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2 FTSE 100 growth stocks I’d buy in 2018

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Coffee house and hotel giant Whitbread (LSE: WTB) ended what was a fairly underwhelming 2017 with a flourish.

The Footsie star’s share price spiked in early December after news emerged that US-based activist hedge fund Sachem Head Capital Management had snapped up a 3.4% stake in the Costa Coffee and Premier Inn owner. Market appetite was piqued on speculation that the move could prompt a spinning off of some of Whitbread’s assets with its hot drinks business firmly in the crosshairs, as well as its pub estate.

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Following this, news this week that former ITV and Royal Mail chief executive Adam Crozier will assume chairmanship of Whitbread provided the share price with fresh fuel, and the company is now trading at 10-week highs. Investors are hoping that the new man, who will replace outgoing chairman Richard Baker in February, will have the same positive transformative impact that he had in his previous roles.

A compelling growth share

Many would argue that Whitbread is in need of a shake-up as sales have disappointed more recently. But as I write today, the company in its current shape still remains a compelling pick for long-term investors, in my opinion.

The leisure giant’s ambitious expansion strategy saw it open a further 2,000 new Premier Inn rooms in the UK during the first half of fiscal 2018. And Whitbread has big plans for its cut-price hotel chain in foreign markets too, the company vowing to accelerate its expansion into Germany (it now has nine hotels in its committed pipeline).

The business also has big plans for Costa Coffee and it is doubling-down on its position in China, while it is also boosting the number of Costa Express machines it operates abroad. And it rolled out more machines across Europe, the Middle East and Malaysia between March and August.

What’s more, Whitbread is embarking on a £150m, multi-year cost reduction plan to help it deal with current trading difficulties, £60m of which has already been achieved.

So the City is expecting the FTSE 100 firm to keep its long-running growth record rolling with earnings expansion of 4% and 6% in the years to February 2018 and 2019 respectively. And current projections leave the share dealing on a forward P/E ratio of just 15.6 times, terrific value in my opinion given the stunning sales opportunities contained in its foreign markets.

When you throw chunky dividend yields of 2.5% and 2.7% for this year and next into the bargain, I reckon the stock is a compelling blue-chip pick right now.

Outlook improving

Intertek Group (LSE: ITRK) is another FTSE 100 growth share I would consider buying in 2018.

Unlike Whitbread, the quality assurance business can hardly be considered a snip at the present time, however (thanks to a predicted 6% profits advance in 2018 it actually carries a prospective earnings multiple of 25.6 times).

But I consider this to be an acceptable price to pay given that organic sales growth is likely to kick back into gear from this year, while Intertek’s hunger for acquisitions provides its long-term revenues picture with added appeal (the firm snapped up Acumen Security just last month to bolster its cyber security operations).

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