Peaking at just under £30 on September 18, 2018, the Accesso Technology (LSE: ACSO) share price went on to see a steady decline. This was the case until late 2020, when things started to pick up for the AIM-listed company. In the past six months, the share price has increased over 180% and year-to-date prices are up 250%! A year ago the price was almost 223p. It closed Tuesday at 720p. Let’s take a closer look at why.

What is Accesso Technology?

Accesso is a virtual queuing, ticketing, and distribution company. Its solutions operate in theme parks, water parks, cruise lines, museums, and various other attractions. Accesso eliminates the hassle of queuing, instead you get a token that tells you when it’s your turn. Accesso functions at over 1,000 venues in over 30 countries. This is a huge reach to the guest experience and tickets & distributions markets, which are valued at $1.5bn and $1.9bn respectively.

Bull case for Accesso Technology share price

The recent increase in share price can be largely attributed to the recent full-year results issued by Accesso. Revenues of $56.1m exceeded revised projections for 2020 by 3%. This increase in revenue was in the face of multiple worldwide lockdowns. This gives me huge confidence in the company’s direction for 2021.

The firm also announced a stronger liquidity position, with a rise in net cash to $29.7m. This was also backed up by a new three-year debt facility, which will provide $18m of liquidity. This gives the company a strong cash base moving forward.

Most importantly, as lockdown restrictions are lifted, people will want to visit theme parks again. The guest experience industry will thrive as people are allowed to visit their favourite attractions freely again. Accesso’s business model is built on this freedom and will profit directly from this reopening.

Bear case for the share price

The fact that the Accesso Technology share price had been falling since 2018 — before the pandemic shut down the attractions industry — does worry me.

The company was a classic example of an overinflated growth share, I feel. It offered a new, exciting technology that investors flocked to, inflating the price/earnings ratio to 70 at one point. This came at the cost of neglecting some of the shaky fundamentals that began to present themselves in the 2018 annual report. By 2019, cash issues led to the Accesso bubble bursting, sending share prices tumbling. If shaky management happened once, who’s to say it won’t happen again?

There’s also the problem that the pandemic still exists. Although vaccines are being rolled out, there are some concerns about the AstraZeneca vaccine’s safety that have impacted the rollout in some countries. And distribution globally for all vaccines remains patchy. This could halt the opening of the public attractions that drive Accesso’s business.

My Verdict

But I believe the Accesso Technology share price will continue to rise throughout 2021 as much of its business reopens, even if not as fast as it has done. The firm has also strengthened its balance sheet throughout 2020, learning from previous mistakes. There are still risks to consider, but I think the worst is behind this company. Therefore, I could see this stock being a solid addition to my portfolio.

The post Will the Accesso Technology share price keep climbing? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Dylan Hood owns AstraZeneca shares. The Motley Fool UK has recommended Accesso Technology. 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.

But the airline sector is notoriously cyclical. The shares were down by another 8% at the time of writing on Monday, after management warned that this year’s half-year loss would rise to £275m, from £18m last year.

Is this the wrong time to be buying airline shares? Or is easyJet a contrarian buy for investors with a long-term view?

What’s gone wrong?

Although it’s normal for easyJet (and others) to make a loss during the quieter period from October to March, figures released by the firm today suggest to me that conditions may be tougher this year.

The company said that although total revenue is expected to have risen by 7.3% to £2,340m during the six months to 31 March, revenue per seat is expected to have fallen by 7.4% while costs have risen.

Unsurprisingly, easyJet says that “many unanswered questions surrounding Brexit” have resulted in weaker customer demand and softer ticket yields.

The figures weren’t a disaster. But management said that “our outlook for H2 is now more cautious”. I suspect City analysts will trim their full-year forecasts for the airline after today’s news.

However, shareholders should take comfort from the group’s healthy finances and modest valuation. The stock now trades on about 9 times forecast earnings, with a 5.3% dividend yield. I think easyJet remains safe to hold and could be worth considering as a contrarian buy.

I was wrong about this

Unfortunately I was wrong to be bullish about ticketing and virtual queueing technology firm Accesso Technology Group (LSE: ACSO) last year.

Shares in this business — which sells virtual queueing systems for theme parks and ticketing technology — have fallen by about 70% since last September. It’s a dramatic reversal for a company that was previously seen as a stunning success story.

Accesso’s shares started to fall in October last year, after the group’s half-year results showed that pre-tax profit fell by 12.5% to just $1.4m, despite sales growth of 17%.

The shares plunged again in February this year after the company said it had spent $1.7m on an acquisition opportunity before deciding not to proceed. The board said it was now going to carry out “a review of the Group’s investment priorities” but didn’t explain what this meant.

Last week Accesso published its full-year figures for 2018. These showed that operating profit fell by 37.6% to $6.3m last year, while net cash fell from $12.5m to just $0.5m. Chief executive Paul Noland also warned that the firm had decided to increase investment in new products, suggesting that more cash will be required this year.

Will Accesso bounce back?

This firm has some big contracts for its original virtual queueing products and it seems to be a market leader in this field. However, Accesso has now made so many acquisitions that I’m not sure how fast the underlying business is really growing.

The group isn’t very profitable either, with an operating margin of just 5.3% last year.

The overall picture looks complex and uncertain to me. Although this firm has some good products, I’m not convinced it’s a great business to invest in. I plan to avoid the shares for now.

The post Is the easyJet share price the bargain of the year? appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. 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.

That’s why, in addition to building up my cash reserves, I’ve started drawing up a list of ‘expensive’ looking businesses I might just buy a slice of if they were to come on sale in a general market meltdown. Here are just three I’ve got my eye on.

Not cheap enough…yet

£700m cap ticketing and virtual queuing solution firm Accesso Technology (LSE: ACSO) has thoroughly earned its market darling status. Had you bought the shares five years ago and learned to sit on your hands, the value of our capital would have grown by 300%. 

Given the growth opportunities available — such as providing solutions for music concerts and sporting events, in addition to building on its established presence at many tourist attractions — I still think the company warrants attention from growth investors. Last week’s announcement of a strategic partnership with Groupon is yet another positive development. 

Nevertheless, all this promise comes at a price. On 46 times earnings, it could be argued that the company still looks priced to perfection, even if this valuation is set to become far less punchy next year if analyst targets are hit. 

Having looked at the business back in June, challenger law firm Keystone Law (LSE: KEYS) continues to grab my attention. I’m not alone. Even after taking into account the market’s recent wobble, the shares are still worth twice what they were when it listed on AIM in November last year. 

Keystone continues to grow at a rapid pace, so much so that it’s already smashing its own earnings estimates. Revenue rose just under 30% in the six months to the end of July with profit before tax soaring 40.3% to £2.3m. As evidence of its growing profile, the £120m cap also increased its number of lawyers by more than 50% to 31 over the reporting period and continued investing in its IT platform. 

A forecast price-to-earnings (P/E) of 33 is too hot for me in the current political and economic climate, but with first mover advantage, the defensive qualities of its work, and CEO James Knight describing the UK legal services sector as “ripe for disruption“, I’m keen as mustard to add the company to my portfolio. 

Doubled in value

Fryer management firm Filta Group (LSE: FLTA) is certainly the least glamorous of the trio, not that you’d know by the performance of its stock.

Since coming to the market in 2016, the Rugby-based business has more than doubled in value — further evidence that backing market minnows can seriously improve your wealth, so long as you can accept greater volatility and are fortunate/skilled enough to get in early.

It’s not hard to see why growth aficionados have warmed to it. Last month’s half-year results revealed a 22% rise in both revenues (£6.6m) and pre-tax profit (£1m). Currently expanding into Canada and Germany at a fair clip, Filta added 10 new franchises and 28 mobile filtration units in the period, bringing the total in operation to 192 and 422 respectively.

Right now, the stock is trading on 28 times earnings for the current year — too punchy for my liking. That said, a general market sell-off could be just the ticket to get me involved.

The post 3 quality growth stocks I’d consider buying if the market crashes appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. 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.

The two stocks I’m looking at today have both delivered potentially life-changing gains for early investors, and are still growing fast.

My first company has risen in value by more than 2,900% since its flotation in 2002 and by 51% over the last year. In contrast, the FTSE 100 has risen by just 40% since 2002 and has remained flat over the last year.

The company in question is Accesso Technology Group (LSE: ACSO). This firm started out by producing queue management systems for theme parks, so that customers would not have to stand in line for hours on popular rides.

The product range has expanded and now includes systems used at ski resorts and ticketing solutions for sports events and concerts. Accesso is also developing wearable products for use in the healthcare sector, and expanding into the hotel business.

Still growing fast

Growth has been driven by a mix of organic expansion and acquisitions. Today’s half-year results suggest that the company’s momentum remains strong.

Sales rose by 16.7% to $54.4m during the six months to 31 March, while adjusted operating profit rose by 68% to $11m.

Admittedly, this profit figure is flattered by excluding all acquisition-related expenses and non-cash charges. But even if we include cash expenses relating to past acquisitions, my sums suggest underlying operating profit rose from 72% from $5.4m to $9.3m.

Too late to buy?

Accesso Technology’s share price of 2,650p puts the stock on a 2018 forecast price/earnings ratio of 47. It would be easy to view this market-leading business as fully-priced, but earnings are expected to rise by 34% over the next year, reducing the 2019 forecast P/E to 35.

I think further gains are possible. If I was a shareholder I would certainly sit tight after today’s results.

Simple done well

My next stock is a great example of how a simple concept, executed very well, can be a great investment.

Patisserie Holdings (LSE: CAKE) isn’t very high tech compared to Accesso Technology. But the company — which owns café group Patisserie Valerie — has grown from eight branches in 2006 to more than 200 today. Since its flotation in 2014, profits have doubled and the share price has risen by 125%.

High profit margins and strong cash generation mean that the group has funded this expansion without needing much debt. Indeed, Patisserie Holdings’ free cash flow is so strong that the group’s net cash balance has risen from £6.1m in 2015 to £28.8m at the end of March 2018, despite regular store openings.

Growth + income

I can see two opportunities here for investors. The first is that the expansion of the Patisserie Valerie chain will be complemented by another big success. The company already operates a number of other bakery brands, but could also branch out through acquisition.

The other possibility is that management will be content to focus on maximising the profitability of its existing business. As expansion slows, the amount of cash available for dividends should rise sharply. This could make the stock an attractive income option, rather like some pub stocks.

In either case, I think Patisserie Holdings looks fairly valued on a 2018 forecast P/E of 24, falling to a P/E of 22 for 2019. I’d hold at current levels, and buy on the dips.

The post Retire wealthy: Two stunning growth stocks that are absolutely smashing the FTSE 100 appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Patisserie Holdings. 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.

Taking today’s action into account, the shares have climbed a smidgen under 1,000% since July 2015, underlining the potential for a single business to completely transform a portfolio’s performance and, in doing so, the wealth of those lucky enough to be invested in it.

Just the start?

This morning’s interim results were predictably excellent. Post-tax profit hit $166.3m for the six months to the end of June — up 17% from the $142.7m achieved over the same period in 2017. Income rose by the same percentage from $177.5m to $205.2m with 65% of this from realised gains. Cash generation soared 61% to $299m with the company’s total assets also climbing 37% in value to $1.64bn by the end of the period.  

While this kind of growth can’t continue indefinitely, I wouldn’t be surprised if Burford — thanks to its status as global leader in what can still be regarded as a niche market — replicated numbers like this for a while yet. Indeed, Chairman Sir Peter Middleton reflected that the company “continues to set the pace for a growing industry.” And CEO Christopher Bogart added that the commitment of more than half a billion dollars to new investments over the traditionally slow interim period fills management with “excitement” on Burford’s potential. While most definitely not a stock for income seekers, the 20% increase in the interim dividend to 3.67¢ only serves to emphasise this confidence.  

Clearly, these superb figures coupled with the great outlook means that buying a slice of Burford’s success is no longer cheap. On a forecast price-to-earnings (P/E) ratio of 26, the stock is now looking pretty dear compared to its industry peer group. With sky-high operating margins and increasing returns on the capital it invests, however, one might argue that that the quality on offer deserves such a valuation. 

Still rising

Burford isn’t the only stock that’s defying gravity. AIM-listed premier technology solutions provider Accesso Technology (LSE: ACSO) is another example of just how quickly a company’s value can shoot upwards. Three years ago, its share price was a little above the 500p mark. Today it stands at 2770p.

Like Burford, further gains seem likely. May’s pre-AGM trading update highlighted a “strong start” to 2018 thanks in part to an extension to an existing deal with global theme park operator Ceder Fair Entertainment.

Positively, Accesso — led by relatively new CEO Paul Noland — is not resting on its laurels. In addition to rubber-stamping a new contract with Detroit-based Henry Ford Health System (marking the company’s first foray into the healthcare industry), it’s also attempting to push its Ingresso ticketing distribution system in the US. Elsewhere, the company’s ShoWare solution continues to be popular, with the mid-cap overseeing ticketing for the opening ceremony of the Special Olympics USA Games earlier this month.

Again, all this comes at a price. Changing hands for a seriously steep 46 times projected earnings, Accesso’s stock is even more expensive than that of Burford. While I don’t doubt that growth will continue and its valuation will eventually surpass the £1bn mark, prospective investors may wish to consider waiting for a general market sell-off before joining the queue for its stock.

The post This top growth stock has now 10-bagged in just three years appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. 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.

To put this in context, the FTSE 100 has fallen by 2.5% over the same period.

That’s no disaster, but it’s clear that investors who’ve focused on identifying good quality growth stocks have seen the value of their holdings crush the wider market. Today I’m asking whether further gains are likely from these tech growth stocks.

A booming market

The market cap of Dublin-based video games services specialist Keywords Studios (LSE: KWS) has risen to almost £1bn over the last year, as the group’s share price has doubled. Today Keywords published full-year results, showing that revenue rose by 57% to €151.4m last year, while adjusted pre-tax profit was 55% higher at €23m.

This business provides a range of specialist services that video games producers can’t do without. The firm’s origins lie in providing localisation services, such as translation and voiceovers in different languages. It’s expanded with a string of acquisitions and now also offers functional testing, artwork, engineering and music-related services.

The company’s stated aim is to consolidate the video game services sector, which is currently highly fragmented. So far progress has been good.

Should you buy this stock today?

Before deciding whether to award Keywords Studios a buy rating, I want to consider how profitable this business is. Last year saw the group’s operating margin fall from 11.9% to 10.9%. From what I can tell, this decline is partly down to the $66.4m acquisition of testing group VMC last year.

These margins aren’t outstanding but are expected to improve as acquisitions bed-in. And analysts expect the group’s continued growth to drive earnings up by 48% to €0.46 per share this year. I calculate that this gives a price/earnings growth ratio of 1.2 for the year ahead.

That’s a little higher than the PEG ratio of 1 I’d look for in a growth stock. In my view, Keywords Studios is fairly priced at current levels. I’d view any dips as a buying opportunity.

Beat the queues

Shareholders of Accesso Technology Group (LSE: ACSO) have enjoyed a 130% share price gain over the last two years. This company makes virtual queuing systems used in theme parks and at other major attractions. If you’ve used them, you’ll know why they’re so popular — you can avoid spending hours in slow-moving queues.

However, the company isn’t stopping there. Solutions now include ticket sales, access control and support for personalised services such as promotions, food ordering and much more.

The firm hopes that its technology base will allow it to expand into other sectors. Accesso recently announced a trial project with a US hospital group to provide features such as concierge services, food and care preferences, patient communication and smartphone bill payments.

Fully priced?

Shares in this fast-growing firm have always looked expensive by conventional measures. But adjusted earnings are expected to increase by about 32% in both 2018 and 2019. This gives the stock a 2018 price/earnings growth ratio of just 1.7.

This suggests to me that the stock is fully priced but not necessarily expensive. As with Keywords Studios, I’d continue holding Accesso Technology and would consider buying more on any dips.

The post These monster growth stocks are crushing the FTSE 100 appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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.

Second profit warning

The profit warning was the second in the space of just a few months for Micro Focus. Back in January, when the group released interim results, it advised that sales were likely to fall between 2% to 4% for the year ending 31 October. However, this week’s trading update revealed that the year-on-year revenue decline has been “greater than anticipated” and that sales are now more likely to fall between 6% to 9%.

The company, which recently paid a huge $9bn for Hewlett Packard Enterprises’ (HPE) software business, blamed the revenue decline on issues relating to its new IT system implementation, poor performance of sales personnel due to integration/system issues and disruption of ex-HPE customer accounts. CEO Chris Hsu stepped down with immediate effect, with COO Stephen Murdoch taking on the top job.

It’s not often that you see an £8bn market cap FTSE 100 company lose half its value in the blink of an eye, but that’s what happened on Monday. The market is in an extremely unforgiving mood right now, with many profit warnings being punished harshly, especially when debt levels are high.  So is now the time to grab a bargain?

While Chairman Kevin Loosemore advised on Monday that the firm remains confident in its strategy, personally, I’m not a buyer of the shares at current levels. High debt ($4.2bn on the balance sheet at 31 October) from the HPE acquisition adds considerable risk to the investment case, and it sounds like the company is really struggling with the HPE acquisition. I’ll be sitting on the sidelines for now, waiting to see if Micro Focus can turn things around.

Stronger momentum

Another tech stock I won’t be buying is Accesso Technology (LSE: ACSO), which designs virtual queuing systems for amusement parks and other similar attractions. Operating in 27 countries around the world, Accesso’s solutions drive increased revenue for attraction operators while also enhancing the guest experience.

Unlike Micro Focus, Accesso is generating some pretty strong growth right now. Preliminary results this released this morning showed a 30% rise in revenue to $133.4m, a 22% climb in adjusted operating profit, and a 10% increase in adjusted earnings per share at 56.7 cents. Chairman Tom Burnet was bullish in his outlook, commenting: “I am excited by where we are as an organisation, and I see enormous growth opportunities in our future.”

While the growth story here looks exciting, the valuation of the stock just looks a little too high for my liking at present. The shares have risen around 25% over the last six months and with City analysts expecting earnings of 74 cents per share this year, the forward-looking P/E is now a high 43. With that in mind, Accesso is going on my watchlist for now. I could be interested in the stock if we see a pull-back.

The post Is Micro Focus a bargain after a 50% share price fall? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Micro Focus. 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.

I think that when I look at Accesso Technology Group (LSE: ACSO), the company that revolutionised the way people queue to get on rides at amusement parks and similar attractions. Physically standing in queues is wasted time, which is wasted money, and Accesso’s technology cuts through that. By carrying around a little doo-dah that virtually waits in the queues for you so you can turn up at the perfect time, you can be enjoying one ride while queuing for the next.

Accesso’s shares have soared more than 2,000% to today’s 2,310p, since its AIM flotation back in 2002, and Thursday’s full-year trading update suggests there could be a lot more to come.

Beating expectations

The company says that revenue should come in slightly ahead of expectations, and that EBITDA should be substantially ahead. Analysts currently have a 7% drop in earnings per share pencilled in for the year ended December 2017, and I can see that turning into an EPS rise now.

It was only ever expected to be a brief pause anyway, after annual EPS hikes of more than 30% for the past three years. And there’s a 57% boost predicted for 2018 as acquisitions start adding to the bottom line, followed by a further 30% in 2019.

And unlike many growth companies, Accesso doesn’t have to worry about net debt, which should be less than $6m. 

P/E multiples might look high, at 31 as far out as December 2019, but I don’t think that’s too stretching. Accesso is increasingly becoming the supplier of first choice in a business where first-mover advantage is significant, and it has what I see as a nice safety moat.

Lower-tech growth

High-tech firms are often seen as having the best growth prospects, but that ignores cracking growth stories like that of Victoria (LSE: VCP).

The company designs, manufactures and distributes floor coverings — that’s carpets, underlay, tiles and the like. And its business in the UK and Australia has been booming. With earnings per share growing rapidly since turning upward in 2014, the shares have risen by 1,800% in the past five years.

The announcement on Thursday of a capital markets day at its new Spanish acquisition, Keraben Grupo, didn’t say much about the company’s performance. But we did hear of “very good levels of trading in the important December quarter, which has continued into the New Year,” and that suggests April’s scheduled trading update should be good.

Impressive interims

Interim results released in November showed a 22% rise in EBITDA, with adjusted EPS up 26%. Debt rose too, by 46% to £98.6m, which is a characteristic of many companies growing by acquisition, and that’s something to watch for at full-year results time.

But at least the firm’s adjusted net debt/EBITDA ratio was falling, to 1.77 times from 1.93 times a year previously, so I expect a careful eye is being kept on it.

On fundamentals, we’re looking at relatively high P/E ratios. But I see a multiple of 16.5 by March 2020 as sustainable, and I think Victoria shares are still good value.

The post 2 multibagging growth stocks I’d buy today and hold for a decade appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Alan Oscroft has no position in any of the shares mentioned. 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.

Both companies have delivered gains of at least 200% over the last five years. Although these high-performing stocks aren’t cheap by conventional measures, I believe both have the potential to deliver further gains.

Sales up 30%

Gooch & Housego (LSE: GHH) makes “optical components and systems” used in a wide range of industries. These include telecoms, oil and gas, defence and life sciences. The group’s products are highly technical, but today’s accounts for the year to 30 September were refreshingly simple.

Sales rose by 30% to £112m last year, while pre-tax profit was 24.8% higher, at £12.6m. Adjusted earnings per share rose by 16% to 49.4p and the dividend climbed 13% to 10.2p.

Cash generation remained strong and the Somerset-based firm ended the year with net cash of £14.9m, 28% above last year’s figure of £11.7m.

The outlook for the current year is also positive. Gooch & Housego reported a record year-end order book of £72.1m, 36.5% higher than at the same point in 2016.

What do these figures tell us?

The stock has risen by nearly 4% today to 1,450p. This gives the shares a trailing P/E of 29, with a dividend yield of just 0.7%. Clearly this is a stock for growth investors.

One potential concern is that this business isn’t massively profitable. Last year’s operating margin was 11.8%, consistent with 2016. Today’s results appear to have been boosted by acquisitions, and I suspect the company may require further acquisitions to maintain an attractive growth rate.

However, the firm’s strategy of pursuing organic and acquisition-led growth appears to be working well at the moment. Analysts expect adjusted earnings to rise by a further 10-15% this year, putting the stock on a forecast P/E of around 25. At this level, I’d continue to rate the shares as a buy for long-term investors.

Everyone hates queuing

Queues for popular rides at theme parks can involve very long waits. This isn’t much fun, and so perhaps it’s not surprising that Accesso Technology Group (LSE: ACSO) has been so successful.

Shares in this firm — which makes virtual queuing systems that eliminate the need to stand in line — have risen by 535% over the last five years. Shareholders who bought the stock when it floated in 2002 have enjoyed an incredible 2,100% gain, if they’ve held onto their shares.

More to come

The Reading-based firm is increasingly the virtual queuing partner of choice for many large visitor attractions. Sales rose by 17.4% to $46.6m during the first half of this year, while adjusted operating profit climbed 30% to $6.5m. Adjusted earnings per share — excluding acquisition costs — rose by 40.8% to 22.25 cents during H1.

Accesso’s adjusted earnings are expected to be broadly flat this year, but in 2018 analysts expect to see the group’s earnings climb by a staggering 50% as recent acquisitions and contract wins kick in. This puts the stock on a forecast P/E of 39.

That may seem pricey, but it implies a price/earnings growth (PEG) ratio of just 1.1. That’s close to the threshold of 1 that legendary growth investor Jim Slater used to find cheap growth stocks.

In my view, investors should continue holding while the company is performing so well.

The post Two hot growth stocks I’d buy and hold for another decade appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the companies mentioned. The Motley Fool UK has recommended Gooch & Housego. 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.

While most early investors might be tempted to leave the party when they’re having the most fun, I still believe the stock is worth holding on to after this morning’s solid (rather than overwhelmingly spectacular) interim numbers. 

More growth ahead

Performing in line with management expectations, AIM-listed Accesso achieved revenues of £46.6m over the first six months of 2017 — equating to 17.4% top-line growth. As a result of acquisition-related expenses, however, pre-tax profit fell just over 30% to £1.6m. Net debt also increased by just under 90% to £23.8m.

Away from the headline numbers, the company confirmed that the integration of recent acquisitions — ticket distributor Ingresso and theme park software company TE2 — were proceeding to plan. Volumes for the former (whose customers include Amazon Tickets and GroupOn) rose 48% year-on-year over the period since it was purchased. Both companies are expected to “grow substantially” over the rest of the year and contribute meaningfully to Accesso’s profits thereafter.

Elsewhere, Accesso secured a number of contract wins for its Passport ticketing suite over H1, with new customers including the NFL Experience in Times Square and the CNN Studio Tour in Atlanta. A five-year deal with Australia’s largest theme park operator, Village Roadshow, was also announced last week. On top of this, it continues to bond with FTSE 100 constituent Merlin Entertainments with its technology now in operation at Alton Towers and the new Legoland park in Japan.

Arguably the most encouraging news, however, related to Accesso’s ongoing expansion into relatively untapped markets. The Reading-based business recently signed the largest ever contract for its Siriusware product with Experiencias Xcaret in Mexico. Its ShoWare solution — the focus of its efforts to grow in South America — also continues to experience positive business momentum. Ticket sales in Brazil over H1, for example, exceeded the figure achieved for the whole of 2016.

As far as its near-term outlook is concerned, Accesso confirmed that it remains on track to achieve its aims in 2017 while cautioning that full-year performance would, “as ever“, be more dependent on trading over the second half of the year.   

Priced to perfection?

Of course, its status as a premium growth company is reflected in the eye-watering valuation attached to its shares. Right now, these trade on 54 times forecast earnings (assuming expected growth of 50% in the current year is realised). Combine this with the fact that technology stocks have a tendency to be more volatile than most and it’s little wonder if many investors believe the stock is priced to perfection and destined to fall.

Despite this, I remain positive on Accesso. The aforementioned valuation is mitigated to an extent by the fact that — at 1.1 — the stock’s price-to-earnings growth (PEG) ratio remains low enough to still justify buying a slice of the company. This, combined with the push to diversify the firm across markets and geographies, makes me believe there could be further upside ahead.

The post This top growth stock turned £1k into £64k in just 10 years (and there should be more to come) appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers has no position in any of the shares mentioned. 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.