Bunzl (LSE: BNZL) is far from a household name but it's highly likely that most of us use the FTSE 100 giant's products on a daily basis. That's because the outsourcing company provides everything from disposable tableware for restaurants to packaging for grocers and cleaning products for janitorial staff.
By freeing up customers big and small from the costly and time-consuming process of procuring these mundane items, Bunzl has made itself an indispensable partner, which together with expansion into new markets and adding new products has made it a fantastic growth stock.
In the past five years, the company has increased earnings by 50% and with sales growing at a solid clip, margin improvement under way and the potential for expansion into Europe, it is one of my top FTSE 100 growth stocks.
In 2016 the group's £7.5bn in revenue predominately came from its most mature markets, the US and UK, which together accounted for just under 75% of turnover. With just £1.3bn, or 18%, of sales coming from Continental Europe it's easy to see why management is targeting this huge, easy-to-access and highly fragmented market for future growth.
Last year constant currency sales from the region rose 10% year-on-year (y/y) while operating margins bumped up from 9.1% to 9.3%. Over the next few years this level of growth is entirely sustainable as the company acquires its way into other countries, adds different capabilities and increases cross-selling. Investors needn't worry about this strategy going wrong either as management has a long history of success with acquisitions. It has completed 136 purchases since 2004 for a total of £2.4bn.
While Bunzl's shares appear somewhat pricey at 20.4 times forward earnings, this valuation is in line with historic prices over the past four years and with high growth potential, margins increasing and a great management team, I reckon the stock is one that will reward investors for many years to come.
Another under-the-radar FTSE 100 growth star on my list is pest control chain Rentokil (LSE: RTO). Earnings growth has been choppy over the past few years for the multinational, but with growth heating up as it targets the US, the world's largest market, I believe the long-term growth potential for this stock is fantastic.
Thus far, the strategy is paying off as acquisitions and organic growth boosted underlying sales by 10% y/y in constant currency terms in Q1. This continues good progress carried over from last year, when full year sales rose 12.6% y/y.
On top of positive sales growth through organic expansion and acquisitions, it's also good to see management doubling-down on its core pest control business. The company has announced it will be moving some of its Western European hygiene and workwear businesses into a joint venture that will dramatically reduce net debt levels, accelerate growth and allow management to concentrate on its core competencies.
Renotkil isn't a bargain basement share at its current valuation of 22.9 times forward earnings. But with plenty of growth prospects in the US and emerging markets and significant room to improve underlying operating margins of 14.4%, I'd definitely take a closer look at the company if its share price were to dip.
For a truly bargain basement share offering growth potential, I recommend reading the Motley Fool's free report on one top small cap that is trading at just 8 times earnings. And this isn't a low-growth tiddler either as the company has recorded four consecutive years of double-digits earnings growth.
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Ian Pierce has no position in any 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.