One stunning growth stock I'd buy with £2,000 today

Online fashion group MySale(LSE: MYSL) is trying to replicate the success of its larger peer Asos(LSE: ASC) in Southeast Asia, Australia and the UK. However, over the past five years, the firm has lost approximately A$83m on sales of A$1.3bn as it has been investing heavily to build out its infrastructure, but it now looks as if the investment stage for MySale is over.

A turning point

Today the online mainly-fashion retailer reported that for the six months to 31 December (first half of fiscal 2018) underlying profit before tax increased 266% to A$2.3m on revenue growth of 11% to A$152m year-on-year.

These figures put MySale on track to potentially beat City earnings forecasts for the year. Reported underlying earnings per share for the six months to the end of December were 2 cents and City analysts are currently forecasting earnings of 2.4 cents for the full-year (fiscal H1 tends to be the group's most profitable period).

Still, while these numbers look impressive, compared to the likes of Asos, they're pretty downbeat. Indeed, total retail sales in the four months to December 31 increased 30% for Asos, including 23% year-on-year sales growth in what the company described as a "challenging" UK market. MySale does not break out its UK revenue directly like it does with sales in Southeast Asia, and Australia and New Zealand. UK sales are part of the group's 'Rest of World' category (just under 6% of total sales) and here sales expanded 23% year-on-year for the six months to the end of December, in line with Asos's growth.

Picking up speed

MySale might not be growing as fast as its larger UK-focused peer, but the company is heading in the right direction.

Sales growth only really started to take off in 2015 when management refocused the business on "its core aims of providing exceptional value in branded products to customers." Since then, margins have widened and losses have been substantially reduced. The group continues to add more products to its range as well as investing in technology to help consumers and suppliers alike. And as revenue continues to grow at a double-digit rate, City analysts expect the company's earnings to jump by more than 50% for fiscal 2019, although these figures are based on current estimates for 2018, which could, looking at today's numbers, be revised higher over the coming months.

Nevertheless, based on current City numbers, shares in the company look cheaper than those of Asos, trading at a forward P/E of 60, compared to Asos's 65. What's more, Asos's earnings are only expected to grow by 25% for fiscal 2018 and 2019 implying that Mysale also looks cheaper on a PEG basis as well.

Asos has invested millions building out its infrastructure to deal with extra capacity. Big new warehouse operations in Germany and the US, designed to handle £4bn worth of sales, double that of today, will only pay off if the company's extraordinary growth streak continues. Meanwhile, MySale is less invested and I'm more excited by its long term potential as the firm expands across Asia while mature markets, such as the UK and US, become more competitive and Asos loses its edge.

Put simply, MySale's growth is only just getting started and the company's offering already seems to be winning over customers with an industry-leading return rate of just 5%.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended ASOS. 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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