Dechra Pharmaceuticals (LSE: DPH) has all the tools to continue delivering stunning earnings growth over the next decade, at least.
The business of developing medicines for livestock and companion animals is becoming an ever-more lucrative one, and Dechra’s latest set of financials underlined the exceptional profits potential here. Net revenues leapt 18% between July and December at constant currencies, the FTSE 250 firm advised, the strength of its drugs pipeline helping sales to grow beyond the broader market, too.
What’s more, Dechra continues to build its pipeline (as well as its global footprint) to keep the top line roaring higher through shrewd M&A action. In December, it snapped up Brazilian pharmaceuticals giant Venco, a major player in the country’s gigantic food animal product market.
It’s not surprising, then, that City analysts expect earnings to rattle 13% higher in the year to June 2019, and by an extra 15% the following year. In my opinion, the company’s exceptional growth record and market-leading product stable makes it worthy of a high forward P/E ratio of 26.7 times.
Ring the bells
A more attractive pick for cash-strapped investors may be Bellway (LSE: BWY), though, the house-builder dealing on a bargain-basement prospective P/E multiple of just 6.7 times.
Don’t, however, take this low valuation as a sign of weakness. Sure, the stratospheric property price growth may be behind us, something which brokers believe will slow profits expansion at the builder to 2% in the years to July 2019 and 2020.
But the robustness of the UK housing market, supported by increasingly-generous mortgage packages and an inadequate number of new homesteads entering the market, means that Bellway should keep its long-running growth record motoring along nicely. Just this week, Lloyds unveiled its 100% mortgage product, for example, requiring no deposit at all from borrowers in the latest leg of the ongoing ‘mortgage deal wars’.
B&M European Value Retail (LSE: BME) is another great growth share that I’m tipping to thrive over the next decade.
The cut-price retailers may not have had the best of it in November as sales slowed, but this proved to be a temporary problem, B&M advising this month that it enjoyed a “pleasing finish” in the three months to December. This doesn’t shock me in the slightest as you’d expect its value products to fly off the shelves in tough times for shoppers such as these.
That said, as the rampant influence of Aldi and Lidl on the global stage has already shown, consumers, both in the UK and beyond, have become increasingly accustomed to squeezing every last ounce of value out of their shopping trips. And by expanding across its home territory, as well as in Germany, B&M is positioning itself to exploit this phenomenon across the continent.
City analysts expect the firm to follow a predicted 3% earnings rise in the year ending March, with an even-better 15% increase in fiscal 2020. A forward P/E ratio of 16.5 times is, in my opinion, an attractive valuation, given the prospect of brilliant earnings growth at B&M in the medium term and most probably well into the 2020s.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of B&M European Value. The Motley Fool UK has recommended Lloyds Banking Group. 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.