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Two high-growth stocks you might regret not buying

A quick look out the window makes me yearn for a sun-drenched beach and a bright-coloured drink, and reminds me of a share destined to keep doling out brilliant earnings growth, On The Beach Group (LSE: OTB).

The beach holiday specialist’s operating model is built upon giving holidaymakers much more freedom when they are putting together their perfect holidays, and this is reflected in soaring revenue growth. It clocked in at 17.2% in the 12 months to September, to £83.6m, when sales in its core UK market jumped 16.7%.

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And On The Beach — whose growth profile received a shot in the arm with the purchase of online rival Sunshine.co.uk in the spring — plans to add Denmark to the list of international markets it operates in during 2018, paving the way for extra meaty sales opportunities. This would seem a sage move as overseas revenues exploded 48% last year.

Profits powerhouse

It saw earnings shoot 35% higher in fiscal 2017. And City analysts are predicting further heady growth, a 25% advance chalked in for the current year.

And forecasts make the travel titan a brilliant bargain. Sure, a forward P/E ratio of 20.4 times sails above the widely-accepted value benchmark of 15 times. But a corresponding sub-1 PEG readout of 0.8 illustrates that the business actually offers terrific bang for your buck.

I am also enticed by the rate at which On The Beach is lifting dividends. The Cheadle business hiked the payout to 2.8p per share in fiscal 2017 from 2.8.2p in the previous period, up 27.2% year-on-year. And a further hefty hike, to 3.6p, is forecast for the current period, resulting in a handy-if-unspectacular 0.8% yield.

Global giant

Robert Walters (LSE: RWA) is another share where expectations of super earnings growth are expected to translate into bumper dividend expansion.

The recruitment specialist — which has seen the bottom line swell at a compound annual growth rate of 34.8% during the past four years — is expected to see profits explode 28% in 2017. And its record of double-digit increases is expected to continue with a 12% rise next year.

As a consequence, it is anticipated to raise the full-year dividend from 8.5p per share in 2016 to 10p in the outgoing period, and again to 11.1p in 2018. These projections yield 1.7% and 1.9% respectively.

And like On The Beach, the recruiter should also attract value seekers (a forward P/E ratio of 16.6 times is offset by a corresponding PEG reading of 0.6).

It comes as little surprise that City brokers are expecting more chapters to be added to Robert Walters’ impressive growth story. This month the firm advised that it had witnessed “strong trading across all of the group’s regions in the first two months of the fourth quarter” and that, as a result, pre-tax profit for the full year would be “materially ahead” of current market forecasts.

Trading continues to go from strength and strength, the firm noting just a couple of months ago that net fee income grew 21% at constant currencies during July-September to £90.7m, the fastest rate of growth since 2010. And the company’s growing momentum across established and emerging markets bodes well for the future.

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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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