One FTSE 100 growth and dividend stock I'd buy ahead of NMC Health plc

Today I'm looking at fast-growing healthcare group NMC Health (LSE: NMC), which is based in the United Arab Emirates. I'll also consider another high-flying stock from the FTSE 100.

A £900k vote of confidence

Director share trading isn't always significant, in my view. But when a senior director makes a big purchase, I usually take notice. After all, no one is likely to know more about the outlook for the business than they do.

So I was interested to learn that NMC Health chairman Mark Tompkins and his family trust invested more than £900,000 in this stock earlier in December. This major purchase came just ahead of today's trading statement and strategy update.

The headline news is that full-year results are expected to be in line with expectations. For a highly-rated growth stock with a 2017 forecast P/E of 36, meeting expectations is the minimum that's acceptable. This may be why the stock is down by 4% at the time of writing.

A new level of growth

NMC's current operations are focused on the Gulf region, where it runs a number of private medical centres and a pharmaceuticals distributor. Earnings per share have risen by an average of 16% per year since 2011, catapulting the stock into the FTSE 100.

Growth has focused on increasing scale, adding new services and expanding geographically. But today's update suggests to me that the company now plans to accelerate this strategy, by adding new services and targeting expansion beyond the Middle East.

Notably, NMC also hopes to develop its fertility business into a "global consolidator", building on its existing position as the world's second-largest IVF provider.

Still a buy?

The shares have risen by about 80% this year, and now trade on a 2018 forecast P/E of 27. That's not cheap. If growth slows, I'd expect the shares to fall sharply. However, there's no sign of this so far and the firm's track record seems impressive. I see this as a potential growth buy.

My preferred choice

NMC isn't the only way to access growing emerging market economies. One alternative I'm keen on is chemicals group Croda International (LSE: CRDA).

Around half of Croda's profits come from its Personal Care division, which produces chemicals used in cosmetics, haircare products and so on. This is a very profitable business -- the Personal Care division generated a profit margin of 34.7% during the first half of the year.

Strong returns for shareholders

Croda's overall operating margin has been consistent at around 24% for a number of years. Last year, this resulted in an impressive return on capital employed (ROCE) figure of 23%. This compares very favourably to the 11% ROCE generated by NMC in 2016.

This could be significant as it suggests to me that NMC may have to invest more than Croda in order to generate the same amount of profit growth. I believe this could make Croda a more profitable investment for stock investors, as debt requirements are likely to be lower.

Like NMC, Croda isn't cheap. The chemical group's shares trade on a 2018 forecast P/E of 24, with a prospective yield of 2%. Although earnings growth is expected to slow next year, I continue to rate these shares as a long-term buy.

A potential triple-bagger

Croda and NMC have both performed strongly over the last year. But if you're looking for mid-cap growth stocks with serious potential, I believe you need to consider this stock.

Our top analysts believe this business could triple in value over the coming years. They've pencilled in a gain of up to 200% for shareholders, thanks to this firm's ambitious international growth plans.

If you'd like full details of this potential buy, download A Top Growth Share From The Motley Fool today. This report is free and withoutobligation. To get your copy, click here now.

Roland Head has no position in any of the shares mentioned. 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.

///>