Does today's economic climate offer a once-in-a-decade opportunity to capitalize on growth stocks?

I think there are good benefits to investing in UK growth stocks which are not important at the moment. The trick is to identify those rare gems: undervalued stocks with promising growth potential. For that, I examine certain metrics such as price-to-earnings (P/E) to growth ratio (PEG) and future cash flow ratios.

I think I've found two little-known UK stocks that are good examples. Currently trading below fair value, they look poised for growth.

Standard Chartered

With a market capitalization of £20bn, Standard Chartered (LSE: STAN) is the world's fifth largest bank FTSE 100. However, it will not be available on the high street. The bank provides services mainly to Asian markets, with core operations in Singapore, Hong Kong and Dubai. But while it benefits from growth potential in several emerging markets it also faces the risk of political instability in these regions.

The trailing P/E ratio is 8.1, slightly above the industry average but still good. And future cash flow estimates show that shares could be undervalued by 65%. With a very low P/E ratio of 7.3, it is a rival bank HSBC looks like a better price. But the PEG ratio tells a different story: with earnings forecast to fall, HSBC's PEG ratio is negative while the norm is 0.7.

Following the positive results for Q1 2024, revenue is now forecast to grow by 14% annually. That's faster than the industry average of 3.9%. The average 12-month price target of £9.34 is 22% higher than the current price (although consensus among analysts is low). Since its post-Covid low of 336p, it has risen 126% – coinciding with a 22% return.

So that seems like a realistic goal to me.

However, if the forecasts are wrong and a recession looms, Standard Chartered could go deeper. That's still a big risk but one I'm willing to take. As part of my September balance, I plan to sell some of my HSBC shares and buy Standard Chartered instead.

TBC Bank Group

£1.7bn in cash TBC Bank Group (LSE: TBCG) is a much smaller outfit than Standard, providing services in Georgia, Uzbekistan and Azerbaijan. Up from £8.20 four years ago, the shares at £29.60 may not sound cheap but I think they still have room to grow.

The price fell earlier this year after the Georgian government introduced a bill on 'foreign workers' which many believe is aimed at suppressing opposition to the government. The protests that followed raised fears about the country's future stability.

However, a strong set of Q2 results released earlier this month put things back on track. Revenue and income increased 17% and 12%, respectively, with a slight 2% decrease in profit due to higher costs. Revenue is now forecast to grow 19% annually.

In addition to its growth potential, TBCG pays reliable dividends with a yield of 6.8%. That can make it a good option for serious investors looking to increase their income. However, without a significant track record, it is difficult to gauge how reliable the payments are.

The ongoing political climate poses a huge risk to the stock, which is why I have been reluctant to buy before. But the latest results make me optimistic about the bank's performance. I don't want to miss another opportunity, so I plan to buy shares as soon as I have some money freed up.