2 'hot' growth stocks I'd buy before it's too late

At the start of the new year I picked out Hikma Pharmaceuticals(LSE: HIK) as one of the blue-chip firms I expected to post healthy gains during the course of 2017. Since then the FTSE 100 group has announced its full-year results for 2016, giving further clues as to what the future might hold for this fast-growing business.

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So am I still bullish on Hikma's long-term prospects, or has the recent update changed my mind?

Mixed bag

Last month the multinational group reported its preliminary results for 2016, with a mixed bag of numbers prompting an equally mixed reaction from the City. The drug-maker reported an impressive 35% rise in group revenue to $1.95bn, compared to $1.44bn in 2015, equating to a 39% improvement on a constant currency basis.

However, operating profit came in significantly lower at $302m, a 21% slide from the previous year, and 9% down at constant currency. But this was mainly due to exceptional items such as acquisition costs, goodwill amortisation and inventory adjustments. Personally, I'm not overly concerned with the one-off setbacks.

West-Ward Columbus

Overall, Hikma has made significant strategic progress over the past year, with the acquisition of West-Ward Columbus transforming its generics business and indeed the group as a whole. The acquisition is the largest Hikma has made to date and although there have been issues, the integration is now progressing well, with good cost synergies expected.

I think that as a generics manufacturer, Hikma will continue to benefit from consumer demand for cheaper drugs, especially in the fast-growing Middle East & North Africa market. The shares might not look cheap at 18 times forecast earnings for the current year, but this falls to a more reasonable 14 times by 2019, thanks to continued double-digit growth.

A good time to buy

Another London-listed firm that I've been bullish about for some time is RPC Group(LSE: RPC). The Rushden-based plastics company has just completed its financial year ended 31 March, and has already indicated that it anticipates full-year revenue to be significantly ahead of last year.

Annual results won't be published until 7 June, but the group's management is confident that contributions from both acquisitions and continued organic growth will bring about a much improved performance for fiscal 2017. RPC has made several acquisitions during the course of 2016, and has more in the pipeline. The larger acquisitions of British Polythene Industries (BPI) and Global Closure Systems (GCS) have integrated well and are already performing ahead of expectations.

Underlying earnings are expected to almost double over the next three years and the shares currently trade on a very attractive valuation. The fairly modest P/E ratio of 13.6 drops to just 10.8 by FY 2019, which in my opinion undervalues the business. The shares have pulled back sharply since the start of the year and perhaps this could be a good time to load up.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals and RPC Group. 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.