2 blockbuster growth stocks for 2018

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2017 has been a great year for many growth investors. A high number of UK mid-cap and small-cap stocks have performed exceptionally well. However, despite the strong gains registered this year, 2018 is likely to bring plenty more opportunities for share price gains. With that in mind, here's a look at two stocks that I believe have fantastic prospects for 2018 and beyond.

GB Group

£650m market cap GB Group(LSE: GBG) specialises in identity data intelligence. It helps its clients verify identities, protecting against fraud and financial loss.

Identity fraud is a huge problem in the world we live in today, with criminals relentlessly targeting both individuals and businesses. No one is safe. In the UK alone, around 500 identities are stolen every single day.

GB Group is benefitting. Over the last five years, revenue has surged from £32m to £88m. Net profit has climbed from £3.6m to £10.8m. Recent half-year results in November showed continued momentum. Revenue increased 40% year-on-year, while adjusted earnings per share rose 69%. CEO Chris Clark was upbeat about the future, stating: "The Group continues to perform well, demonstrating the strength of our business and the capability of our people globally. With the investments we have made in products, data and technology, we are confident of making further strategic progress in the second half of the financial year."

While the growth story here looks exciting, one downside to the shares is that they don't come cheap. Investors have acknowledged the potential here, and as a result, the stock trades on a forward P/E of 35. That's clearly not bargain territory. However, while the long-term share price trend is clearly up, the stock is prone to regular pull-backs. These dips can provide excellent entry points for long-term investors.

Clipper Logistics

Another exciting small-cap growth prospect is Clipper Logistics(LSE: CLG). The £430m market cap group provides bespoke logistical services to clients such as John Lewis, New Look and Asda. In my opinion, Clipper is a great way to profit from the online shopping boom, without investing in individual retailers.

Like GB Group, Clipper's revenues and profits have exploded in recent years. Over the last five years, sales have grown from £167 to £340m. Net profit has surged from £3.8m to £12.5m. Looking ahead, City analysts expect the growth to continue, with revenue of £400m expected next year, along with a net profit of £16m.

The stock has been a strong performer since its 2014 IPO, rising over 320%. Long-term investors should be pretty happy with that return. However, while Clipper now trades on a lofty forward P/E of 26.6, I think there could be more gains to come.

Looking at the chart, 2017 has very much been a consolidation year for the stock. The share price is up 10% year-to-date, but the stock has spent much of the year hovering around the 400p mark, consolidating past gains. If the company can deliver on analysts' estimates going forward, I believe it's only a matter of time until the share price continues moving higher.

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Edward Sheldon owns shares in GB Group. 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.