2 growth stars that could make you brilliantly rich

Shares of Churchill China(LSE: CHH) are up over 5% today after the company released excellent first-half results and said: "Trading momentum has been maintained since 30 June and we approach the key trading period in the year with confidence."

At a share price of 1,014p this AIM-listed manufacturer and global distributor of performance ceramics to hospitality and retail markets is valued at £111m. Its current valuation and that of another growth stock -- listed in the FTSE SmallCap index -- have a great deal of appeal to my eye. They're two businesses I'd be happy to buy a slice of today.

Performance ceramics

Churchill has delivered earnings growth of between 20% and 30% in each of the last four years. The company, noting today "our record of improved performance established over several years," reported another strong performance for the first half of the current year, with an earnings increase of 32%.

Helped by favourable currency rates, Churchill posted 8% higher revenue in the period. Growth across its hospitality export markets more than offset a more muted performance in the UK and in the retail segment generally. The impressive earnings growth on the single-digit revenue increase was driven by improved gross and operating margins, the latter increasing to 10.3% from 8.4%.

The earnings performance and strong balance sheet (net cash and deposit balances of £10.3m), together with management's confidence in the future, led the board to increase the interim dividend by 17%.

Attractive valuation

Churchill's trailing 12-month earnings per share (EPS) is 53p, with a well-covered dividend of 22.2p. At the current share price, the trailing price-to-earnings (P/E) ratio is just over 19 and the running yield is 2.2%.

The company has considerable scope for increasing export sales. For example, hospitality sales to North America and the Rest of the World grew by 20% and 27% in the first half. And with the company also increasing the proportion of higher margin added-value products, the earnings rating looks attractive and the dividend is a bonus for a growth stock.

Sea, sand and scalable business

With its shares trading at 429p, FTSE SmallCap firm On The Beach(LSE: OTB) is valued at £560m and is another growth stock that I reckon is an attractive proposition for investors today.

One of the UK's largest online retailers of beach holidays, with a 20% share of the online short-haul beach holiday market, On The Beach has been growing fast since joining the stock market in 2015. With its scalable, flexible technology and low cost base, its business model is asset-light, profitable and cash-generative.

Multiple opportunities for growth

We've already witnessed its acquisition of Sunshine.co.uk, to consolidate its leading UK position, and the launch of websites in Sweden and Norway. And management sees "multiple opportunities to generate further growth."

The company is forecast to deliver EPS of 17.4p for its financial year ending 30 September, giving a P/E of near to 25. That may sound a bit rich, but with EPS growth of 34%, the price-to-earnings growth (PEG) ratio of 0.7 is well on the value side of the fair value PEG marker of one. And, as with Churchill China, this growth stock also comes with the bonus of a modest dividend. A forecast payout of 2.9p, giving a yield of 0.7%, has scope for considerable future growth.

Could there be a better growth prospect?

Whether or not you agree with my assessment of Churchill China and On The Beach, you may wish to read the compelling analysis of another growth stock from the experts at the Motley Fool.

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G A Chester has no position in any of the 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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