Two top growth stocks outside the FTSE 100

I often stress that if you’re a growth investor, it’s important to look at investment opportunities outside the FTSE 100. While the footsie is home to plenty of world-class companies, it’s definitely a little limited in terms of growth stocks.

With that in mind, here’s a look at two top growth stocks outside the FTSE 100 that I rate highly.

GB Group

Identity theft is a massive problem for society in today’s digital world. According to fraud prevention group Cifas, last year there were 175,000 cases of identity fraud recorded in the UK, up 125% on a decade ago. That means that nearly 500 Brits had their identities stolen every single day.

One company that is benefitting from this worrying trend is identity data intelligence expert GB Group (LSE: GBG). The £800m market cap group has grown significantly in recent years and now serves over 17,000 businesses and organisations across 79 countries, helping its clients make the right decisions about their customers and employees.

GB’s FY2018 full-year results, released this morning, show that the group has significant momentum at present. For the year ended 31 March, revenue increased 37% to £119.7m including adjusted organic revenue growth of 15%, and adjusted operating profit surged 55% to £26.3m. Adjusted earnings per share climbed 17% to 15.3p, beating the consensus estimate figure of 13.2p. CEO Chris Clark was bullish in his assessment of the company’s outlook, commenting: “We believe there are exciting opportunities across all our sectors, in all our markets and that gives us great confidence for the future.”

Do these results make GB Group a ‘buy’? Looking at the valuation, today’s earnings figure places the stock on a trailing P/E ratio of 34. While that valuation isn’t outrageous for a company with strong growth prospects, it’s not overly cheap either. With that in mind, investors might be better off waiting for a slightly more attractive entry point before investing, in my opinion.

JD Sports Fashion

One growth stock outside the FTSE 100 that does trade at an attractive valuation right now is JD Sports Fashion (LSE: JD). The stock currently trades on a trailing P/E ratio of 15.3, which I think offers excellent value. Here’s why.

For starters, JD is a play on two of the most powerful sporting brands in the world — Nike and Adidas. Demand for these premium brands is likely to remain strong, in my view, especially with the World Cup on the horizon where the brands will be getting plenty of exposure.

JD is also a play on millennial consumers, who love their trainers and athleisure. These consumers are happy to spend a large proportion of their disposable income on such products, irrespective of economic conditions.

Furthermore, JD’s international expansion plans should drive growth going forward. Last year the group opened 56 stores across Europe, as well as a number of stores across Asia Pacific. And earlier this year, it agreed to buy The Finish Line, which has over 900 branded stores in the US. The growth potential here is significant.

JD Sports Fashion may not be as innovative a company as GB Group, but sometimes simple business models can be very effective. I rate the shares as a ‘buy.’

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Edward Sheldon owns shares in GB Group and JD Sports Fashion. 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.