Demand for the takeaway titan’s services continues to rip higher, with legions of couch potatoes the world over hitting their digital devices in growing numbers to get a multitude of tasty treats delivered to their doors. Just Eat saw first-half sales soar 44% year-on-year, to £246.6m, a result that prompted it to hike its full-year sales guidance to £500m-£515m from £480m-£495m previously.

And Just Eat is ploughing vast sums into its marketing and technology, as well as engaging in M&A activity across the planet, to keep order clicks moving higher.

Current forecasts suggest that earnings expansion should decelerate from the skin-ripping rate of previous years. But broker estimates are still not to be scoffed at — the Square Mile consensus points to bottom-line growth of 38% and 37% in 2017 and 2018 respectively.

While a forward P/E ratio of 41.2 times may look toppy on paper, I do not believe investors should be deterred by this heavy reading. Indeed, a corresponding PEG readout of 1.1 suggests Just Eat is actually brilliantly priced relative to its predicted growth trajectory.

Brand power

The City is also pretty bullish on the earnings prospects of Franchise Brands (LSE: FRAN) right now.

In 2017 the Kidderminster firm is predicted to report a 13% earnings rise, and to follow this up with a 44% advance next year. And Franchise Brands’ solid earnings outlook was underlined by half-year results put out on Thursday.

The firm — whose franchise operations include Ovenclean professional cleaning services and Chips Away car repairs — announced that revenues detonated 247% during January-June, to £8.64m, a result that powered adjusted profit before tax and exceptional items 38% higher to just over £1m.

Lauding the results, chief executive Stephen Helmsley commented: “Our principal existing brands have delivered strong growth, and in a relatively short space of time we have created a high quality portfolio of businesses with significant critical mass in the franchising sector. 

“We are focused on maximising the earnings potential from all our brands, particularly with the recent acquisition of Metro Rod, where the medium-term upside potential is substantially better than our initial expectations, with the benefit of additional near term investment.” Franchise Brands snapped up drainage specialists Metro Rod back in April for £28.5m.

Despite these solid results, the investment community did not take too kindly to today’s release and sent the share price 10% lower to its cheapest since last November. But I would consider this to be a great buying opportunity.

With the company having invested huge sums into its infrastructure in recent times, I am convinced demand across its premier brands should continue to surge. And while the company’s forward P/E ratio of 23.3 times may look heady on paper, I reckon this should not deter share pickers given its ample growth opportunities.

The post Just Eat plc isn’t the only stock expected to deliver blockbuster growth appeared first on The Twelfth Magpie.

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

Finding the market’s best growth stocks is never an easy task. Separating the wheat from the chaff is the hardest part as while there are many stocks out there that look like they have all the hallmarks of a top growth pick, more often than not, the story ends in tears.

However, there’s one small-cap growth stock that I’ve recently discovered that looks as if it could be one of the market’s best growth stocks.

The name of the company in question is Franchise Brands (LSE: FRAN), and over the past 12 months, shares in the group have risen by 112% excluding dividends as the market has started to realise the opportunity here.

Growth potential

Over the past two years, Fran’s growth has stagnated as management has struggled to drive growth organically, but this has now changed thanks to the £20m acquisition of Metro Rod, a leading provider of drain clearance and maintenance services. With Metro now part of the business, City analysts expect the company to report a pre-tax profit of £2.4m for 2017 with earnings per share growing 13% to 2.7p. Revenue for the year is set to leap from £5m to £25m.

And as Fran increases Metro’s offering, further growth is expected in the years ahead. For example, City analysts have pencilled-in earnings per share growth of 44% to 3.9p for 2018 on a pre-tax profit of £3.9m and revenue of £38m.

Robust balance sheet

Explosive earnings growth is complemented by the firm’s strong balance sheet. For the year to 31 December 2016, it generated £1.1m in cash from operations and ended the year with a cash balance of £3m. The Metro acquisition was funded with a £20m share placing as well as a £17m debt facility. In total, Metro cost Fran £28m indicating that after the buy closed, the company would be indebted to the tune of £5m. With pre-tax profits of £6.3m projected for the next two years, this debt appears sustainable.

Clear outlook

So earnings growth is explosive, the company’s balance sheet is strong, and management seems set on creating value for shareholders. But there is one problem, and that’s valuation.

At the time of writing shares in Fran are trading at a forward P/E of 34.6, which looks expensive even considering the earnings growth projected for 2017. Still, if the company can hit City targets for growth this year, next year the valuation will fall to more appropriate levels. 

Based on 2018 earnings estimates the shares are trading at a forward P/E multiple of 23.9 compared to projected earnings per share growth of 44%. On this basis, the shares trade at a PEG ratio of 0.5. A PEG ratio of 0.5 indicates that the stock in question offers growth at a reasonable price.

The bottom line 

Overall, this firm seems to have it all, and if the company can grow earnings as expected over the next two years, the shares still look cheap at current levels.

The post This rapidly growing growth stock looks too cheap to pass up appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves has no position in any 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.