Investing in companies that are able to rapidly and sustainably grow earnings and profit has always rewarded investors. Just take a look at some of the best-performing stocks of the last financial year; G8 Education Ltd (ASX: GEM), REA Group Limited (ASX: REA), and Domino's Pizza Enterprises Ltd (ASX: DMP) were three of the best because investors were attracted by their growth stories.
Here are two stocks that could be the winners of the next 12 months:
Collins Foods Limited (ASX: CKF)
Collins Foods owns and operates KFC and Sizzler restaurants in New South Wales, Queensland, Western Australia and the Northern Territory. Until recently, the company had been viewed as a low-growth company with a strong balance sheet. That changed when the company announced a deal to purchase a set of KFC franchises in the Northern Territory and Western Australia.
The restaurants are far less profitable than the company's existing portfolio and as a result, management believe they can add value by increasing margins over the next two to three years. Gearing will increase, however analysts are essentially united that the purchase makes sense and will be a positive over the medium term.
Vocus Communications Limited (ASX: VOC)
Telecommunications group Vocus owns and operates a range of data centres and fibre optic cable routes in Australia, New Zealand, Hong Kong, Singapore and the United States. It offers an integrated communications service to customers that includes internet access and data storage via Vocus' network.
The company recently announced the purchase of a New Zealand fibre network provider that would improve Vocus' position as the third-largest fibre optic network operator in New Zealand and the leader in trans-Tasman route and data centres. Based on analysts' forecasts, Vocus is due to increase earnings by 120% in 2014, 50% in 2015 and 35% in 2016 assuming that there are no further acquisitions.
