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Today I want to look at two growth stocks with outstanding long-term records.

The first of these is a FTSE 250 business whose shares have risen by 163% over the last five years. The company in question is cinema operator Cineworld Group (LSE: CINE).

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This group’s earnings per share have doubled from 17p in 2012 to around 35p for the last 12 months. The dividend has also risen strongly, climbing from 10.6p to 19.8p per share over the same period.

Today’s trading update suggests to me that these gains should continue. Now that its UK network of cinemas is fairly mature, the firm is expanding into Europe, in countries including Poland, Hungary and the Czech Republic.

Indications so far suggest this is working well. The group’s total revenue rose by 10.6% during the year to 19 November, thanks mainly to an 18.2% increase in revenue from the group’s European operations.

A strong outlook

The company says that the film release schedule for the rest of the year includes titles such as Star Wars: The Last Jedi, which are expected to perform well. Management is confident that full-year profits should be in line with expectations.

That puts the stock on a 2017 forecast P/E of 16.7, with a prospective dividend yield of 3.3%. In my view, this seems a fair price to pay for a company with such a strong and consistent track record of growth. Although any slowdown in consumer spending is a risk, I’d continue holding and would be happy to buy at current levels.

Cheap luxury?

Shares of upmarket FTSE 100 fashion group Burberry Group (LSE: BRBY) were hit by a 12% sell-off earlier in November. Although the company’s half-year results were fairly solid, with sales up 9% and operating profit up 24%, investors weren’t impressed by news of a strategy shift.

Chief executive Mario Gobbetti intends to spend £150m-£160m each year until 2020 to “sharpen our brand positioning” and move more firmly into the luxury end of the market. New ranges such as leathergoods will be added and the group will cut back on sales through wholesalers that could dilute the strength of its luxury brand.

Focus on the numbers

I’m not in a position to judge the appeal of Burberry’s products, except that to note that this company has been trading successfully since 1856. This kind of longevity is usually attractive, in my opinion. It shows that the company has survived difficult periods before and continued to do well.

The group’s finances also attract me. Although the shares trade on a forecast P/E of 22, I think this valuation may be justified by Burberry’s financial performance.

The group’s return on capital employed was 21% last year, well above the threshold of 15% I use to help identify highly profitable companies.

Cash generation is also very strong. Free cash flow during the first half rose to £171m, from £75m the previous year. The group ended the first half with net cash of £654m. Much of this will be returned to shareholders via a £350m buyback over the next year.

Although the dividend yield is modest at just 2%, I think this could rise significantly over time. At current levels, I see Burberry as a good buy-and-hold stock.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry. 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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