2 growth stocks that are absurdly cheap right now

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As demand for its sportswear has taken off at home and abroad, JD Sports Fashion (LSE: JD) has proven itself to be an excellent growth stock in recent years.

Indeed, the bottom line has swelled at a compound annual growth rate of 27% during the past three years. And while City analysts suggest that earnings expansion is about to cool markedly — rises of just 3% and 10% are forecast for the years to January 2019 and 2020 respectively — I believe the FTSE 250 firm remains a great pick for those seeking excellent long-term growth shares.

A dirt-cheap valuation, a forward P/E ratio of 14.7 times, solidifies my enthusiasm for the stock.

Looking sharp

Earlier this week JD Sports underlined its titanic growth credentials with news that revenues detonated 33% in fiscal 2018, to £3.2bn, a result that powered pre-tax profit to £294.5m, up 24% year-on-year.

Chief executive Peter Cowgill was unsurprisingly rather chipper on the back of last year’s  progress, commenting: “This is an excellent result demonstrating our capacity for continuing growth in both existing and new markets, and the strength of our offer in-store and online.”

Although much of the UK high street has been under attack from rampant inflation and the increasing influence of internet shopping in recent times, JD Sports has kept on growing the number of customers streaming through its doors and consequently like-for-like sales in its outlets rose 3% in fiscal 2018. That’s not to say the retailer isn’t making terrific progress in cyberspace — revenues tallied up via its internet channel boomed 30% last year.

And though its ongoing expansion strategy I can only see sales continuing to head northwards. The firm added a net 56 of its JD-fronted stores in the last 12-month period in Europe, while the nine it opened in Asia Pacific included its first foray into the Australian and South Korean marketplaces.

Another fashion favourite

I am also pretty enthusiastic about the profits outlook of Superdry (LSE: SDRY), another stock embraced by fashion lovers across the globe.

The business, like JD Sports, has seen earnings grow by double-digit percentages in recent times and it is expected to keep this run going with a 14% increase in the 12 months to April. An additional 17% advance is predicted by City analysts for fiscal 2019 and this happy forecast for the upcoming year leaves Superdry dealing on a P/E ratio of 14.1 times (as well as a corresponding sub-1 PEG readout of 0.8).

It’s not difficult to see why brokers are so enthusiastic about the stock’s prospects, however, as it rapidly expands to meet the needs of fashion-conscious shoppers in developing and emerging economies alike.

The FTSE 250 firm is growing revenues by robust double-digits as a result of its global expansion plan and, with it also ploughing vast sums into its e-commerce operations and its ‘next generation’ store re-fit programme also performing admirably, the outlook is extremely bright in my opinion.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Superdry. 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.