One stunning growth stock I'd buy alongside Fevertree Drinks plc

Fevertree bottles
Fevertree bottles

With the shares up almost 10% as I write, I think it's safe to assume that the market likes today's full-year results report from Fenner(LSE: FENR).

The company makes products targeting high value-added solutions using polymeric materials for the oil and gas and other industries. It also has a big business making engineered conveyer systems for the mining, industrial and bulk handling markets. Trading has been brisk and the firm is reporting revenue up 14% compared to last year, underlying earnings per share rocketing up 111% and a 78% bolstering of free cash flow. Those numbers form a sound foundation for the dividend and the directors took the opportunity to push the full-year payment up by a satisfying 40% -- well played, Fenner!

Sustainable growth

Times have been challenging in for the firm recent years and we've become used to seeing hefty decreases in annual earnings, but the directors think today's "significantly improved results" mark a move from recovery towards sustainable growth. If you cling to fears that the macroeconomic landscape might be deteriorating, that view is at odds with the outlook statements that firms such as Fenner are posting lately. Chief Executive Mark Abrahams says that "as we enter the new year, the outlook is strengthening."

Of course, we live in a politically and economically uncertain world, but I'm encouraged by Fenner's progress and delighted that the directors now expect next year's trading to come in "above its previous expectations," a phrase that's music to the ears of investors far and wide. At a share price near 364p, Fenner trades on a forward price-to-earnings (P/E) ratio of almost 19 for the current trading year to August 2018, not cheap, but fair for a company performing so well. I think the firm is well worth your further research and the stock could make for a more comfortable hold than, for example, Fevertree Drinks(LSE: FEVR), which has a stratospheric valuation.

More to come?

The share price of the premium mixer drinks manufacturer has eased back from the 2,500p or so it hit in September, but even today's 1,918p throws up a forward P/E ratio just over 48 for 2018, which makes me nervous. City analysts following the firm expect earnings to move up just 4% during 2018, which is well short of the hefty increases we've seen over the past few years.

Fevertree remains a fabulous growth story and has the opportunity to further consolidate its market position in this country while expanding rapidly abroad, which could ignite the share price down the line. However, the rate of earnings growth is taking a breather and I fear that the level of valuation may take a breather as well. To me, this one of those occasions when it could pay to think of the prospects of the underlying business separately from the prospects of the stock. I have no doubt that the stock will go on to present us with another compelling investment opportunity, but for now, I'm watching from the sidelines. I'd like to see Fevertree's stock decline further or trade sideways for a while, but I'm sure the firm could sit comfortably in my portfolio alongside Fenner in the end.

Our analysts think this stock could triple

If you're looking for growth in today's markets, you may wish to consider a FTSE 250 stock our analysts believe could triple over the coming years. The business is profitable and well known, but the market doesn't seem to be pricing in the company's true growth potential.

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Kevin Godbold 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.