2 hot growth stocks that could make your fortune

hot sun

Specialist international food packing business Hilton Food Group (LSE: HFG) has enjoyed a meaty five years, its share price rising 188% in that time. Its protein-rich vein of form has continued over the past 12 months, when it grew 27%. However, the share price is unchanged today as investors digest its trading update for the year to 31 December.

Glorious food

The collective shoulder shrug could be due to the fact that the results blandly report that Hilton has "performed in line with the Board's expectations", posting growth in a number of existing and new markets, while also benefitting from the positive impact of foreign currency translation. Clearly, there are more exciting stocks around.

Turnover in the UK and Ireland grew noticeably, with smaller rises in Sweden and Denmark, and a slight sales dip in Holland. Moves to adapt the business model to the local environment in central Europe also appear to be paying off. This brief update concluded that the £683m company's trading outlook remains positive as its looks to grow in Australia, Portugal, Central Europe and New Zealand, and exploit its recent Seachill acquisition. "The Group's financial position is strong, positioning us well for further expansion," it concluded.

Capital return

Investors will get more to sink their teeth into on 28 March, when full-year results are due. My main concern today is that Hilton now trades at a slightly pricey forward valuation of 21.4 times earnings. It also looks expensive as measured by a price-to-earnings growth (PEG) ratio of 2.3, given that figures over 1 start to look high.

However, predicted earnings per share (EPS) growth of 10% in 2017 and 9% in 2018, plus a forecast 2.3% yield covered twice, all make a solid investment case. So does Hilton's healthy 29.8% return on capital employed (ROCE).

Star performer

Jupiter Fund Management(LSE: JUP) also issued a trading update after a strong year of 36% share price growth as stock markets boomed. However, the market is not quite so sanguine about today's results, with the stock dipping 2.12% at time of writing following a slowdown in net fund inflows to £600m. 

Across 2017, total inflows were a buoyant £5.5bn, which compares favourably to just £1bn across 2016. Assets under management also increased, rising 24% over the year to £50.2bn. CEO Maarten Slendebroek hailed a year of "consistent progress" as strong investment performance provided positive returns for clients after fees.

New frontiers

Slendebroek said the £2.63bn group's diversification strategy is paying off as it launches a number of new funds targeting emerging and frontier markets. Jupiter also expanded its geographic reach with flows from clients in Thailand and Latin America. Its timing was good and last year was certainly the right one to target emerging markets. The top performing global asset class returned 25%, figures from Fidelity show. The FTSE 100 also had a strong year.

I am wary about tipping a fund manager with global stock markets at record highs and people once again worrying about a correction. However, Jupiter's forecast valuation of 16.7 times earnings does not look pricey, and EPS are forecast to have grown a healthy 18% in 2017, with another 9% expected in 2018. By then, the yield is forecast to be 5.1%. Jupiter could be an even hotter destination if the market dips.

However, we reckon we may have an even hotter growth stock for you right here.

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Harvey Jones 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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