Today I’m going to look at two stocks which I believe could deliver market-beating gains over the coming years — potentially helping you to achieve seven-figure stock market wealth.

Powering up

The first company I want to look at is temporary power solutions provider Aggreko (LSE: AGK). This FTSE 250 stock has been out of favour since 2012, but now appears to be poised to return to growth.

The company’s business is split into two divisions. Rental Solutions provides short-term power, cooling and heating for short-term projects in developed markets. Examples include sporting fixtures and providing power following natural disasters, such as hurricanes.

The Power Solutions division focuses on providing long-term services to industrial and utility customers in emerging markets. Typical examples include remote mining and oil production sites. Increasing levels of activity in the mining and oil sectors are likely to be a positive for Aggreko.

Returning to growth

The group’s half-year results showed a 10% rise in revenue. Underlying operating profit rose by 8% to £76m and the average number of megawatts on hire rose slightly to 6,560MW.

Although the group’s earnings are still expected to fall by 9% this year, Aggreko is expected to report profit growth in 2019. Analysts are forecasting a 7% rise in earnings next year, accompanied by a modest dividend increase.

The stock’s forecast P/E of 17 and 3.1% yield may seem pretty average, but I think 2018 is likely to mark a turning point, after which profits should recover. For this reason, I believe the shares could be worth buying at current levels.

Homing in on big events

My second company is also involved in providing temporary facilities for big events. Arena Events Group (LSE: ARE) builds large temporary structures for major events. Examples include grandstands, marquees, seating and ice rinks.

Over the last year, the firm has worked at events including the Royal Wedding, Wimbledon and the Cheltenham Festival, where Arena built “the largest ever temporary structure”.

It doesn’t just operate in the UK. It’s also involved in events in Europe, North America and the Middle East. To speed up expansion, it’s hoovering up smaller rivals. So far this year management has made five acquisitions, including two overseas.

Risk vs opportunity

Companies that expand rapidly through acquisition can sometimes run into problems. But well-executed deals to acquire much smaller companies can often work well.

One thing that concerns me is that Arena only floated in July 2017. Since then, the company has already raised a further £19m by selling new shares, and increased its net borrowings to £17m. This suggests to me that the business is expanding very fast, or that it doesn’t generate much free cash flow.

Despite this concern, progress so far seems reasonable. Revenue rose by 23% to £54.9m during the first half of this year, while adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 52% to £3.5m.

However, rising costs hit the group’s half-year operating profit, which I estimate at just £0.8m on an underlying basis. That gives an operating margin of just 1.5%, which is a little slim for my liking.

The shares look reasonably valued on 15 times 2018 forecast earnings, with a 2.8% yield. This could be a good growth buy, but I’d like to see a longer track record before making a decision.

The post Two dividend-growth stocks that could help you retire with £1 million 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.

However, for long-term investors, there appears to be a buying opportunity on offer right now. With that in mind, here are two shares that could be worth buying for the long run.

Improving performance

Reporting on Wednesday was temporary physical structure, seating, ice rink and furniture provider Arena Events (LSE: ARE). The company enjoyed a relatively prosperous 2017, with its revenue increasing by 18% to £109.6m. This enabled adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) to rise by 25% to £10.6m, with the company’s return on capital employed surging to 8.3% from 4.2% in the previous year.

The business made significant progress during the 2017 financial year. It was able to deliver a number of major contracts which could have a positive impact on its financial figures in future, while the acquisition of Wernick seating and mass participation sports business could act as a positive catalyst on its performance.

Looking ahead, Arena Events is forecast to post a rise in its bottom line of 30% in the current year, followed by further growth of 25% next year. Despite this, it has a price-to-earnings growth (PEG) ratio of just 0.4, which suggests that it could offer a wide margin of safety. While its prospects could be viewed as relatively high risk due in part to its small size, it appears to have a sound business model and strong momentum. As such, buying it now could be a shrewd move.

Dependable growth

Also offering growth at a reasonable price is consumer goods company, Unilever (LSE: ULVR). It has delivered two consecutive years of double-digit growth in its bottom line, and is expected to post a rise in net profit of 5% this year and 10% in the following year. As such, it could be viewed as a relatively reliable growth stock which has a diverse business model that could perform well in more challenging trading conditions.

Since Unilever has focused on building its business in the developing world in the last decade, it now generates the majority of its sales from emerging markets. Given the longevity of growth which could be on offer in such regions, the stock appears to have a dependable growth outlook for the long run. Therefore, it could be worthy of a premium valuation due to what may prove to be a strong risk/reward ratio.

However, with Unilever trading on a PEG ratio of 1.9, it seems to offer significant upside potential. It could perform well even in volatile market conditions, with the recent fall in the FTSE 100 suggesting there may be a buying opportunity on offer.

The post 2 monster growth stocks at deep-value prices appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. 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.

Arena Events Group (LSE: ARE), which floated on AIM only in July this year, is one that I think is looking good. The company, which provides temporary structures, furnishings and the like for sporting, outdoor and leisure events, raised £59.3m in its IPO. That allowed it to get net debt down to £10.5m while leaving enough on the balance sheet “for future acquisitive growth“.

Revenue in the half reached £51.1m, up from £44.5m at the same stage last year, and gross margins look healthy after gross profit rose by 5% to £14.7m.

Cash looks good, with operational cash generation up from £2.8m in 2016 H1 to £7.4m, and the company was moved to post a maiden interim dividend of 0.45p per share — that’s a first-half yield of only 0.7% on the 61p shares, but it suggests confidence in the firm’s future dividend potential.

Solid contracts

Arena has managed the “successful delivery of multiple recurring contracts“, including Cheltenham Festival. It has extended its European Tour contract by four years, which should bring in up to £10m, and a new five-year contract with the US PGA is the “largest contract win” in its history.

The main outdoor event season is June to September, and the second half of the year has apparently started well and full-year expectations seem confident.

We really don’t have any meaningful financial ratios at this stage, but even without them, Arena Events really does strike me as one that could reward IPO investors well in the next few years.

Recovery on the cards

My second pick is Goals Soccer Centres (LSE: GOAL), a company that operates five-a-side football pitches. Goals has had a tough time, with three years of falling earnings (plus a further drop predicted for this year) sending the shares into tailspin — the price has lost 60% since a peak of 242p in early 2015, to 98p today.

But I reckon that could be all set to turn around nicely. 

One arm of of the firm’s recovery plans is to refurbish its UK offerings, and upgrading 27% of its clubs with five arenas or more has already seen football sales grow 5.1%. Smaller venues have not done so well, so the focus is on those larger ones (which constitute the majority anyway).

Go west!

The second arm is the launch of the brand in the USA. To that end, Goals has pulled off a 50:50 joint venture with City Football Group — that’s the business behind Manchester City and New York City football clubs, and it looks like a bit of a coup to me.

A handful of US clubs have already opened, and there’s some way to go yet — but we could easily be seeing some feedback into 2018’s bottom line, with an EPS rise of 15% forecast for that year.

This time we do have useful ratios, and we’re looking at a P/E of only a little over 11 on 2018 forecasts. If we really are past the worst and the mooted return to growth does come off, that could look very cheap.

The post 2 sparkling small-cap stocks that could make you rich appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
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Alan Oscroft has no position in any 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.