Two growth stocks I'd buy right now

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Ted Baker

Building materials specialist CRH (LSE: CRH) has fallen out of favour with share pickers more recently thanks to mixed trading conditions across its markets, its value slipping to 15-month lows in recent sessions. And I consider this to be a great opportunity for eagle-eyed dip buyers to slip in, and particularly so for those seeking excellent earnings and dividend growth.

City analysts are expecting annual profits expansion to cool from recent years, although this is expected to still clock in at 9% for 2017. Those hoping for the pace to hasten will not have to wait long, either, an 18% improvement being forecast for next year. And current projections leave the FTSE 100 star dealing on a relatively-cheap forward P/E ratio of 13.7 times.

Meanwhile, CRH's recently resurrected progressive dividend policy is predicted to push the dividend to 67.5 euro cents per share in 2017, up from 65 cents last year and yielding a chunky 3%. What's more, an anticipated 70.8-cent payment that is being forecast for 2018 nudges the yield to 3.2%.

In a promising sign for future profits generation, the company has considerable financial firepower to continue its aggressive acquisition strategy across the US and Europe, while the benefits of CRH's busy M&A drive in 2017 are expected to begin to filter through next year.

In addition to this, pricing is expected to begin improving across these established markets from 2018 onwards, in a further boon to CRH's bottom line. And beyond this, promising economic indicators and should continue to drive infrastructure spend and thus keep the firm's products well bought.

Looking good

Booming global demand for Ted Baker's (LSE: TED) fashions has caused earnings to jump by double-digit percentages over the past five years (and at a compound annual growth rate of 15.1%). I am convinced the firm, like CRH, should prove a happy pick for growth seekers.

City analysts have pencilled in rises of 12% in the year to January 2018 and 13% in fiscal 2019 alone. And as a consequence the designer trades on a forward P/E ratio of 17.7 times, excellent value in my opinion given the FTSE 250 star's brilliant sales momentum.

But the prospect of stunning earnings growth is not the only reason to pile into Ted Baker today -- indeed, the rate at which the company continues to hike dividends should attract the gaze of income seekers. The business has doubled the full-year payout during the last five fiscal years.

So the Square Mile is predicting that last year's 53.6p per share dividend will surge to 60.4p in fiscal 2018, and again to 68.9p in the following period. These sunny projections yield 2.4% and 2.7% respectively.

I am confident that Ted Baker's chic lines can allow it to traverse the impact of broader industry pressure, a belief underlined by a recent market update in which, despite the firm warnings of "challenging trading conditions across some of our global markets," it still managed to grind out a 7.3% year-on-year revenues improvement during the three months to November 11th.

And with Ted Baker steadily expanding to capitalise on strong pent-up demand (it opened stores and concessions in the UK, mainland Europe and across North America in the period), the business is setting itself up for solid earnings growth in the years ahead.

Get the New Year started with this great growth stock

But Ted Baker and CRH are just a couple of the London-listed heroes you can buy today and live off in the years to come.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Ted Baker plc. 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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