2 top growth stocks I'd buy in May

Persimmon
Persimmon

Do you fancy a company whose interests include Agriculture, Engineering, Food Services and the Investment business? It's an eclectic mix which might put you off, but then again it might strike you as getting a nice bit of diversity all in one go.

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Risky long-term growth

I'm talking of Camellia(LSE: CMA), a holding company that owns this array of diverse companies, and which released full-year results on Thursday. Right up, I'm impressed by the company's stated ethos which includes "We see ourselves as custodians, holding our businesses in trust for future generations" -- the kind of long-term focus that I very much favour.

But other than that, I find this set of results admittedly tricky to evaluate. Revenue from continued operations rose by 5% to £257.9m, with headline pre-tax profit from continuing operations pretty much flat at £26.5m.

But there's an apparently big whammy from the disposal of the firm's interest in Duncan Lawrie Private Banking Group. That generated a one-off charge of £20m, and contributed to a bottom-line net loss of £5.9m and a reported loss per share of 387.4p. However, chairman Malcolm Perkins points out that the firm's expected gains of £19.2m from the disposal have not been included in these 2016 results, as the timings involved will push it into 2017's figures.

Overall, then, though Mr Perkins does describe prospects for 2017 as uncertain, the company was confident enough to pay out a slightly increased dividend this year, of 130p -- which provides a modest yield of 1.1%.

Investors didn't seem too concerned by the uncertainty facing the company, with the shares down only 1% to £110 apiece as I write. There's certainly some short-term risk here, but I could be tempted by Camellia's long-term growth prospects -- though I might wait for updated forecasts.

Just keeps giving

For a less risky and more confident growth opportunity, Persimmon(LSE: PSN) seems to be one of those that just keeps giving. Sure, the double-digit EPS growth that has characterised the past five years has to slow, but even at the lower rates of increase forecast for the next two years I'm still seeing no reason to fear for the firm's long-term growth prospects -- and what we're also seeing is a very healthy and well-covered dividend.

A trading update on Thursday said that "Persimmon's operational performance continues to be excellent", and revealed an 11% rise over 2016 in forward sales revenue to date with a 4.1% rise in the builder's average selling price.

As part of its capital return plan, Persimmon paid out 25p per share in surplus cash in March, and has reaffirmed its plan to pay a further 110p this year -- and that 135p represents a yield of 5.8%.

The share price put on 2% in response, reaching 2,332p in early trading, and it's now up 75% since the depths of last summer's post-Brexit crash (and it's nearly quadrupled in the past five years). Those who joined the irrational sell-off in the days following 2016's EU referendum must surely be kicking themselves now.

Unlike some, I don't see Persimmon's prospects as being dependent on booming house prices, but instead on the long-term shortage of supply in the UK. Even with level or even cooling prices, I see many years of profit growth still to come.

Profitable growth

There are growth candidates of all shapes and sizes out there, and the tempting pick uncovered in our Top Growth Share From The Motley Fool report has been raking in the cash for years.

The past five years have brought in double-digit annual earnings growth, and the City's experts are predicting two more years of solid growth ahead of us. On top of that, a progressive dividend policy adds an extra attraction to the mix.

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Alan Oscroft has no position in any 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 us better investors.

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