Four stocks for long-term growth

Each week, a professional investor tells MoneyWeek where they'd put their money now. This week: Marina Bond, investment director at Rathbone and co-manager of the Rathbone Recovery fund.

At a time when equity markets are weighed down by concerns over Europe, slowing Chinese growth and doubts over the sustainability of the US recovery, it is tempting to select stocks that look very cheap and have impressive dividend yields to match.

However I am more concerned with avoiding potential value traps and looking for growth. Companies that are able to grow sales, improve margins, and generate cash in these difficult economic conditions are future winners provided they also have the right management team. Here are four I currently like.

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Identity management business, GB Group (LSE: GBG), addresses how business can verify and manage their customers' identities online. The aim is to minimise fraud and regulatory risk and also enable them to develop relationships with those customers, and maximise their revenue opportunities. The acquisition last year of Capscan gives GB Group scale and international reach, and the benefits of operational gearing are already starting to come through.

In their recent results, which exceeded brokers' forecasts, margins rose from single to double-digits, driving significant earnings growth, backed by strong cash-generation. This company is less well-known by the investment community, but it is one to watch.

Oxford Instruments ( LSE: OXIG ) is a well managed, high-tech industrial, with a focus on designing specialist tools for nano-technology. The management team has transformed and commercialised the business - building a sales force, refocusing the product lines, and investing in R&D.

They are targeting 14% growth and 14% margins by 2014. Recently reported results showed a big improvement in year one of this three year plan, with strong organic growth and margin expansion. For a business that owns all of its intellectual property, in a market with structural growth, the management's targets look easily achievable.

Moss Bros (LSE: MOSB) is in year three of a turnaround under the impressive stewardship of Brian Brick. He has brought the business back to its core, dumping the fashion brands and refocusing on formal menswear. He has also reinvigorated all aspects of customer service by reevaluating the product range, pricing, delivery and the store environment. Managers have been replaced and the cultural mindset overhauled.

This process has freed up cash which has enabled him to fund store refurbishment. As a result the business is now profitable for the first time in many years and has a strong balance sheet to support its growth.

RPC (LSE: RPC) supplies rigid plastic packaging and continues to rise up the value chain, exiting lower margin business and improving the quality of its earnings. Recent results reflected decent organic growth, rising margins and the successful integration of Superfos, acquired 18 months ago. Synergies from this acquisition have already exceeded targets.

The business materially boosted RPC's injection-moulding capacity and brought interesting new technologies, and increased exposure to the Scandinavian market. Having integrated this acquisition successfully, we would not be surprised if management were on the lookout for further earnings-enhancing deals.