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One growth stock I’d buy and hold for the next decade

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I have long been a big fan of Acal (LSE: ACL) and, although the market has remained unmoved in Tuesday business, the company’s latest trading statement today has firmed up my bullish view.

The electronics builder and distributor — which from today will be known as discoverIE Group — announced that revenues detonated 21% during the six months to September, to £190.2m, a result that pushed underlying pre-tax profit to £10.4m, up 42%.

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And discoverIE, boosted by a solid order book, is confident that it can continue making progress in the near term and beyond. Chief executive Nick Jefferies commented: “The second half has started well and we are on track to deliver full-year performance in line with our expectations, supported by a record order book of £111m.

“Together with an increase in new project design wins of over 30%, with an estimated lifetime sales value of over £90m, we are well positioned for continued growth.”

Meanwhile, discoverIE’s multi-year programme to boost margins by expanding its Design and Manufacturing arm is also delivering the goods. The company saw its underlying operating margin increased by 60 basis points, to 6.2%, during the first half.

Brilliant forecasts

It should come as little shock, therefore, that City analysts expect discoverIE to continue growing earnings at a terrific rate.

In the year to March 2018 a 10% bottom-line improvement is anticipated. And the good news does not end here, a further 8% advance predicted for the following year.

These current forecasts make the small-cap a brilliant value pick too. On top of carrying a forward P/E ratio of 14.4 times, it also boasts a corresponding PEG multiple of just 1.4.

What’s more, today’s release underlined the fact that discoverIE is a growth dividend share that investors should take notice of — the business hiked the interim dividend 8% year-on-year to 2.65p per share on the back of its strong results.

In fiscal 2018 the total dividend is expected to increase to 9.3p per share from 8.5p previously, City analysts are predicting, meaning that discoverIE sports a chunky 2.9% yield. And the yield steps to 3.1% for next year thanks to an anticipated 9.8p reward.

Another growth hero

I also believe that 4Imprint Group  (LSE: FOUR) is a share that growth and dividend hunters should seriously consider today.

Supported by an anticipated 9% bottom-line advance in 2017, the company is expected to lift the dividend from 41.82p per share last year to 44.1 cents, resulting in a handy 2.4% yield.

And with earnings anticipated to improve 10% next year, 4Imprint is expected to raise the dividend again, to 48.5 cents, nudging the yield to 2.7%.

Thanks to its broad exposure to North America — a region that produces 97% of group profits — the promotional products manufacturer can look forward to strong and sustained sales growth, in my opinion. That’s even if toughening trading conditions in the UK weigh on its performance at home looking ahead. It said that it had achieved “further encouraging organic revenue growth in both its North American and UK-based operations” in the four months to the beginning of November.

Given its proven knack of attracting new customers across the globe, not to mention its record of keeping its existing clients happy, I believe 4Imprint is a knockout growth share worthy of a toppy forward P/E rating of 22.3 times.

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Royston Wild has no position in any of the shares mentioned. 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.

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