2 growth stars that are only just getting started

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Cineworld cinema

When Cineworld Group(LSE: CINE) announced the purchase of Cinema City International, a Warsaw-listed company operating across seven countries in central and Eastern Europe at the beginning of 2014, some analysts were sceptical about the price paid and logic behind the deal. However, over the past three years, it has proved its doubters wrong by becoming the second largest cinema chain in Europe and producing impressive returns for investors. 

Since the company's European invasion was announced at the beginning of 2014, shares in Cineworld have added nearly 60% excluding dividends. Including profit distributions, shareholders have seen a return of around 100%. And it looks as if the growth is only just getting started. 

Just getting started 

Having conquered Europe, the firm is expanding its international presence, as well as using its size to consolidate in existing markets. 

During the first half of 2017, as admissions grew 10% year-on-year, the company opened two new sites, Ely in the UK and Zichron in Israel taking its footprint to 2,136 screens by 30 June. Management also announced the acquisition of the 16 screen Empire Newcastle site. A further 11 developments are slated for completion by year end. 

Cineworld's global expansion, coupled with the firm's VIP customer offering is helping it expand at a rapid clip. Also, the company has been able to reduce its reliance on blockbuster film takings with the addition of IMAX, 4DX and VIP seats, which are helping to boost margins and accelerate earnings growth. For the first half, as admissions grew 10%, EBITDA expanded 12.9%. City analysts are expecting earnings per share growth of 9% for 2017 and 8% for 2018. 

Unfortunately, due to its past performance, shares in Cineworld trade at a premium P/E of 16.7.  This might seem expensive, but considering the company's growth potential, I believe this multiple is not overly demanding. 

Market leader

Shares in Bargain Booze owner Conviviality(LSE: CVR) have gained nearly 80% over the past 12 months, and once again I believe that this company's growth story is only just beginning. 

Conviviality's sales for the 52 weeks to 30 April nearly doubled as the company completed the acquisition and integration of Bibendum PLB Group. Analysts are expecting the group to report a pre-tax profit of £53.2m for the fiscal year ending 30 April 2018 indicating that the firm is on track to grow pre-tax profits 10 times in the past five years.  

This steady growth should continue as Conviviality sits in an unrivalled position supplying more than 25,000 customers with 10,000 different products. The company dominates the UK's alcohol distribution network and can achieve economies of scale not available to smaller peers. 

Premium growth 

Shares in Conviviality trade at a forward P/E of 17.2, which is quite expensive. Nonetheless, over the past four years the firm has shown that it has what it takes to grow in the UK's competitive retail market, and now that the business has a market-leading position, it should be able to outperform its peers for years to come. As a bonus, the shares currently support a dividend yield of 3.3%. 

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Rupert Hargreaves has no position in any of the 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