I am utterly convinced that the global ambitions of Supergroup(LSE: SGP) will pave the way for stunning earnings growth in the years ahead.
Demand for the popular Superdry label remains red hot with shoppers all over the globe, and this was reflected in November's trading statement in which Supergroup advised of a 20.4% advance in group revenues during the six months to October, to £402m. The company opened 50 new directly-owned stores in the period to tap into this trend, while it is also hiking investment in the exciting growth markets of the US and China to deliver future profits growth.
What's more, after years in which the company's owned stores have driven profits in recent years, signs are emerging that the Wholesale division is becoming an increasingly impressive cog, while digital sales growth at its online division is also picking up the pace. Revenues in these two areas jumped 34.1% and 31.6% respectively in the first half.
City analysts are expecting earnings to rise 13% in the year to April 2018, and for the FTSE 250 play to follow this with a 19% advance in fiscal 2019.
A forward P/E ratio of 20.4 times may look pretty toppy on paper. But a company of Supergroup's calibre and increasing dominance on the global fashion stage makes it worthy of such a premium, in my opinion. I can easily see the fashion giant's share price continuing to rip higher (it has swelled by almost a quarter in the past three months alone).
Don't fear the reaper
Now, while Dignity (LSE: DTY) isn't expected to deliver the kind of breakneck earnings growth expected at Supergroup, I would be more than happy to buy and hold the undertaker long into the future.
As far as defensive picks go, few can stand up to the funeral services provider. As Benjamin Franklin famously declared, "nothing can be said to be certain, except death and taxes." But the business is not content to rest on its laurels and is rapidly expanding to improve its share of the market, it has acquired 24 funeral locations plus one crematorium, and opened 13 satellite locations, in 2017 alone.
Dignity has fallen out of favour with share pickers in recent weeks, its market value tanking 32% since the release of third-quarter trading numbers last month. It is now changing hands at its cheapest level since November 2014.
Three weeks ago it advised that revenues rose 6% in January-September, to £243.9m, supported by a 1% rise in the death rate to 440,000. But investors took fright after the firm advised of "significant competition across the business." The undertaker added that "whilst our pre-arranged and crematorium businesses are performing strongly, we continue to see increasing price competition and new competitors in our funeral business."
Reflecting these pressures, Dignity is expected to report a 4% earnings rise in 2017, a result that would mark a rapid deceleration from the double-digit increases of yesteryear (profits jumped 34% in 2016, to cite one recent example).
But growth is expected to heat up again from 2018, when a 9% advance is expected. While the aforementioned competitive pressures may see Dignity struggle to replicate the profits advances of recent years, I still expect the firm -- assisted by its aggressive expansion strategy -- to keep these rising at a healthy rate.
And I reckon a forward P/E ratio of 13.5 times represents an attractive level upon which to buy in.
Don't regret ignoring this growth tip
But Dignity and Supergroup are just a couple of the London-listed heroes you can buy today and live off in the years to come.
Indeed, the Motley Fool's army of analysts has toiled to write this special Fool report which picks out a brilliant FTSE 250 stock that has already delivered stunning shareholder returns, and whose sales are expected to balloon in the next few years.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Supergroup. 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.