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2 monster growth stocks I’d buy for 2018

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A growth stock I have long tipped for greatness is corporate jet services provider BBA Aviation (LSE: BBA).

Having got back to earnings growth in 2016 the City is expecting BBA to post a sustained period of impressive expansion. This year a 10% advance is forecast (and follows a projected 23% profits improvement in 2017). And in 2019 the flying ace is expected to see the bottom line swell an extra 8%.

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A prospective P/E ratio of 19 times may sail outside the widely-accepted value terrain of 15 times or below. But I believe BBA is more than worthy of this premium.

Primed for take-off

I last wrote about the stock in November when I noted that recent broker estimate-beating trading numbers had indicated a pick up in revenues momentum over the past quarter. Like-for-like sales at its Signature flight support division rose 5.3% in quarter three versus 3.2% in the first half.

What is particularly encouraging is that, thanks in no small part to its expanded asset base following the Landmark acquisition in 2016, the FTSE 250 business continues to grow ahead of the wider market. During the July-September quarter like-for-like sales at Signature outstripped the 4.3% rise in US business and general aviation flight movements in the period.

This, combined with flight activity steadily increasing in the States thanks to the strengthening economy across the Pond, looks set to keep earnings on a steep upward slant now and, in my opinion, long into the future too.

Pick up a bargain

Another share I am tipping to achieve great things in 2018 (and beyond) is B&M European Value Retail (LSE: BME).

Latest inflation data this week showed a welcome slowdown in rising inflation during December, the CPI gauge dropping for the first time in six months to show growth of ‘only’ 3%. But I don’t think that the high street’s biggest operators were breaking out the bunting as this figure remains just a whisker away from November’s six-year peak of 3.1%. Besides, prices continue to swell well above average wage growth in the UK, keeping the strain on shoppers’ budgets.

In this environment the cut-price wares over at the likes of B&M are likely to continue flying off the shelves. Back last week the Liverpool-based business announced that group sales (at constant currencies) vaulted 22.7% higher during the 13 weeks to December 23, to £969.8m, underpinned by a 3.9% improvement in like-for-like revenues in its core British marketplace.

And B&M is exploiting the growing trend of consumers squeezing more distance out of their hard-earned cash by expanding aggressively across the UK and Germany. At home, the company now operates 569 outlets, the business having opened an extra 19 in the last quarter alone.

Reflecting the FTSE 250 firm’s bright sales outlook the City expects earnings to step 20% higher in the year to March 2018. And an extra 19% advance is forecast for fiscal 2019.

A forward P/E ratio of 23.3 times may look expensive on paper, although a PEG ratio of 1.2 times certainly doesn’t. I believe B&M is a compelling pick at current prices given its favourable trading backcloth and ambitious growth strategy.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended BBA Aviation. 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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