The recent volatility in the FTSE 100 seems likely to continue over the medium term. Risks to global economic growth remain relatively high, with the threat of inflation and interest rate rises having the potential to hurt investor sentiment.
As such, many investors may wish to buy shares in companies that are able to offer relatively reliable growth prospects. They may not be the cheapest stocks around, but they could provide greater resilience and a more dependable outcome. With that in mind, here are two shares which could be worth a closer look.
Reporting on Tuesday was specialist filtration and environmental technology company Porvair (LSE: PRV). The company has made a strong start to the 2018 financial year, achieving revenue growth of 9% in the four months to the end of March. Profitability is in line with previous expectations, while order books remain healthy, according to the update.
The acquisition of Rohaysys in December could act as a positive catalyst on the company’s future performance. Its buy brings robotic sample handling expertise, which enhances its bioscience sample preparation capabilities. Meanwhile, the acquisition of Keystone Filter in February could also have a positive impact on performance, with plans to move its operations to the Virginia plant on track.
With Porvair having delivered a rising bottom line in each of the last five years, it appears to offer a relatively resilient growth outlook. Further growth in its bottom line is forecast over the next two years and this could improve investor sentiment towards the stock. As such, now could be a good time to buy it, ahead of what may prove to be a volatile period for the FTSE 100.
Strong growth potential
Also offering investment potential within the chemicals industry is Johnson Matthey (LSE: JMAT). The company has a solid track record of growth, with its bottom line rising at an annualised rate of over 6% in the last five years. Additional growth is anticipated over the next two years, with the company’s bottom line due to increase by 9% this year and by a further 10% next year.
This improved rate of growth could help to justify a higher rating for the stock. Since it trades on a price-to-earnings growth (PEG) ratio of just 1.6, there seems to be significant capital growth potential ahead.
With Johnson Matthey’s dividend payout currently covered 2.7 times by profit, there seems to be significant scope for a rapid growth rate in dividends over the medium term. Therefore, while the stock currently has a dividend yield of just 2.4% at present, it could become a more enticing income play over the coming years.
This could add to its overall return and lead to a prosperous period for the company’s investors at a time when the wider index may experience a challenging period.
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Peter Stephens owns shares of Johnson Matthey. The Motley Fool UK owns shares of Porvair. 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.