2 stunning small-cap growth stocks that could double in 2018

Keystone Law(LSE: KEYS) has only been a publically traded company since October of last year, however, in this short time, it has already made a big impact.

Rising expectations

Shares in this challenger law firm have ripped higher since the IPO in October. At the time of writing the shares are trading at 255p, up around 30% from the IPO price of 190p. And it looks as if these gains are set to continue as today the company reported that for the financial year to January 31, results are expected to be "comfortably ahead" of market expectations.

In the weeks after hitting the market, the company's profile has only improved, and this has translated into higher sales and profits. Management believes Keystone is uniquely positioned in the UK law market to consolidate its position and use technology to push ahead of its competitors. Today's trading update makes several references to the group's "distinctive platform model" and "infrastructure and recruitment capabilities," which continue to attract both new clients and employees.

Using tech to boost growth

Keystone bills itself as more of a tech company with lawyers than a pureplay law firm. It seems as if the business is doing something right as its client list is full of blue-chip names such as RBS, RSA and Siemens.

City analysts are highly excited about the prospects for the group. Earnings per share are expected to rise 124% to 6.4p for fiscal 2018, although considering today's news, it looks as if these forecasts are now too low. Analysts have been expecting it to go on to earn 9.6p for fiscal 2019, but once again, considering today's news, it would appear as if this is a conservative estimate.

With profits set to roughly double every year for the next two years, shares in Keystone currently look cheap as they're currently trading at a PEG ratio of 0.8. Considering this, it's easy to see how the shares could double over the next 12 months -- something I wouldn't rule out as City analysts revise their estimates for growth higher.

International expansion

Another small-cap that I believe could double in value during 2018 is clothing and design business Joules Group (LSE: JOUL).

Joules has already achieved an impressive return of 13% for investors so far this year. City analysts are expecting it to report 56% growth in earnings per share for the current fiscal year and 18% for 2019. However, I believe that these figures could be conservative as the company recently announced that its critical Christmas trading period performed ahead of expectations and following this, management now expects full-year profit to be ahead of the City's estimates.

The most important part of the group, and where I believe most of the growth will come from over the next few years, is its international division. International sales expanded by 26.4% for the 26 weeks to the end of November and now account for 11.3% of group revenue.

As Joules continues to grow overseas, its bottom line should benefit significantly and this could drive further outperformance. In other words, even though the shares look expensive trading at a forward P/E of 24, I believe that this fast-growing retailer deserves your attention as it continues to attract customers and register healthy earnings growth.

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Rupert Hargreaves owns no share 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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