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2 growth stocks I’d buy and hold forever

Finding shares with bright growth prospects is not particularly challenging. After all, with a loose monetary policy having been adopted across the globe in recent years, the prospects for the world economy are fairly bright. However, unearthing stocks which have a strong track record of growth and that can offer sustainable growth is much more difficult.

Despite this, there are stocks which can provide relatively resilient earnings growth that is ahead of that of the wider index. Here are two prime examples which may be worth buying and holding for the long run.

Improving performance

Reporting on Wednesday was global supplier of bonding solutions and manufacturer of adhesive based products Scapa Group (LSE: SCPA). The company’s trading statement showed that its sales, profit and margins have moved higher versus the first half of the prior year. It has benefitted from currency gains and a full contribution from Euromed, which was acquired in May last year.

The company’s Healthcare division’s sales grew by 7.9%, with improvement in both trading profit and margins. Its Industrial division continues to benefit from a focus on boosting margins. It also completed the sale of its property in Switzerland for £13.6m and acquired Markel Industries for £7.8m.

Looking ahead, Scapa Group anticipates that profit for the full year will be ahead of current expectations. It is due to post a rise in its bottom line of 11% this year, followed by further growth of 12% next year. Having reported double-digit earnings growth in each of the last five years, the company has a sound track record of high growth. With a sound strategy and solid business model, it could deliver improving financial and share price performance in the long run.

Reliable performer

Also offering a strong track record of earnings growth is distribution and outsourcing specialist Bunzl (LSE: BNZL). The company has reported a rising bottom line in each of the last five years and is forecast to do likewise over the next two years. For example, in the current year its earnings are expected to increase by 7%, followed by additional growth of 6% next year.

The company’s acquisition strategy appears to be working well. Bunzl also has the potential to deliver organic growth which may help to boost its dividend prospects. Currently, it has a yield of 2%, but pays out just 40% of profit as a dividend. This suggests that a higher proportion of profit could be made available for payment to investors in future without disrupting the company’s growth-by-acquisition business model.

Although Bunzl trades on a price-to-earnings (P/E) ratio of 20.3, the company’s resilient growth potential could make it a strong buy. That’s especially the case with the political and economic outlook for the UK and its investors being highly uncertain due to Brexit. As such, the stock appears to be a worthwhile buy for the long term.

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Peter Stephens owns shares in Scapa. The Motley Fool UK has no position in any of the shares mentioned. 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.