2 cheap growth stocks I'd buy right now

As the squeeze steadily mounts on Britons' spending power, I am convinced B&M European Value Retail(LSE: BME) should continue to deliver knockout earnings expansion.

Pressure on the UK high street is steadily worsening as inflation easily outstrips wage growth. And with the domestic economy predicted to keep slowing, conditions aren't going to get any better soon either, forcing cash-strapped shoppers into the arms of value-focused retailers.

B&M is thriving in this environment and it announced in January that sales had risen 22.9%, to £969.8m, in the 13 weeks to December 23, or 3.9% on a like-for-like basis. The retailer commented that the bright like-for-like improvement reflected  "the continued robust performance of our grocery and FMCG ranges, further operational improvements to store standards for customers and the recognition of our value offer by consumers generally."

Expansion drives sales growth

The leap in the headline revenues figure was down to its fizzy store expansion programme, the FTSE 250 company having opened 19 B&M stores in the 13-week period alone. It had 569 B&M stores up and running by the close of the last quarter, while it had 263 Heron Foods outlets as well after the opening of a further four in the period.

B&M isn't restricting its ambitious rollout programme to its home territory either. Two store openings over in the European economic engine room in the last quarter took the number of Jawoll cut-price outlets to 84.

Reflecting the retailer's ambitious expansion drive, City analysts are expecting it to keep growing earnings by double-digit percentages, and they are predicting growth of 20% and 19% for the years to March 2018 and 2019 respectively.

And current projections make B&M brilliant value, the firm dealing on a P/E ratio of 19.5 times for the forthcoming year and a corresponding PEG reading bang on the bargain watermark of 1.

An added bonus is that its brilliant profits outlook is expected to keep thrusing dividends skywards so last year's 5.8p per share reward is predicted to rise to 7.5p in the current period and again to 8.5p in fiscal 2019.

These estimates yield a chunky 1.8% and 2.1%.

Another great growth pick

Those on the lookout for another share growing earnings and dividends at a sprightly pace need to take a look at GVC Holdings (LSE: GVC).

In 2018 the online gambling giant is predicted to report a 21% profits improvement, a prediction that also leads to expectations of dividend expansion to 37 euro cents per share from 34 cents last year.

And next year, a predicted 9% earnings jump supports expectations of a 40 cent payment. Current dividend predictions lead to chubby yields of 3.4% for this year and 3.7% for 2019.

In terms of value, a forward P/E ratio of 16.1 times is hardly outstanding, but a corresponding PEG reading of just 0.8 times certainly is. This is much too cheap given the exceptional revenues-boosting opportunities and cost benefits brought by its merger with Ladbrokes Coral, even in spite of the danger of a regulatory clampdown on fixed odds betting terminals. As the popularity of online gambling takes off, I expect profits at GVC to keep on booming.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended GVC Holdings. 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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