Can these £1.7bn AIM growth stocks double again?

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Boohoo.Com

The more lightly-regulated AIM market is supposed to provide an ideal environment for fast-growing businesses to flourish. Things don't always work out this way, but today I'm looking at two AIM stocks that have delivered multi-bagging gains for investors.

Both of these companies are still growing fast. Can they double again?

A quality operation

Life sciences company Abcam (LSE: ABC) is one of just eight AIM-listed companies with a market capitalisation of more than £1bn. The firm's shares have risen in value by nearly 19 times since its flotation in 2005.

Today's interim results have lifted the shares by another 6% to 935p. It's easy to see why. Sales rose by 30.4% to £102.5m during the first half, while pre-tax profit rose by 20% to £25.1m. The group's operating margin rose to 27.6%, up from 26.8% for the same period last year.

Although these figures were boosted by the weaker pound, even at constant exchange rates Abcam's sales rose by 10%. The company says that this figure exceeds the rate at which its markets are growing. This means that Abcam is increasing its market share.

The group appears to be working hard to open up new markets in Asia. This is most notable in China, where Abcam's sales rose by 29.5% last year on a constant currency basis. China is now the group's third-largest territory, accounting for 13% of total sales.

Analysts expect Abcam to report earnings per share growth of about 20% for both 2016/17 and 2017/18. After this morning's gains, the group's shares trade on a 2017 forecast P/E of 37, falling to a P/E of 30 for 2018. That's not cheap, but this high-quality firm has no debt and continues to churn out growth. I believe further gains are likely.

Up 257% in one year: what's next?

Shares of online fashion retailer Boohoo.Com (LSE: BOO) have risen by 257% over the last year. The stock now trades on a forecast P/E of 74. It would be easy to assume that all the good news is in the price, but I'm not sure this view is correct.

For example, during the 10 months to 31 December, Boohoo's US sales rose by 130% to £34.8m. But that's still only a fraction of the £146.7m of clothes it sold in the UK during the same period. I think it's reasonable to expect that US sales could eventually equal UK sales.

A second factor is that Boohoo is only expected to report sales of £292.9m for the current year. By contrast, rival ASOS is expected to report sales of £1,861m. To me, this suggests that Boohoo.com still has a lot of room to grow.

Could Boohoo double again?

If we assume that Boohoo's valuation remains unchanged, then all that would be needed for the shares to double would be for sales to double again. This is possible, but I think it's a bit too optimistic.

If we model in an increase in Boohoo's costs and more cautious market sentiment, then I'd argue the group's sales would need to increase by between 150% and 200% in order for the share price to double.

That's not impossible -- 200% sales growth would still leave Boohoo half the size of ASOS, measured by sales. It remains a buy for bold investors, in my view.

Our experts expect 200% growth

Here at Motley Fool HQ, our experts believe they've identified a UK retail stock with the potential to deliver 200% growth.

The company in question isn't Boohoo.Com. I can't reveal the name of this firm here, but I can tell you that it has a history of profitable growth and is currently expanding overseas.

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Roland Head has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo.com. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.