One day to go and want to use up some of your 2018-19 ISA allowance? At short notice, many would go for cash, but does around 1.5% interest sound good to you?
I’d always go for a Stocks and Shares ISA, and there’s no rush to choose your shares — as long as you get the cash in, you can then take your time to make your actual investment decision.
The bulk of my investment goes into solid dividend-paying stocks, but I have room for the occasional riskier growth pick. Today, I’m examining two that tempt me.
Cheap growth
It’s not often we see a company with a solid earnings growth record but whose share price has fallen and is looking cheap. But that might just be the case at NWF Group (LSE: NWF).
The specialist fuels, food and animal feeds distributor has enjoyed steadily rising EPS over the past five years. But a 15% dip forecast for the current year hasn’t helped, even though it comes after a 20% hike last year.
The shares have lost 30% of their value since their peak in June 2018. That puts them on forward P/E multiples of 10 and under, with modest EPS growth predicted to resume in 2020, and that looks cheap to me.
My colleague Kevin Godbold’s examination of 2018 results and the company’s long-term prospects paints a convincing picture for me, and an update Thursday strengthens that.
Acquisition
NWF has acquired Consols Oils Limited, in accordance with its strategy to grow and consolidate its fuels distribution business — it bills itself as the third largest in the UK. The earlier acquisition of Midland Fuel Oil Supplies Limited is apparently performing well. Overall trading is in line with expectations, and we should have a year-end update in June.
Net debt at the halfway stage had dropped by 9% to £14.8m, and that’s only 1.0x EBITDA, so I see nothing to worry about there. And NWF is generating cash strongly and pays a well-covered and progressive dividend, forecast to yield 4.6% and rising. I see a bargain here.
No profit
The riskiest kind of potential growth shares is surely those that are not making any profit yet, and that’s the case at Tiziana Life Sciences (LSE: TILS).
When I last looked at the company in 2017, it was very much in a cash-burn phase, and the same is still true today. And it’s fair to say it’s been a disappointment since then, with the share price losing 70% of its value since I wrote. The big problem is that it’s pretty much impossible to work out an actual valuation.
Financial figures for 2018 show a continuous process of raising cash through new equity, with £3.9m raised from issuing ordinary shares, £3.4m from an IPO on the US market, and £1.4m from a debt-equity swap. That raises the additional question of how much dilution current shareholders will face if and when first profit shows up.
Potential?
We have to evaluate Tiziana through the prospects for its oncology and immunology drugs and, according to executive chairman Gabriele Cerrone, “Tiziana is confident that it is well positioned to advance these programs to their next respective value inflection points.”
Right now, Tiziana looks very risky to me, but I can’t help thinking it’s worth a (very) small investment based on the potential upside.
