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Why these 2 monster growth stocks look set to crush the FTSE 100

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With the FTSE 100 experiencing a period of increased volatility, many investors may feel that its prospects are less enticing than they once were. After all, a number of share prices have declined, and this trend could continue over the medium term as interest rate rises may be ahead.

However, volatile periods for stock markets can create buying opportunities. And some stocks could now be worth buying, due in part to their potential to deliver improving earnings growth in future years. With that in mind, here are two companies that could offer returns ahead of the wider index in the long term.

Turnaround potential

Reporting on Wednesday was commercial security printer and papermaker De La Rue (LSE:DLAR). The company’s trading update for the year to 31 March 2018 showed that its revenue is expected to increase by 6%, with it delivering growth across all of its product lines. It expects to deliver underlying operating profit between £60m and £65m, which includes the £4m bid costs related to the UK passport tender as well as delays in the shipment of certain contracts.

The company remains cautious about its near-term prospects. It will now not appeal against the decision by HMPO regarding the UK passport tender. It therefore expects no impact from the issue on its performance over the next 18 months.

With De La Rue forecast to post a rise in its bottom line of 13% in the next financial year, it appears to have the potential to deliver a turnaround after a period of difficulty. Since it trades on a price-to-earnings growth (PEG) ratio of 0.9, it seems to offer growth at a reasonable price. Therefore, it could beat the wider index in the long run.

Improving prospects

Also offering the potential to outperform the FTSE 100 is consumer goods company Reckitt Benckiser (LSE: RB). It has experienced a marked improvement in its financial performance during the last three years, with its bottom line rising in each year. This suggests that the company has been able to find the right strategy as it continues to refocus its business.

As part of its refreshed strategy, Reckitt Benckiser is undertaking a major restructuring. This should make it more efficient and position itself as a stronger business that is able to generate high and sustainable profit growth in the long run.

With the company forecast to post a rise in its bottom line of 5% this year and 7% next year, it may not seem to be a strong growth stock. But with it having positioned itself as a dominant player in emerging markets, Reckitt Benckiser could capitalise on the high growth rate among consumables which is forecast over the coming years. As such, while it may not be the cheapest stock in the FTSE 100, now could be the perfect time to buy it due to its improving outlook.

Capital Gains

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Peter Stephens owns shares of Reckitt Benckiser. The Motley Fool UK has no position in any of the shares mentioned. 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.