2 stocks that could deliver stunning long-term earnings growth

The Motley Fool
AG Barr Irn Bru
AG Barr Irn Bru

The share price of Centamin(LSE: CEY) was trending lower in Monday business despite the release of reassuring production numbers.

The Africa-focused business advised that production at its flagship Sukari Gold Mine in Egypt registered at 124,641 ounces between April and June, down 11% from the 140,306 ounces dug out of the ground in the corresponding 2016 month.

However, quarter two's output represented a 14% increase from the prior three months. As a result, Centamin maintained its full-year production guidance of 540,000 ounces.

Chief executive Andrew Pardy commented that "mining activity in the open pit during the first part of 2017 has focused on the cut back of the east wall with correspondingly low ore grades reported from these sectors.

"This continued into the second quarter, however during the latter part of the quarter higher grade was accessed from the open pit, as scheduled. Mining of higher grades from the open pit is expected to continue for the balance of 2017."

Gold star

The City expects Centamin to endure a little earnings grief in the near term, the 48% bottom-line decline currently forecast for 2017 reflecting lower production volumes. The mining colossus produced 551,036 ounces of the yellow metal last year.

However, the precious metals powerhouse is predicted to start firing again from next year, and an 8% rise is currently forecast for 2018.

Centamin's share value has trended lower in recent weeks along with gold prices. The commodity has fallen more than 4% to recent levels around $1,210 per ounce as bubbly US data has boosted speculation of fresh Federal Reserve rate rises.

Still, gold remains well bought as the tense geopolitical backdrop keeps safe-haven demand on the boil. Latest data from the World Gold Council today showed total holdings in gold-backed exchange-traded funds and similar vehicles rising 22.2 tonnes month-on-month in June, to 2,313.1 tonnes. And I reckon there is plenty of scope for sales to pick up.

In addition to this, Centamin's share price could gain fresh legs should mining and processing at Sukari continue to impress. The miner has a history of beating production forecasts of course, with last year's output sailing past its tipped target of 520,000 and 540,000 ounces.

With the digger also making promising headway at its exploration assets in Burkina Faso and Cote d'Ivoire, I reckon Centamin could prove a very lucrative growth pick, particularly given its non-demanding forward P/E ratio of 16.2 times.

Profits set to fizz?

Drinks giant AG Barr (LSE: BAG) is another FTSE 250 stock I am tipping for great things.

Challenging trading conditions at home are expected to hamper earnings in the immediate future however, and a slight bottom-line dip is forecast by City analysts for the year to January 2018. But the beverages maker is expected to get back on the front foot from fiscal 2019 when a 6% earnings gain is expected.

The business is doubling-down on investment in its key labels to drive profits, efforts which helped push underlying sales of IRN-BRU and Rubicon 3.2% and 4.9% higher, respectively, last year. And it is also ploughing the cash into its assets and infrastructure to deliver long-term earnings growth.

I reckon Barr is a great growth selection despite its slightly-heady prospective P/E multiple of 20.2 times.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended AG Barr. 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.