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2 shares I’d add to a high-growth Stocks and Shares ISA

UDG Healthcare (LSE: UDG) is a global leader in healthcare advisory, communications, commercial, clinical and packaging services. The group is organised and managed across two divisions: Ashfield and Sharp, and employs 8,700 people in 26 countries. The company positions itself to make the most of a trend for pharmaceutical, biotech and healthcare companies to outsource specialist and non-core activities on an international basis.

Recovering from a fall

The share price suffered for much of 2018 as a result of concerns about an over-reliance on acquisitions and the shares being more expensive than some of its peers. But 2019 so far has been much better for shareholders, with the share price rising by about 30%. Even so, the shares now look much better value because the P/E, despite the sharp share price rise, is only around 17. Previously the P/E was frequently 25 and upwards. 

The pharma services provider has 30 years of dividend growth and recent results show it is heading in the right direction as third-quarter pre-tax profits came in “well ahead” of the same period a year earlier. The group expects full-year earnings per share (EPS) to be between 5% and 7% ahead of last year’s EPS. 

With growth in the global healthcare market expected to accelerate to approximately 5% to 6% per annum and the market projected to exceed $1.4trn by 2022, I think UDG is well-positioned to grow strongly, benefitting from increased outsourcing within the healthcare sector. The share price is still well below where it was in late 2017 and early 2018 when it peaked at around 950p. With the shares now below 800p and with a far lower P/E, they are cheaper than in the past, giving greater potential for future growth. 

Strong gains

Softcat (LSE: SCT) is another company having a stellar 2019. So far this year, the share price of the IT reseller has risen by almost 75%. The most recent boost for investors has been in the form of an update stating that full-year operating profit is now likely to be ahead of its prior expectations.

Before that, half-year results for the six months to 31 January 2019 showed revenue growth of 21.1%, operating profit growth of 40.4% and an increase in the interim dividend of 36.4%. 

From 2014 to 2018, Softcat’s customer numbers increased from 9,300 to 11,900 and over the same timeframe, operating profit went from £35.5m to £68m. The trajectory of the business and the ability of management to ensure that growth is coming from across all parts of the business is why I think investors have been buying into the shares.

There’s no doubt that Softcat is not exactly a hidden gem, given its P/E is a pricey 35, but that doesn’t mean the share price can’t keep on going up. With Brexit causing a lot of uncertainty in the market, investors may well want to pour money into quality, profitable companies as opposed to risky speculative bets, and I think Softcat fits the bill. This is why I’d add it to turbocharge growth returns within a Stocks and Shares ISA. 

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Andy Ross has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat and UDG Healthcare. 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.