2 high-growth stocks you might regret not buying before Christmas

Updated: 
Clipper Logistics

With markets continuing to look frothy and investors becoming increasingly nervous over Brexit negotiations, it's more important than ever for growth investors to be selective about which companies they allow into their portfolios. Here are two stocks that I think could perform better than most as we move into 2018.

Delivering the goods

I've been bullish on mid-cap, Leeds-based ClipperLogistics(LSE: CLG)for some time now. Today's interim numbers go some way to explaining why.

In the six months to the end of October, group revenue rose 21.1% to just under £200m with earnings before interest and tax (EBIT) climbing 19.4% to £9.2m. Pre-tax profit increased a healthy 15.6% to £7.9m.

Over the reporting period, Clipper expanded its click-and-collect network with new clients such as Supergroup and Urban Outfitters, while also launching new operations with, among others, FTSE 100 giants Marks and Spencer and British American Tobacco. As evidence of further expansion overseas, the company is now working with ASOS at the latter's new returns facility in Poland, building on its established relationship with the online fashion star in the UK. 

Having completed on two "immediately earnings-enhancing" acquisitions over the reporting period (Tesam Distribution and RepairTech), Executive Chairman Steve Parkin reflected that Clipper's business pipeline "continues to be strong" and that the company expects "the positive momentum from existing and new contracts to continue into the second half of the year".

Trading at 27 times forecast earnings for the current financial year, Clipper's stock certainly isn't cheap.  Then again, a fairly low price-to-earnings growth (PEG) ratio of 1.24 (dropping to 1.1 in 2018/19) suggests that prospective buyers would still be getting a good deal for their money.

Add to this the assumption that online retailing will only become more popular and the fact that Clipper isn't dependent on any one business for its success and I remain convinced that the logistics services provider is an excellent addition to most growth-focused portfolios.

Multi-channel marvel

Assuming recent performance has continued over the Black Friday/Cyber Monday period, another stock that I think might be worth snapping up before Christmas is the owner of the aforementioned Superdry brand, Supergroup(LSE: SGP).

November's trading update from the Cheltenham-based business -- revealing a solid 20.4% rise in group revenue to £402m over H1 -- gives some indication of just how well this company is faring relative to peers. Although gross margin is expected to be lower as a result of growth in wholesale, inflation and ongoing investment, the board still anticipates underlying pre-tax profit for the full year being in line with market expectations.

Like Clipper, Supergroup's global expansion continues at pace with a total of 50 new stores, spread across 23 countries, added to its portfolio over the reporting period. As CEO Euan Sutherland explained at the time, this should help "insulate the business from trading conditions in any single market".  

Having climbed just over 30% in value over the last six months, Supergroup's stock currently trades on a still-fairly-reasonable forward price-to-earnings (P/E) ratio of 21. Assuming analyst earnings growth targets are hit, this reduces to 18 in the next financial year.

Taking into account its rock solid balance sheet and history of delivering consistently decent returns on the capital it invests, Supergroup is surely one of the best retail picks on the market.

Going global

If reading about Clipper Logistics and Supergroup has whetted your appetite for investing in the best growth stocks, you'll definitely be interested in another opportunity identified by the Fool's Head of UK Investing, Mark Rogers. He thinks this top British brand could be a perfect share to buy and hold as it seeks to grow its international footprint over the coming years.

Mark's report is completely FREE to read and comes with no obligation. Click here and get reading. 

Paul Summers 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.


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