2 super growth stocks that could make you rich
Photonics specialist Gooch & Housego(LSE: GHH) stepped back from recent record highs in Tuesday business following the release of latest financials.
The stock was nursing a fractional decline as half-year numbers came in as expected, and reflected bouts of light profit-taking after recent share price strength. Gooch & Housego has advanced 42% since the start of the year, and topped £14.50 per share just this week.
However, I expect the Ilminster business to resume its upward trek quite soon as sales head to the stars.
Keep an eye out
It announced that revenues exploded 36% during the six months to March 2017, to £52.2m, a result that powered adjusted pre-tax profit 11.8% higher to £6.2m.
The firm announced that this robust sales growth was "driven by telecoms, precision inspection equipment and microelectronic manufacturing sectors." It noted that "market conditions continue to be positive," and that it remains on track to meet full-year expectations.
Gooch & Housego has a long history of generating solid earnings growth, and the City expects this pattern to continue for some time yet. Indeed, a 10% rise is forecast for the 12 month period to September 2017, up from 8% in 2016. And the momentum is expected to keep increasing, a 17% advance pencilled-in for 2018.
Some investors may baulk at the tech star's forward P/E ratio of 30.7 times, a figure that sails above the widely-regarded value benchmark of 15 times. But I believe Gooch & Housego is worthy of such a premium.
The photonics play continues to witness breakneck levels of new business, its order book exploding 70.5% year-on-year during the first fiscal half to a record £66.6m.
And through a combination of acquisitions (like that of StingRay Optics in February) and increased product investment (it raised R&D spend by 28.6% in October-March, to £4.5m), I believe the company is in great shape to ride market conditions
Manufacturing marvel
I am convinced that consumer goods colossus Unilever (LSE: ULVR) also remains a stellar pick for those seeking strong earnings growth in the years ahead.
The Marmite and Dove soap manufacturer has been on the end of rampant buying activity in recent months, the stock shooting 33% higher since the turn of January and topping out above £43.60 per share just today.
And it is easy to see why it has continued to stride higher, the firm shrugging off difficulties in any of its territories to keep sales chugging higher. Indeed, the manufacturer saw underlying sales rise 2.7% during January-March, speeding up from the 2.2% rise printed in the prior quarter.
It is this resilience that makes Unilever one of the safest growth stocks out there, the London firm's broad stable of industry-leading labels commanding customer loyalty that few others can match. And the firm's investment in the development and marketing of these products should keep sales on an upward bent, and particularly so in its increasingly-wealthy emerging regions.
The City certainly expects Unilever's bottom line to pick up momentum in the near term, a 15% rise predicted for 2017 and up from 6% last year. And another double-digit increase, this time by 12%, is pencilled-in for 2018.
While the FTSE 100 goliath deals on a forward P/E multiple of 23.5 times as a result, I reckon this is a fair price given Unilever's exceptional growth profile.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Gooch & Housego. 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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