2 attractive growth and dividend stars for your ISA

There's something different about the way B&M European Value Retail SA (LSE: BME) is going about building its business, in a refreshing, earthy, no-nonsense kind of way, and I think that difference may be the 'secret' of the firm's success.

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Fast-growing

The firm describes itself as a fast-growing discount retailer, operating from over 533 high street and out-of-town stores across the UK and 73 stores under the JA Woll brand in Germany.

And fast growing it is. As recently as 2004 the B&M sign hung above the door of just 21 stores, at which point new ownership drove forward the expansion of a brand originally established as long ago as 1978 with the first store in Blackpool. Yet the company declares that it spends "next to nothing" on advertising so that it can keep prices "as low as possible" and the expansion is driven by word of mouth.

Targeting expansion at home and abroad

During 2014, B&M came to the London stock market to "support the company's ambitious growth plans, both in the UK and continental Europe." And in what strikes me as something of a triumph, in 2013 the firm had picked up Sir Terry Leahy to serve as chairman. As the chief executive of Tesco, Sir Terry led the supermarket giant though it most prosperous times before the firm's fortunes turned down recently. Such an experienced pair of hands could be just what B&M needs to help drive through its expansion programme.

At today's 299p share price, B&M trades on a forward price-to-earnings (P/E) ratio of 16 for the year to March 2019 and the forward dividend yield runs around 2.6%. I think the firm's valuation looks reasonable given its exciting forward prospects.

Moving up

Robust single-digit percentage increases in revenue, underlying earnings per share and dividend marked the Ultra Electronic Holdings(LSE: ULE) full-year results delivered in early March. After a years-long period of sideways trading, the shares appear to be moving up to reflect the firm's improving prospects.

Demand seems to be growing for the company's offering, which involves applying electronic and software technologies to create solutions and products in the defence, aerospace, security, cyber, transport and energy markets.

Defence spending on the rise

The firm is sensitive to national defence budgets, but chief executive Rakesh Sharma points to market analysis suggesting the global defence sector is returning to growth. Increasing tensions around the world and a new administration in the US appear to be driving the change and I reckon Ultra Electronics looks poised to benefit and trade well as defence spending beefs up around the world.

At today's 2,115p share price, the company trades with a forward P/E ratio of just over 14 for 2018 and the forward dividend yield runs at 2.5 %. City analysts following the company expect earnings to lift 3% during 2017 and 7% in 2018, and to cover the dividend payment around 2.8 times. I think that valuation looks undemanding for a firm that seems to be gaining momentum ahead of a gathering tailwind.

Another opportunity

B&M and Ultra Electronics look set to deliver for investors from here and strike me as well worth your own research and due diligence right now.

But let me also tell you about another promising opportunity, which features in a special report called A Top Growth Share From The Motley Fool.

The Fool's analysts identified this firm's compelling growth prospects after searching the market for opportunities. The research is free to download and you can get it right now by clicking here.

Kevin Godbold has no position in any 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.