Clearly, a wider fall in the stock market is likely to have been a factor in the stock’s decline. Although there may be further volatility ahead, could it prove to be a bargain buy after its recent fall?

Uncertain outlook

The prospects for the UK and global economies seem to be more uncertain than they have been for a number of years. In the UK, Brexit talks seem to have progressed in recent months but there is still further progress to be made before a deal can be signed. As such, the pressure on consumers from a weaker pound and higher inflation could increase over the coming months and lead to companies which operate in the UK seeing their valuations decline.

Similarly, disappointing economic data from the US alongside higher inflation could lead to worsening expectations for the global growth rate. Higher interest rates in the US may also initiate a slowdown in economic activity which could hurt global operators such as Boohoo over the medium term.

Low valuation

Despite the uncertainty facing the UK and global economies, Boohoo’s valuation suggests that it offers a wide margin of safety. Investors appear to have priced-in potential difficulties in terms of the operating environment, with the stock trading on a price-to-earnings growth (PEG) ratio of just 1.4. This indicates that there could be significant upside potential on offer in the long run.

With Boohoo’s latest trading update showing that it has delivered strong growth across all of its brands, it seems to have a sound strategy. A further focus on improving the customer proposition as well as in offering greater value for money could mean that its stock price generates high returns in future.

Growth potential

Also offering impressive total return potential is bonding solutions and adhesive-based products specialist Scapa (LSE: SCPA). The company released a positive year-end trading update on Thursday which showed that is has made further progress since its interim results.

In its Healthcare division, revenue grew by 3.8% for the year despite currency headwinds in the second half. Investment in the integration of two technology transfers is expected to result in margins that are above 15%. In the company’s Industrial division, there has been further progress on the delivery of the asset optimisation strategy. The restructuring of the Asian operations of the business could lead to further improvements in margins in future.

With Scapa forecast to post a rise in its bottom line of 10% per annum over the next two years, it appears to offer a bright future. Its share price may have been flat over the last six months, but could now deliver strong capital growth in the coming years.

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Peter Stephens owns shares of Scapa Group. The Motley Fool UK has recommended boohoo.com. 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.

Historical highs

Less than a decade ago shares in AIM-listed Scapa Group (LSE: SCPA) were changing hands for less than 10p each, but after delivering very strong and sustained levels of growth over the years, they now trade at more than 40 times that value. In fact, for a brief moment last summer, the share price closed above the 500p mark for the first time in the company’s history, before drifting lower to today’s levels around 470p.

The group based in Ashton-under-Lyne, near Manchester, is a global supplier of bonding solutions and a leading manufacturer of adhesive-based products for the Healthcare and Industrial markets. The company has a truly global footprint with manufacturing sites right around the world, with the vast majority of sales coming from within Europe, North America and Asia.

Geographic ‘insulation’

This wide geographic spread has somewhat insulated the company from many of the uncertainties that have made the current environment very challenging for many of its peers, particularly the effects of recent currency fluctuations and the as-yet-unknown longer-term impact of Brexit.

From a valuation standpoint, the current share price translates into an expensive-looking price-to-earnings (P/E) multiple of 27 for the current fiscal year to March. But with City analysts forecasting more double-digit rates of growth in the coming years I think the shares are well worth that premium price tag.

Electronic warfare

If Scapa’s pricey-looking valuation is still a little too rich for your taste, then fellow AIM constituent Cohort (LSE: CHRT) might be better suited to your palate. The Reading-based technology group also saw its shares take a little breather in 2017 after an impressive run that led to a sixfold increase in its market capitalisation in as many years.

The group currently operates four innovative, agile and responsive businesses based in the UK and Portugal, which provide a wide range of services and products for domestic and export customers in the defence and security markets. Particular areas of focus include electronic warfare, cyber security, surveillance technology, and advanced communications systems.

The group’s shares have fallen back from last year’s all-time highs of 462.5p and now look to be offering greater value at 12 times earnings for the current year to April. For this reason Cohort is currently my top pick from the defence and aerospace sector.

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Bilaal Mohamed has no position in any of the shares mentioned. The Motley Fool UK has recommended Cohort. 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.

Despite this, there are stocks which can provide relatively resilient earnings growth that is ahead of that of the wider index. Here are two prime examples which may be worth buying and holding for the long run.

Improving performance

Reporting on Wednesday was global supplier of bonding solutions and manufacturer of adhesive based products Scapa Group (LSE: SCPA). The company’s trading statement showed that its sales, profit and margins have moved higher versus the first half of the prior year. It has benefitted from currency gains and a full contribution from Euromed, which was acquired in May last year.

The company’s Healthcare division’s sales grew by 7.9%, with improvement in both trading profit and margins. Its Industrial division continues to benefit from a focus on boosting margins. It also completed the sale of its property in Switzerland for £13.6m and acquired Markel Industries for £7.8m.

Looking ahead, Scapa Group anticipates that profit for the full year will be ahead of current expectations. It is due to post a rise in its bottom line of 11% this year, followed by further growth of 12% next year. Having reported double-digit earnings growth in each of the last five years, the company has a sound track record of high growth. With a sound strategy and solid business model, it could deliver improving financial and share price performance in the long run.

Reliable performer

Also offering a strong track record of earnings growth is distribution and outsourcing specialist Bunzl (LSE: BNZL). The company has reported a rising bottom line in each of the last five years and is forecast to do likewise over the next two years. For example, in the current year its earnings are expected to increase by 7%, followed by additional growth of 6% next year.

The company’s acquisition strategy appears to be working well. Bunzl also has the potential to deliver organic growth which may help to boost its dividend prospects. Currently, it has a yield of 2%, but pays out just 40% of profit as a dividend. This suggests that a higher proportion of profit could be made available for payment to investors in future without disrupting the company’s growth-by-acquisition business model.

Although Bunzl trades on a price-to-earnings (P/E) ratio of 20.3, the company’s resilient growth potential could make it a strong buy. That’s especially the case with the political and economic outlook for the UK and its investors being highly uncertain due to Brexit. As such, the stock appears to be a worthwhile buy for the long term.

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Peter Stephens owns shares in Scapa. 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.

Improving performance

Reporting on Tuesday was adhesive and bonding solutions specialist Scapa (LSE: SCPA). The company enjoyed an excellent year, with revenue growing 13.3% and trading profit rising by 37.1%. Although both figures include the impact of positive currency translation, underlying revenue growth of 1.7% and underlying trading profit growth of 18.2% indicate that the company’s strategy is working well. Further evidence of this can be seen in the company’s rising trading profit margin, with it increasing to 10.4% from 8.6% in the previous year.

Looking ahead, there is scope for earnings growth as the company seeks to grow its business within the healthcare and industrial segments. This is expected to help Scapa to increase its bottom line by 11% in the next financial year.

While its shares currently trade on a price-to-earnings (P/E) ratio of over 30, the company has a solid track record of double-digit growth. For example, in the last five years it has been able to grow its bottom line at an annualised rate of 29%. This shows that as well as high growth, Scapa also offers resilient growth. As such, its shares seem to be worthy of purchase at the present time – especially with uncertainty surrounding the UK economic outlook continuing to build.

Growth opportunity

Also offering upbeat growth prospects is tissue manufacturer Accrol (LSE: ACRL). It is expected to grow its earnings by 11% in the current year, and by a further 5% next year. Its outlook could be upgraded due to the potential for pressure on household budgets. Due to higher inflation, consumers now have negative real-terms growth in disposable incomes, which means they may trade down to cheaper own-brands on a range of staple goods, such as tissues. This could lead to greater demand for Accrol’s services and more new contract wins in future.

Despite this growth potential, Accrol continues to trade on a relatively low valuation. For example, it has a P/E ratio of just over 10, which suggests that its shares could experience an upward re-rating over the medium term.

Certainly, the company’s lack of a dividend payment and the absence of plans to commence shareholder payouts over the next two years may hold investor sentiment back somewhat at a time when inflation is heading higher. However, with a sound business model, a track record of improving financial performance and a wide margin of safety, Accrol could prove to be an excellent long-term investment.

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Peter Stephens owns shares of Scapa Group. 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.