Today I'm looking at two stunning long-term growth shares that are trading far, far too cheaply.
Build a fortune
I'm convinced the underlying strength of the British housing market makes Redrow (LSE: RDW) one of the strongest growth picks out there.
While the explosive property price growth of previous years looks set to end in 2017 as homebuyer appetite cools, the huge gulf between housing supply and demand means that house prices are unlikely to fall off a cliff any time soon.
Nationwide chief economist Robert Gardner commented this week that, despite fears over the impact of Brexit on the wider economy, "demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs."
And despite concerns over the health London property market, Redrow is managing to overcome the worst of these troubles thanks to its limited exposure to high prices in the capital. Private reservations at the firm rose 6% during the 19 weeks to November 4, and the order book advanced 29% year-on-year to £941m, easing fears of a sharp demand slump.
And Redrow is expected to fare better than many of its rivals in the near term with modest earnings dips widely predicted across the sector. By comparison Redrow is predicted to punch a 3% earnings rise in the period to June 2017.
This forecast leaves Redrow dealing on a P/E ratio of 7.2 times, some way below the FTSE 100 forward average of 15 times. I reckon any risks to the construction specialist's earnings outlook is more than priced in at these levels.
Take a sip
Coffee house and hotel giant Whitbread(LSE: WTB) has seen its share price tank again in recent months, a 20% fall since the start of September taking it to within a whisker of fresh multi-year lows just this week.
This weakness reflects to a large degree fears over the profitability of leisure stocks like Whitbread as Brexit-related turbulence hits the economy from next year and beyond. However, I believe the business has what it takes to navigate these waters by grabbing market share, and reckon now is a great time for value hunters to nip in.
The Premier Inn owner is well on track to meet its goal of 85,000 rooms by 2020, and it sees the potential for 100,000 of its low-price rooms in Britain beyond that. And Whitbread also has big plans for its Costa Coffee franchise, the company targeting 2,500 UK outlets by the close of the decade and 3,000 further out.
And Whitbread has eyed expansion in Germany and China for Premier Inn and Costa Coffee respectively to spearhead its international growth plan, steps that will also reduce the impact of a possible downturn in the domestic economy.
The number crunchers certainly expect earnings to keep rolling higher at Whitbread, and a predicted 1% bottom-line rise for the period to February 2017 is anticipated to speed to 6% in the following period.
These projections create very-decent P/E ratios of 14.1 times for this year and 13.3 times for fiscal 2018. I reckon this is a bargain for a firm with Whitbread's electric growth potential.
More growth greats
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Redrow. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.