeed, over the past four years, the group’s pre-tax profit has risen from $294m to $585m, and earnings per share have increased from around 41p to 95p (as projected for 2017).

Wide economic moat 

As the world’s second-largest anchor bottler of Coca-Cola products, it is unlikely to see a sudden drop-off in its sales and profits anytime soon. Even though on a quarter-by-quarter basis sales will fluctuate, the group still bottles one of the planet’s most successful and well-known brands. What’s more, management is highly proactive in tweaking products and operating practices to maximise profitability, margins and efficiency. 

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For the first quarter of the year, the company reported FX-neutral revenue per case growth of 4.5%, reflecting changes to packaging and category mix, as well as price increases. With the well-known, established brand behind the company, management can afford to concentrate on these operational changes without having to worry about continual product research and development. This means the group should be able to maximise shareholder returns for a long time to come. 

Analysts expect earnings per share growth of 14% this year and 13% for 2018 and if the company continues to grow as it has done in the past, by 2021 earnings will have doubled once again to around 200p per share, making the current share price of 2,231p seen cheap. Shares in the company currently trade at a forward P/E of 23.7 and support a dividend yield of 1.9%, but don’t let these figures put you off. Over the long term, this is one growth champion that is unlikely to let you down.

Data dependent 

Just as Coca-Cola HBC has an enormous competitive advantage in its product, Experian (LSE: EXPN) has been building a broad and deep moat around its business by gathering customers’ data. Data has become the world’s most valuable commodity, and the more you have, the better. 

Experian has been building a credit score database for more than two decades now, and this rich trove gives the group a huge competitive advantage over its peers. They would have to spend a lot of time and/or money to acquire a similar asset. With this advantage behind it, Experian should be able to continue to grow at a steady rate for the foreseeable future and this growth is unlikely to be interrupted by competitors. 

For the next two years, city analysts have pencilled-in earnings per share growth of 8% and 9% respectively. Even though this increase might seem insignificant compared to the company’s current valuation of 21.4 times forward earnings, shares in Experian are worth paying a premium for because of the company’s unrivalled consumer credit database. This unique selling point should help the business continue to grow, no matter what.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Experian. 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.