The Motley Fool

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

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.

Claim your FREE copy of The Motley Fool’s Bear Market Survival Guide.

Global stock markets may be reeling from the coronavirus, but you don’t have to face this down market alone. Help yourself to a FREE copy of The Motley Fool’s Bear Market Survival Guide and discover the five steps you can take right now to try and bolster your portfolio… including how you can aim to turn today’s market uncertainty to your advantage. Click here to claim your FREE copy now!

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.

There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it!

Don’t miss our special stock presentation.

It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.

They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.

That’s why they’re referring to it as the FTSE’s ‘double agent’.

Because they believe it’s working both with the market… And against it.

To find out why we think you should add it to your portfolio today…

Click here to read our presentation.

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.