2 bargain growth stocks for the long term

Perhaps one of the greatest challenges of investing is looking beyond the short term. In other words, while there are clear risks to the UK and global economies in the short run, in the long term there could be significant growth potential on offer. And while the FTSE 100 may have reached new highs, the margins of safety on offer among many shares remain attractive, given their outlooks.

With that in mind, here are two shares which could prove to have been dirt cheap at the present time.

Growth potential

Engineering services company Renew Holdings(LSE: RNWH) continues to post steady growth numbers. In its most recent update, the company recorded a rise in revenue of 9% and an increase in adjusted operating profit of 15%. Much of this growth was due to the company's current strategy, which is well-established and has focused on improving the operating margin. It increased by 30 basis points to 4.2% in the most recent half year results, which means the company is on target to meet its target of 4.5% for the year.

Strong top and bottom-line growth means that Renew's dividend growth is also relatively high. Dividends per share moved 13% higher in the first half of the year, while in the next two years they are due to rise at a similar pace. This puts the company's shares on a forward dividend yield of 2.3% and since shareholder payouts are covered three times by profit, there could be more double-digit growth ahead.

With a price-to-earnings growth (PEG) ratio of 0.8, Renew seems to offer growth at a reasonable price. Therefore, while the outlook for the UK economy may be somewhat uncertain at the present time, in the long run its share price rise could be impressive.

All-round opportunity

Also offering a potent mixture of growth, value and income appeal is construction and regeneration company Morgan Sindall(LSE: MGNS). It is expected to record a rise in earnings of 14% in the current year, followed by further growth of 10% next year. This puts it on a PEG ratio of only 1.1, which suggests that more capital gains could be on the cards after the 65% rise recorded since the start of the year.

As well as growth appeal, Morgan Sindall may also be a worthwhile holding for income investors. It has a dividend yield of 3.2%, and since dividends are covered 2.4 times, they could realistically rise rapidly in future years. In fact, it would be unsurprising for Morgan Sindall's dividend growth rate to beat inflation as a result of its forecast for high net profit rises and relatively low payout ratio.

As such, with share prices being high and inflation also rising, Morgan Sindall could be the right stock to own over the long run for both capital growth and income investors

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Peter Stephens 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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