Should you invest £1,000 in these two growth monsters today?

Engineering data and design IT systems provider Aveva Group(LSE: AVV) has been setting the pace in the last six months, its share price jumping an incredible 48% in that time.

Viva Aveva

It is relatively becalmed today, rising only slightly on publication of the briefest of trading updates to mark today's announcement of the 2017 financial results at French-owned Schneider Electric. It bought a majority stake in Aveva last year and its industrial software portfolio shares corresponding assets. This reported continued growth in its licensing and maintenance revenue streams, partly offset by a slight decline in services revenue.

Expensive

Do check out this article by my Foolish colleague Peter Stephens, who warned that this stock could lose you a fortune because it risks being overvalued, which is always a danger with growth monsters like this one. However, Aveva at the moment looks to have earned its success after posting strong performance in the first nine months of its financial year, across all reporting regions with a particularly good performance in Asia Pacific.

The share price surge has pumped up its valuation to a hefty forecast 36.8 times earnings, while its PEG ratio stands at an equally stretched 3.3. Those two numbers will be enough to put many potential investors off but there is growth in the pipeline, according to City analysts, who forecast an increase in earnings per share (EPS) of a healthy 11% in the year to 31 March 2018, followed by 5% and then 9%. So the share price could keep rising, but it shouldn't be too hard to find a better home for your £1,000 today.

Nice IDEA

Could that home be high-growth technology play Ideagen (LSE: IDEA)? The company supplies information management software to highly regulated industries and its stock spiked 20% at the end of January following publication of its unaudited interim results for the six months to 31 October.

This buoyant set of figures showed revenue increasing 43% to £17.2m, with underlying organic revenue growth of 13%. New bookings increased 78% to £10.8m while recurring revenues increased 60% to £10.8m. My colleague Alan Oscroft flagged up its success at the time, and said he admired a business that benefits from a captive clientele and high barriers to entry.

The gen on Ideagen

Ideagen has now posted five consecutive years of double-digit EPS growth with another 27% forecast in the year to 30 April 2018, followed by 10% after that. Once again, its pricey valuation reflects the recent share price surge, with the stock trading at 34.2 times earnings, although this is expected to calm down by 2019, to 24.6 times.

Before you part with your £1,000, make sure you understand the risks as well as the potential rewards. This AIM-listed software developer has a market cap of just £227m and needs to constantly build revenue sources to justify high investor expectations, so any slippage could prove costly. In January it won a new audit software contract with Commerzbank and will need more of that to keep rattling along. This probably should not be the first stock to pop in a newbie portfolio, but it could add some zip to an existing one.

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Harvey Jones 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.

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