Advance!

This is a 6% increase at constant currency and was further supported by a gross margin improvement of 300 basis points to a whacking 63% for the six months to 30 June. Branded revenues climbed 10% to £30.1m, more than offsetting a dip in its OEM business unit, where sales fell 6% on weakness in the woundcare market.

The £688m AIM-listed stock is scoring in the US, where revenues rose 16% to £10.5m, or 27% at constant currency. Market share volume increased from 24% to 28%. Today’s interims included a 19% rise in adjusted profit before tax to £13.7m, a 16% rise in adjusted diluted earnings per share (EPS) to 5.01p, and a 29% rise in net cash, which leaves the company sitting on a healthy £71.1m.

Growth prospects

CEO Chris Meredith said full-year trading was in line with expectations and the board remained optimistic about the group’s organic growth prospects as the R&D pipeline grows and it seeks acquisition opportunities.

The stock is up a whopping 252% over five years and EPS are forecast to grow 6% this year, and 9% next. The downside is that its healthy growth prospects are in the price, with a forward valuation of 33 times earnings. Today, the board lifted the interim dividend share 20% to 0.42p. It yields just 0.4%, but with a healthy net cash balance and dividend cover of 8.4, further progression looks likely. My colleague Rupert Hargreaves certainly thinks so.

Low Energy

Advanced Medical Solutions hasn’t attracted a fraction of the attention of 88 Energy (LSE: 88E), a £64m oil exploration minnow which operates the majority of the vast 475,000 acre Project Icewine, targeting oil on the world-class North Slope of Alaska. This stock has attracted Alaskan-sized interest but, so far, investors have nothing to show for it.

The AIM-quoted group has been on a slippery slope since peaking at 2.81p on 4 June, following positive reports of progress at Project Icewine, in which it holds a 63% stake. However, subsequent news flow has disappointed as, later that month, it reported “no meaningful change” to the composition of gas and fluid returned from production testing at its number-two well.

88 in a state

Managing director Dave Wall is holding out hope saying the well “remains in its infancy and shows great promise.” But within days it had suspended work, with predictable consequences for the share price. 88 Energy now trades at just 1.20p.

As fellow-colleague Roland Head points out, with a net debt of $7.2m Icewine won’t go ahead unless it can draw in a new partner. Management is now pursuing its Western Blocks project through wholly-owned subsidiary Captivate Energy Alaska, which has a potential 400m barrels of oil and a 25-30% geological chance of success.

I tip my hat to investors who can take a punt on oil explorers like this one. But I’ve seen too many dry up to join their number. I prefer the strong, solid prospects on offer from Advanced Medical Solutions.

The post This growth star is completely thrashing the 88 Energy share price appeared first on The Twelfth Magpie.

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harveyj has no position in any of the shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions. 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.

Beating the market 

Brooks has been punching above its weight in recent years. The firm has expanded rapidly, building on its physical presence around the UK to attract high net worth clients to its award-winning offering. 

According to a trading update issued by the firm today, discretion funds under management totalled £11.66bn at the end of March, a decrease of 0.7% over the quarter. While the decline is disappointing, it’s mostly due to market volatility during the period. Indeed, according to the update, new business totalled £343m for the quarter. Investment performance, on the other hand, detracted £422m from total funds under management. For some comparison, over the period the MSCI WMA Private Investor Balanced Index — a closely watched benchmark for private investor returns — decreased by 4.5%. 

Commenting on these numbers, CEO Caroline Connellan declared that the firm’s performance during the period demonstrated the “value of good active management in difficult markets.” 

As Brooks continues to exhibit “good active management” I believe that the company will continue to produce outsized returns for investors.

Over the past decade, the stock has returned 23.8% per annum. At this rate, a £1,000 investment made 10 years ago would be worth £9,500 today. Earnings growth has been the primary driver behind these gains. If the firm hits City growth targets for the next two years, it will have managed to grow earnings per share 100% in just five years. 

What’s more, over the past six years, the dividend per share has risen at a compound annual rate of 17.3%, and there’s still plenty of room for payout growth. The distribution is covered 2.3 times by earnings per share. 

And despite all of the above, shares in Brooks still look cheap. The stock is currently trading at a forward P/E of 13.8 and supports a yield of 3.1%.

Cash cow 

Another small-cap that I believe can produce significant gains for investors is Advanced Medical Solutions (LSE: AMS). 

A manufacturer of wound care solutions, Advanced’s growth over the past six years has been nothing short of outstanding. Revenues have doubled over this period, and so has net profit. 

But what I really like about this business is its cash generation. Since inception, the group has been a cash cow, and today, the firm has a net cash balance of around £63m, just under 10% of its market capitalisation.

As the business does not require much in capital spending, the company has lots of options regarding what it can do with these funds, including boosting the dividend payout to investors. While the shares only yield 0.4% today, the payout is covered nine times by earnings per share and, according to my figures, the firm has enough cash to maintain its payout for more than 10 years at current rates if profits fall to zero. Management is also “actively reviewing M&A opportunities that will further increase value for shareholders” according to Advanced’s latest full-year results release.

The post 2 inflation-busting dividend growth stocks to help you make a million appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Advanced Medical Solutions. 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.

However, if the world economy experiences a difficult period, those same shares could produce disappointing returns. As such, buying companies with lower positive correlation to the macroeconomic outlook could be a shrewd move. Here are two prime examples which could be worth a closer look.

Improving performance

Reporting on Wednesday was surgical and advanced wound care specialist Advanced Medical Solutions (LSE: AMS). The company reported full-year results which showed a rise in revenue of 12% at constant currency, with it reaching £96.9m. Branded revenues were up by 16%, while there was also strong performance in OEM revenues. They increased by 8% and contributed to a rise in adjusted diluted earnings per share of 23%.

Encouragingly, the performance of the company’s LiquiBand topical tissue adhesives was strong. Revenues increased by 30%, while in the US they were up by 47%. This could prove to be a key market for the business and it may be a positive catalyst on its overall financial performance.

Advanced Medical Solutions continues to consider acquisitions, while also investing heavily in R&D. This twin approach to growth could lead to improving financial performance, while also creating a more dominant business in a range of markets. Therefore, with the stock forecast to post a rise in its bottom line of 8% in each of the next two years, it appears to be a sound buy for the long term.

Turnaround potential

Also offering growth potential within the healthcare space is pharmaceutical company AstraZeneca (LSE: AZN). The business has endured a hugely challenging period which has seen its financial performance come under pressure. The so-called ‘patent cliff’ has been a disaster for the company, with its bottom line in the current year expected to be around half of what it was in 2013.

However, over the last five years the company has been able to invest in its pipeline. This is yet to have a clear impact on its profitability, but it has helped to diversity its operations and create new areas of future growth. In fact, the strategy is set to bear fruit next year when AstraZeneca is expected to deliver a rise in its bottom line of 12%.

After such a challenging period, investor sentiment is understandably weak. The stock trades on a price-to-earnings growth (PEG) ratio of just 1.4. For such a diverse and financially sound business which offers significant defensive qualities, that seems to be a highly attractive price to pay. As such, it could be worth buying now for the long term.

The post 2 top value shares I’d buy right now appeared first on The Twelfth Magpie.

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Peter Stephens owns shares in AstraZeneca and Advanced Medical Solutions. The Motley Fool UK has recommended Advanced Medical Solutions and AstraZeneca. 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.

Advanced thinking

This morning’s results show Advanced Medical Solutions revenues up an impressive 17% to £45.9m, or 8% at constant currency. Growth is particularly strong in the US, where revenues rose 52% to £9.1m, or 32% at constant currency. Sales of its LiquiBand topical tissue adhesives, RESORBA branded products and antimicrobial dressings were strong with CEO Chris Meredith saying the group’s brands have made been boosted by the firm’s marketing initiatives: “We remain optimistic about our organic growth prospects and our innovative R&D pipeline and continue to closely monitor and evaluate acquisition opportunities to capitalise on our strong financial and strategic position.” 

Advanced Medical Solutions has an impressive earnings per share (EPS) growth history given its volatile sector, with five years of consecutive growth and a forecast 10% in 2017 and 11% in 2018. Unsurprisingly the stock isn’t cheap, trading at a forecast 37.9 times earnings, but the keyword here is pipeline, and on this front it has certainly done better than ailing pharmaceuticals giant GlaxoSmithKline (LSE: GSK).

SmithKline and fall

It is perhaps invidious to compare a £632m growth stock with a £73bn pharma behemoth, and of course nobody expects Glaxo to four-bag, like, ever. However, it would be nice if the share price had shown a little more pep – today’s price of 1,490p is 15% below its 2013 high of 1,760p.

Turning around this tanker is taking time, although it still managed to generated second-quarter sales of £7.3bn, up 3% at constant exchange rates, thanks to strength in key respiratory and HIV franchises.  However, this hides the wealth of problems facing new CEO Emma Walmsley, who is driving through a strategic overhaul in a bid to strengthen the pipeline, boost cash flow and reintroduce Glaxo investors to the joys of dividend progression.

Let the cash flow

They will have to wait, with Glaxo freezing its dividend at 80p in 2014, 2015 and 2016, and City analysts expecting a slight cut to 79.95p in 2017 and 2018. That’s what happens when cover slips to just 1.3 and with Walmsley tying future progression to an improved free cash flow coverage ratio, investors may have to be even more patient. But it still yields a juicy 5.3%, and today’s forecast valuation of 13.4 times earnings looks low by its standards.

Walmsley has revised down full-year EPS guidance from 5%-7% to 3%-5% at constant exchange rates. But she is tackling the turnaround with relish, halting more than 30 pre-clinical and clinical programmes, focusing capital on the key areas of respiratory and HIV/infectious diseases, and offloading 130 smaller consumer healthcare and vaccine businesses, on top of Horlicks. Advanced Medical Solutions should continue to deliver the share price growth, but Glaxo should remain a long-term income winner. They could balance each other nicely.

The post This four-bagger should continue to thrash GlaxoSmithKline plc appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Advanced Medical Solutions. 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.

Since 2012, the company’s revenue has grown from £52.6m to £82.6m and pre-tax profit has risen from £10.8m to £19.1m. Meanwhile, earnings per share have jumped from 5.4p to 7.8p. City analysts are expecting further growth in the years ahead. The company is projected to report revenue growth around 10% to £92.4m for 2017 and then further growth to £103m for 2018. A pre-tax profit of £25.5m is expected for 2018, up 150% from 2012’s figure of £10.8m. 

In a trading update issued today, management confirmed the company is on track to hit these targets as Advanced Medical grows through both acquisitions and organically.

Worth paying the price? 

Unfortunately, thanks to the company’s defensive nature and impressive growth, its shares are quite expensive. 

Based on current city forecasts shares in the company trade at a forward P/E of 33.9 and earnings per share growth of only 10% does little to justify this lofty valuation. The dividend payout of 1p per share for a yield of 0.3% is hardly a reason to buy either. 

Still, the one redeeming feature is the company’s hefty cash balance. At the end of 2016, Advanced Medical reported a net cash balance of £51.1m, up 49% year-on-year and equal to just under 10% of the company’s current £600m market capitalisation. Over the past five years, shares in the company have returned 330% excluding dividends.

Overall, if you’re looking for a highly defensive growth stock with more cash than it knows what to do with, and a record of producing returns for shareholders, Advanced Medical seems to be a great investment. Even though the shares might seem expensive, as Warren Buffett once said, “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.“

Explosive growth rate

Quartix Holdings (LSE: QTX) looks to be an early stage Advanced Medical. Over the past five years, the company’s revenue has started to pick up, rising from £15.3m to £23.3m for 2016. Pre-tax profit has increased by £1.5m to £6.5m and earnings per share have grown from 8.5p to 12.9p. Pre-tax profit is expected to hit £6.7m this year before rising to £7.7m for 2018, and earnings per share are projected to increase to 13.5p over the same period. 

According to a trading update issued by the company this week, management believes that Quartix is on track to hit City forecasts for growth this year with new installations of its vehicle tracking systems growing by 40% during the six months to 30 June. With over 14,300 vehicles already using the group’s tracking systems, there is clearly a huge market out there for the tech. 

As management continues to pursue growth opportunities, investors should reap the rewards from further growth. Shares in Quatrix currently trade at a forward P/E of 32.6.

The post Two high-growth small-caps I’d buy today appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions and Quartix. 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.

However, not all AIM stocks are bad. Some companies have achieved highly impressive returns for investors, and tarring them with the same brush as AIM’s other rotten eggs, is unfair. Here are three such opportunities. 

Growth through acquisitions 

Building products group Epwin Group (LSE: EPWN) may not be the most glamorous business, but it is a cash cow. For 2015 the firm generated £22m in cash from operations and for 2016, based on first-half figures which show cash generation up more than 100% year-on-year, it looks as if the firm is set to beat that number for full-year 2016. With a market capitalisation of £150m, cash generation from operations is highly attractive. 

Management is reinvesting Epwin’s cash for growth, as well as paying out around 50% of earnings to investors. Over the past four full financial years, Epwin’s shareholder equity has nearly tripled as bolt-on acquisitions have helped grow the business. 

At the time of writing, the shares support a dividend yield of 5.8% and the payout is covered twice by earnings per share. For 2016, City analysts expect the company to report earnings growth of 23% followed by 6% for 2017. Despite these impressive growth and income numbers, shares in Epwin only trade at a forward P/E of 8.2. 

Defensive business 

Advanced Medical Solutions (LSE: AMS) is one of my favourite AIM companies. 

Since the beginning of 2013, shares in AMS have nearly tripled as the company has gone from strength to strength. Pre-tax profit has doubled in the past five years, and there’s little chance the company will go out of business anytime soon as its medical products are in high demand. Even though growth has now slowed, investors are still willing to pay a premium to get their hands on shares in AMS. The shares currently trade at a forward P/E of 27.2 and City analysts have pencilled-in an earnings per share rise of 3% for 2017. 

At the end of 2016, AMS reported a cash balance of £51m, up 49% year-on-year. For a company with a market capitalisation of £513m, this cash pile is extremely attractive. 

Housing demand 

Despite the shortage of affordable housing in the UK, shares in Telford Homes (LSE: TEF) remain undervalued. Unfortunately, for the year ending 31 March, City analysts are expecting the company to report a decline of 3% in earnings per share, but for the next fiscal year, earnings growth of 29% is pencilled-in. If the company hits this target, it will have raised earnings tenfold in five years. However, the market hasn’t recognised Telford’s rise, and the company’s shares look cheap compared to both historic and forward growth. Shares in Telford are currently trading at a forward P/E of 9.7 and support a dividend yield of 4.4%. 

The post 3 ‘hidden’ FTSE AIM All-Share Index growth stocks appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended Advanced Medical Solutions. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Big market, slow growth

The Parsortix system is the specialist MedTech company’s flagship product that uses patented micro-fluidic technology to capture and harvest circulating tumour cells from blood. Angle believes that the addressable market for this kind of product could be worth as much as £250m, although the company didn’t reveal any details about the customers or the revenue derived from the initial sales reported today. Angle expects revenue from the medical research tool to be initially modest as it grows over time.

City analysts believe that the Parsortix system could generate sales of £340,000 for the year to 30 April 2016, which works out at around four-to-five months of sales. Next year, sales are expected to pick up and analysts are predicting Angle will generate revenues of £2.2m for the full-year. However, even though sales of Angle’s Parsortix system are set to take off over the next 12-to-24 months, analysts expect profit to remain elusive for the time being. 

So for now Angle remains a speculative play. Until the company is able to show that it can generate a consistent profit, its shares aren’t suitable for risk-averse investors. 

Another strong performance

In what’s become something of a regular occurrence for Advanced Medical Solutions (LSE: AMS), the company issued another upbeat trading update today, reporting that it was on track to meet the market’s expectations for revenue and profitability for full-year 2015.

What’s more, Advanced Medical said today that the regulatory approvals received this year for its new antimicrobial foams, together with the clearance to market its sutures in the US, are expected to contribute to growth in 2016.

Commenting on today’s trading update, Chris Meredith, CEO of AMS, said:

“The Group continues to deliver strong organic growth supported by a pipeline of new products coming out of our Research and Development teams. We are confident that AMS is very well positioned to deliver further growth.”

If you’re looking for an investment to revolutionise your portfolio’s returns, Advanced Medical could be an excellent choice. The company has consistently outperformed since 2009. Net profit has grown at a compound annual rate (CAGR) of 36% since 2009, and reported earnings per share have expanded at a CAGR of 27.7%. Over the same period, the company’s shares have gained 450%, outperforming every major stock index by several hundred percentage points. 

That said, Advanced Medical’s shares don’t come cheap. They’re currently trading at a forward P/E of 26.9, falling to 25.3 for 2016 and support a dividend yield of 0.4%. Still, sometimes it’s worth paying extra for quality. 

The bottom line

Based on my analysis, Advanced Medical looks attractive after today’s update, but risk-adverse investors should avoid Angle. 

The post Is It Time To Buy Angle plc & Advanced Medical Solutions Group plc? appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.