Is now the time to buy these top FTSE 100 growth stocks?

Whitbread costa coffee machine
Whitbread costa coffee machine

It's been a relatively calm three months for the FTSE100 index and Brexit volatility now seems like a distant memory. Does that mean it's time to be buying these FTSE100 growth stocks?

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WPP

I'm a big fan of WPP (LSE: WPP) as the global advertising giant has an outstanding record of revenue and earnings growth, thanks to its bolt-on acquisition strategy. The company has been a shareholder's dream over the last five years, returning a huge 29% per year on an annualised basis.

Brexit concerns haven't slowed WPP down, with the company reporting consensus-beating results in August that sent the share price surging higher. Like-for-like net sales were up 3.8% in the first half of 2016 and CEO Sir Martin Sorrell said the prospects for the second half of the year look "pretty good." WPP said it would seek to accelerate growth in fast growing economies in the wake of the EU Referendum.

The shares hit a low of 1,470p after the Brexit result, but have surged strongly over the last three months to above 1,800p, a gain of around 24%. Furthermore, the stock has tripled over the last five years from 600p in 2011. Is it too late to buy or are there further shareholder gains on offer?

On a P/E ratio of 16.6 times next year's earnings, WPP doesn't look overly expensive given the company's growth history. However one indicator that tells me it might be worth waiting for a pullback is the dividend yield of 2.65%. There have been plenty of opportunities to buy WPP with a yield of between 3% and 3.5% over the last few years, and given the stock has jumped 24% in three months, it suggests to me that sitting on the sidelines and watching for a lower price could be a profitable move.

Whitbread

It's been quiet on the news front at Whitbread (LSE: WTB) recently, with the exception of an update on the company's international growth strategy in mid-July. The hospitality giant announced that it would be focusing its Premier Inn growth strategy on a smaller number of specific markets such as Germany and the Middle East, and commencing a phased withdrawal from its operations in India and South East Asia.

With interim results still just under a month away, I get the feeling that the market isn't quite sure what to make of Whitbread in the face of Brexit and analysts are conflicted as to whether it will continue to offer high levels of growth going forward.

Barclays downgraded the stock in July, trimming forecasts considerably and stating that Whitbread was likely to be one of the most negatively affected leisure stocks after Brexit due to its exposure to business investment. However, analysts at HSBC are more positive on the company, arguing that Germany represents a major opportunity for Premier Inn and that on a P/E of 16 times next year's earnings with a dividend yield of 2.3%, Whitbread looks attractive, especially in an environment of low bond yields and high valuations of defensive peers.

Yes that yield is lower than WPP's but I tend to agree with HSBC and I think the 30% share price drop from 2015 highs has created a buying opportunity that may reward patient shareholders in the long run.

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Edward Sheldon owns shares in Whitbread. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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