2 under-the-radar growth stocks with brilliant momentum


Midwich Group(LSE: MIDW) saw its share price go gangbusters in Tuesday trade. The stock was last dealing up 8% on the day after a terrific reception to half-year numbers, meaning that it has gained a total of 85% during the course of 2017.

The company, which distributes audio visual and document solutions to trade, advised that revenues shot 34% higher during January-June to £211.6m. As a consequence adjusted pre-tax profits improved 32% to £10.3m.

Stephen Fenby, chief executive, commented: "The group has performed strongly in the first six months of the year across all geographies with robust organic growth and contributions from recent acquisitions Holdan and Earpro." He highlighted strong growth in large format displays, in particular, as well as Midwich's progress in the developing specialist broadcast and audio segments.

Fenby added: "The strong performance reported in the first half year coupled with indications of positive sales momentum and strong contributions from recent acquisitions gives the Board confidence in reporting results for the full year in line with our expectations, which were upgraded at the time of [July's] trading statement."

With Midwich also reporting robust cash generation, the firm elected to lift the interim dividend 36% year-on-year to 4.17p per share.

In splendid shape

Investors should be cheered by the massive headway Midwich is making across all regions -- the company saw sales increase by double-digit rates in all its territories, led by Germany and Australasia where turnover grew 47% and 44% -- as well as impressive, M&A action.

The firm noted that recent buyouts have "performed ahead of expectations." And the company's robust balance sheet should keep the position-enhancing acquisitions coming -- the firm snapped up audio visual and lighting products distributor Gebroeders van Domburg just last week for a minimum of EUR2.1m.

So it comes as little surprise that City analysts expect profits to rise 14% in 2017, with an extra 7% advance marked in for next year. As a consequence, Midwich deals on a forward P/E rating of 20 times, very decent value in my opinion given the terrific headway it is making across the globe, not to mention the potential for forecast upgrades further down the line.

In rude health

Renishaw (LSE: RSW) has been no stranger to stratospheric share price gains in recent times either. The healthcare engineer has seen its market value almost double since the bells rang in New Year's Day, and I fully expect the share price to remain on an upward trajectory.

The Gloucestershire company reported record revenues of £536.8m in the first half of 2017, up 26% year-on-year, with sales growing across all healthcare segments. And Renishaw is investing heavily in its marketing and distribution facilities across the globe to keep sales on an upward bent -- it forked out £42.6m in capex in the year to June 2017 alone.

The City expects Renishaw to print a further 10% earnings rise in fiscal 2018, resulting in a toppy-looking prospective P/E rating of 33.8 times. Still, I reckon the firm's ambitious growth strategy, not to mention the huge sales potential of its ever-expanding markets, makes the business worthy of this premium.

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Royston Wild has no position in any of the stocks mentioned. The Motley Fool UK has recommended Renishaw. 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.