Picking the right growth stocks is never easy, but sometimes the most obvious choice isn’t always the best one.
For example, Rolls-Royce shares have delivered a spectacular run over the past few years, rewarding patient investors handsomely. But with so much of that recovery now priced in, I find myself looking elsewhere within the engineering space for the next big opportunity… and I think I’ve already found two compelling opportunities.
In fact, I’ve already bought shares in both.
A pure-play aerospace compounder
Melrose Industries (LSE:MRO) is a world-leading aerospace and defence business, supplying critical engine components and airframe structures for virtually every major commercial and military aircraft flying today. If a plane’s in the air, chances are Melrose parts helped put it there.
In the first quarter of 2026, group revenue grew 11%, with its Engines division surging 20% as both original equipment deliveries and the high-margin aftermarket fired on all cylinders. And subsequently, underlying operating profits came in well ahead of the prior year for both divisions.
Management’s maintained its full-year guidance for revenues to land between £3.75bn and £3.95bn paired with adjusted operating profits of up to £750m. Yet despite this business momentum, Melrose shares have seemingly lagged lately.
To be fair, there are some justified reasons to be nervous. A recent chemical leak scare at its Garden Grove facility in California understandably spooked investors who were already on edge about the indirect impacts of the war in the Middle East.
While the situation at Garden Grove appears to have been largely resolved, and management’s reiterated its full-year guidance, the market seems to be in a ‘wait-and-see’ mode in case Melrose falls short.
Personally, I remain cautiously optimistic. And it’s why I’ve already capitalised on this potential mispricing.
A niche industrial powerhouse
Goodwin‘s (LSE:GDWN) another engineering specialist that’s caught my eye. It’s a family-owned-and-run manufacturer of specialist components and materials used throughout multiple critical sectors like aerospace, defence, energy, and nuclear. And much like Rolls-Royce, the share price has been thriving.
While the stock’s been volatile, the last 12 months have seen investors earn an impressive 130% return on investment before counting dividends, courtesy of a thriving order book and growing opportunities within the defence sector.
However, this could be just the tip of the iceberg. Duvelco’s business is progressing towards commercial sales, with initial contributions expected by 2027. At the same time, a foundry extension is underway to support an automated production line, setting up further capacity for the years ahead.
In other words, the business is quietly laying the foundations to expand its product range and manufacturing capacity that could see its bottom line surge even higher.
Are there any risks? Absolutely. Goodwin actually lost two substantial tenders earlier this year, sparking the previously-mentioned volatility. And the same time, the ongoing war in the Middle East saw component orders from its LNG customers in the region put things on hold.
The bottom line
Neither Melrose nor Goodwin carry the household name recognition of Rolls-Royce. But that’s kind of the point. Both businesses have compelling structural tailwinds at their backs, creating significant room to grow from here, that Rolls-Royce might now struggle to replicate with a £125bn market-cap.
That’s why I’ve already bought both.
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Zaven Boyrazian owns shares in Goodwin and Melrose Industries.
