2 promising growth stocks you probably haven't considered

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Medical products company ConvaTec(LSE: CTEC) has agreed to acquire US-based independent national distributor of incontinence and catheter-related supplies Woodbury Holdings from MTS Health Investors, in a move which expands its presence in the lucrative US market.

"With this acquisition ConvaTec Americas would create a new home distribution business unit, encapsulating the US distribution companies of 180 Medical, Symbius Medical, South Shore Medical Supply, Wilmington Medical Supply and Woodbury Health Products," said CEO Paul Moraviec in today's announcement.

Management further explained that the deal to buy Woodbury, which is valued at an enterprise value of $120.5m, would give the company "further breadth and reach" and strengthen its "leading position" in the market. Additionally, the acquisition is expected to be "immediately accretive" to ConvaTec's earnings.

Encouraging track record

It's too early to say how this move will work out, but given the company's encouraging track record with previous acquisitions, I'm quite optimistic. Separately, the firm is working to improve its margins, expand its Advanced Wound Care franchise and develop new products for insulin and other drug delivery. With a diverse product portfolio and favourable demographic trends, ConvaTec is set to benefit from some advantageous tailwinds.

Last year, the FTSE 100 company's adjusted operating profit rose by 8.1% to $472m, as operating margins improved 150 basis points to 28%. Looking ahead, I expect to see continued margin improvement, with City analysts forecasting adjusted operating profit growth of another 8% this year.

As such, I reckon its promising earnings outlook makes it worthy of a slightly-heady forward price-to-earnings ratio of 21.5 times.

Top-line growth

Elsewhere,Hilton Food Group(LSE: HFG) today released its trading update for the 28 weeks to 16 July.

The retail meat packing company is seeing top-line growth in the first half in the Sweden and Ireland, thanks to the launch of a new packaging format which extends shelf life and an expansion of the Ocado product range serviced from Ireland. Additionally, its UK turnover was higher than last year, thanks to unusually warm weather which contributed to a good start to the barbecue season, and thus rising volumes and higher prices.

In other countries, market conditions have been more challenging, particularly in the Netherlands and in Central Europe. Recent new product launches and rising development costs in these markets have also adversely impacted its bottom line.

Still, the company as a whole is set to continue to deliver positive earnings growth over the next two years. Hilton shares currently trade at 20.2 times its expected earnings this year, as City analysts currently expect adjusted earnings to climb 7% in 2017, with a further advance of 5% in 2018. And although growth is forecast to moderate in the coming years, there's still room for dividends to grow at a steady clip as its payout ratio currently stands at just over 50%.

So although its shares currently carry a modest dividend yield of 2.5%, its dividend payout is forecast to grow by around 7%-8% over the next few years. This implies that shares in the company could yield as much as 3% in two years' time.

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Jack Tang 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.