Why I'd snap up Evraz plc and this other surging growth stock today

FTSE 100-listed miner and steel producer Evraz(LSE: EVR) was up almost 10% at one point this morning on publication of its annual report and full-year 2017 results. Although the excitement has ebbed, the stock is still 4.8% higher after a bullish set of numbers.

Show some steel

Evraz reported strong free cash flow of $1.32bn, more than double its full-year 2016 total of $659m. It has continued to reduce its net debt, down from $4.8bn to $4bn. 

Consolidated EBITDA hit $2.62bn, marking a rise of 70.2% from $1.54bn in 2016, driving up margins from 20% to 24.2%, due to strong market conditions and improvement initiatives. The group made a net profit of $759m in 2017, reversing a net loss of $188m the year before. This is all good stuff.

Raw Russia

The cash-cost of steel and raw materials in Russia did increase, mostly as a result of rouble appreciation, but that was not enough to stop the board from declaring a second interim dividend of $429.6m, or 30 cents a share, which it said reflected its confidence in the group's financial position and outlook. The forecast yield is now a whopping 6.8%, covered 1.8 times. 

This caps an astonishing comeback, both for the company and the commodity sector in general. Incredibly, Evraz is up 523% over the past two years. That's just reward for contrarian buyers who were willing to dive in at the peak of the January 2016 sell-off. Momentum has continued, with a 50% leap over the last six months. No wonder my Foolish colleague Alan Oscroft would be happy to buy and hold it forever.

On the Raz

Investors cannot expect more four-bagging over the next couple of years, even if earnings per share (EPS) are forecast to grow another 51% in 2018 (before falling 13% in 2019). Much of the recent run was due to the snapback after a dramatic sell-off, and the global economy may be heading into choppier waters.

However, trading at a forward valuation of 8.5 times earnings and with a PEG ratio of just 0.5, these are hardly toppy prices. Evraz is still at the mercy of forces beyond its control, such as global commodity prices, but right now they are working in its favour.

Higher Costain

Technology-based engineering solutions firm Costain Group(LSE: COST) is also having a good day, its share price up 5.31% at time of writing on publication of its results for the year ended 31 December. This is a boost for investors in the £492m company that focuses on the UK's energy, water and transportation infrastructures. Its share price performance has been choppy lately, although it still trades almost 50% higher than three years ago.

Today investors are celebrating "another strong performance" with an 18% increase in underlying operating profit to £48.7m and a recommended 10% increase in the dividend to 14p for 2017. This puts it on a forecast yield of 3.6% for 2018, with healthy cover of 2.3.

City analysts expect steady EPS growth of 5% in 2018 and 7% the year after. Yet despite this solid outlook, its forecast valuation is undemanding, at 12.2 times earnings. In January, Edward Sheldon said Costain's shares look attractively priced, and that still applies today.

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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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