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Boohoo.Com plc isn’t the only monster growth stock I’d buy today

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Online fast fashion retailer Boohoo.Com (LSE: BOO) has delivered a terrific return for investors since its stock market debut less than four years ago. It’s multi-bagged from its IPO price of 50p to 190p today and is now one of the biggest companies on AIM, with a market capitalisation of £2.2bn.

Despite having already soared, I believe Boohoo’s shares can rise a lot higher yet. And I’ve got another AIM-listed growth stock for you that I’m equally excited about. This company, which released a trading update today, has a market cap of little more than £100m and I reckon it can grow as big as Boohoo.

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Multi-pronged growth

There’s a lot I like about Boohoo. Its founders are rag trade veterans, who retain a significant stake in the company. Its e-commerce focus gives it cost advantages over traditional bricks-and-mortar chains and its value-orientated proposition should make it relatively resilient through the economic cycle.

I also like the fact that its growth is multi-pronged. It’s acquired complementary brands PrettyLittleThing and Nasty Gal. It’s extended its offering with range extensions into menswear and kidswear. And international sales are rising fast, with over 40% of group revenue now coming from outside the UK. It has customers in almost every country in the world.

Long growth runway

A trading update for the 10 months to 31 December, released earlier this month was, in the words of my Foolish colleague, Alan Oscroft, “everything that a growth investor could possibly want.” The company advised that revenue for the full financial year “is now expected to be [up] around 90%, ahead of our previous guidance of around 80%, which was raised from 60% at our interim results in late September.”

While Alan is wary of the stock’s valuation, Boohoo’s business model, growth strategy and long growth runway lead me to rate the shares a ‘buy’. The price-to-earnings (P/E) ratio for the current year is 67, falling to 55 for fiscal 2019 and 42 for 2020. The company’s revenue is forecast to break through £1bn in 2020, by which time it’ll also have warehouse capacity in place to support sales of over £2.5bn.

Earnings take-off

Fast-growing easyHotel (LSE: EZH) is another stock I rate a ‘buy’. Founded by Stelios Haji-Ioannou, nine years after his launch of easyJet, the hotel group was floated at 80p a share three months after Boohoo’s IPO in 2014.

easyHotel’s shares haven’t soared to the extent of the fashion company’s — they’re currently changing hands at 113.5p (up over 4% on the back of this morning’s trading update) — but I believe the ‘super budget’ hotel chain can replicate the success of its older airline sibling.

Today’s trading update didn’t tell us too much we didn’t already know but did advise that the current financial year (to 30 September) has started well, with a continuation of the like-for-like growth trends of last year. The company has a strong pipeline of new hotel openings to expand its existing estate of seven owned and 19 franchised hotels (in eight countries) and City analysts are forecasting that earnings growth will begin to take-off in fiscal 2019. A P/E of 35 for that year, falls to 24 for fiscal 2020 and I continue to think that easyHotel could be a millionaire-maker for investors.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo.com. 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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