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2 growth stocks I’d buy right now

SuperGroup (LSE: SGP), owner of British fashion brand Superdry, last month released a terrific set of results for fiscal 2017, as it delivered another year of rising sales and profits. But with the UK facing an uncertain economic future, could investing in Britain’s retailers be a risk too far?

Brexit impact

Full-year numbers for the FTSE 250-listed fashion retailer were, dare I say it, Super! The Cheltenham-based group reported a 27.4% rise in revenue to £752m for the 52 weeks to April, with like-for-like retail sales growth of 12.7%. Underlying pre-tax profits climbed to £87m, an 18.4% improvement on the £73.5m reported for the same period a year earlier. The full-year dividend was lifted to 28p per share, representing a substantial 20.7% increase on the 23.2p paid out to shareholders for FY2016.

Management did however acknowledge that the economic environment had been tough and the political backdrop uncertain, with the Brexit vote and fluctuating exchange rates having had the most significant direct impact during the course of the year. But the Superdry brand has proved resilient with increased exposure to different countries, markets and currencies helping to soften the blow.

Expanding globally

SuperGroup is now fully focused on expanding globally with a clear strategy for growing its e-commerce business as well as its operations in key markets within Europe, North America and China. The retailer now has a physical presence in 62 countries, with 863 stores and concessions worldwide, as well a successful online operation with 27 international websites across 18 countries covering 12 different languages.

I can still see plenty more growth in the coming years, particularly in the Sport and Womenswear categories, with management also keen to exploit the growing trend in ath-leisure. Analysts also seem optimistic about the outlook, with consensus estimates suggesting a 30% rise in underlying earnings over the next couple of years, leaving the shares trading on a very undemanding P/E rating of 14 for fiscal 2018/19.

British success story

Another UK fashion brand that I’ve had my eye on for quite some time is Ted Baker (LSE: TED). Lots of others have had their eye on it too. The London-based retailer has seen the value of its shares soar from below 900p in 2012 to all-time highs of 3,555p near the end of 2015. But at 2,444p, the share price has now fallen back considerably and I believe this presents an excellent opportunity to pick up this premium lifestyle brand on the cheap.

The FTSE 250 business continues to outperform, delivering consistently rising earnings year-on-year, and seldom disappoints. In its latest trading update, the group reported a 14.2% increase in revenue for the 19 weeks to June, with total retail sales up 14.3%, despite external factors continuing to impact trading conditions across some of its global markets.

The online business in particular, continues to perform well, with sales increasing 35.9% during the period from 29 January 2017 to 10 June 2017, reflecting continued growth across its e-commerce sites as well as the strength of its retail proposition. At 19 times forward earnings, Ted Baker’s shares are trading well below historical levels, giving new investors a great opportunity to buy into this remarkable British success story at a very affordable price.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup and Ted Baker plc. 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.