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One long-term growth stock I’d buy alongside GlaxoSmithKline plc

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It is fair to say that GlaxoSmithKline (LSE: GSK) is not the flavour of the month right now — its share price has rattled 14% lower from the 2017 peak of £17.22 per share struck in June.

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Indeed, I believe the Brentford firm’s exceptional product pipeline should deliver stonking earnings growth as global healthcare investment steadily rises. Just today it was announced that a US Food and Drug Administration panel had voted unanimously that the efficacy and safety of GlaxoSmithKline’s Shingrix treatment — a potential sales driver in future years — merited approval for application in adults aged 50 and above.

But more on GlaxoSmithKline later. Right now I want to look at another hot stock making headlines in Thursday business — Safestore (LSE: SAFE), Britain’s biggest self-storage provider.

Sales surging

The Borehamwood company announced today that revenues at constant currencies sailed 12.5% higher during May-July, to £ 32.9m, while like-for-like revenues (again, at stable rates) rose 3.2%.

The firm reported a like-for-like closing occupancy of 76%, improving from 74.8% a year earlier, while its like-for-like average storage rate in the third quarter rose 0.8% to £26.8m.

Commenting on the results, chief executive Frederic Vecchioli, said: “I am pleased to report continuing positive trading across the group in the third quarter with particularly strong momentum in our Paris business. As ever, our top priority remains the significant organic growth opportunity represented by the 1.5m square feet of currently unlet space in our existing fully invested estate.

Safestore noted that its new stores in Paris, London, Birmingham and Altrincham “are all performing in line or ahead of their business plans.”

A bubbly profits picture

And despite the troubles currently facing the British economy, Vecchioli remained upbeat on the storage giant’s future revenues outlook, commenting: “I am confident that our leading market positions in the UK and Paris will enable us to withstand any challenges presented by the current uncertain macro-economic backdrop. The company is in a strong position and remains on course to meet the Board’s full year expectations.

Now those looking for immediate earnings growth are likely to end up disappointed as the company looks odds-on to record a hefty bottom-line dip in the year to October 2017. Indeed, City analysts are forecasting a 47% earnings slide in the period, following on from the double-digit decline recorded in fiscal 2016.

Still, I am convinced Safestore’s position at the top of the market should deliver brilliant long-term profits growth, helped by its steady expansion plan. And the calculator bashers agree with me, noting that the business should rebound with an 11% rise in the upcoming financial period. And this also leaves the company on a decent forward P/E ratio of 16.2 times.

And it can also be argued that GlaxoSmithKline merits serious attention at current prices. It is predicted to generate earnings growth of 8% and 2% in 2017 and 2018 respectively, resulting in a forward P/E ratio of 13.3 times.

I believe the medicines mammoth, like Safestore, could provide the key to terrific returns in the coming years.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. 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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