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These rampant growth stocks are crushing the FTSE 100

I’ve long been a fan of FTSE 100 firm Coca-Cola HBC (LSE: CCH). Operating in 28 countries, it’s one of the biggest bottling partners of The Coca-Cola Company. And it’s outperformed the Footsie since moving its listing to London in 2013.

The shares are rising again today on the release of a first-quarter trading update. Can the company continue to deliver superior returns? I’ll come back to Coca-Cola HBC shortly, but first let me tell you about a truly astonishing smaller-cap performer.

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A 1,695% return

Robotic process automation specialist Blue Prism (LSE: PRSM) saves companies money by eliminating repetitive manual tasks carried out by expensive human employees. Its hundreds of customers include the likes of IBM and Procter & Gamble.

Blue Prism floated on AIM at 78p on 18 March 2016. Its shares are currently trading at 1,400p (a rise of 1,695%) and the business is valued at £927m. Over the same period, the Coca-Cola HBC share price has increased 73%, while the FTSE 100 has gained a relatively paltry 23%.

Unsustainable valuation

My Foolish colleague Paul Summers has been a consistent bull of Blue Prism and duly rewarded. In contrast, my caution about the valuation of this still-lossmaking business has been made a mockery of by the market.

The company’s co-founder and chief executive, Alastair Bathgate, has certainly done a great job of selling the story to investors and the software to customers. However, while revenue is forecast to rise to £47.5m this year from last year’s £24.5m, the loss before tax is forecast to widen to £22m from £9.5m. For 2019, analysts are forecasting another £22m loss, despite a further leap in revenue to £70m.

The current eye-watering valuation of almost 20 times forecast 2018 sales and over 13 times forecast 2019 sales looks unsustainable to me. As such, I continue to rate the stock a ‘sell’.

Solid start to the year

Coca-Cola HBC reported a solid first-quarter performance today, with net revenue growth of 4.5% at constant exchange rates. Established markets saw 1.9% growth, developing markets 10.3% and emerging markets 4.4%.

Chief executive Zoran Bogdanovic said the performance was in line with expectations and that “with strong commercial plans in place and anticipated gradual economic recovery in Russia and Nigeria, we expect our revenue growth to accelerate as the year progresses.”

High quality at attractive price

When I last looked at the company in November, the shares were trading at 2,600p. City analysts were forecasting earnings per share (EPS) of €1.14 (101p at the then-exchange rate) for 2017, giving a forward price-to-earnings (P/E) of 25.7. In the event, EPS came in a little ahead of consensus at €1.17. The EPS forecast for 2018 is €1.36 (119p at current exchange rates), so at the current share price of 2,520p, the forward P/E is 21.2.

Back in November, the valuation was a little too rich for me but I see the current P/E as attractive for this high-quality business. As such, I rate the stock a ‘buy’.

Capital Gains

In the meantime, one of our top investing analysts has put together a free report called "A Top Growth Share From The Motley Fool", featuring a mid-cap firm enjoying strong growth that looks set to continue. To find out its name and why we like it for free and without any obligations, click here now!

G A Chester has no position in any of the shares mentioned. The Motley Fool UK is short shares of IBM. 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.