However, its future could be much more appealing than its past. The bank is expected to report improving earnings figures over the medium term, and this has the potential to boost its share price performance. But it’s not the only financial services stock that could be worth buying right now.

Strong performance

Reporting on Friday was institutional securities company Cenkos (LSE: CNKS). It released full-year results for the 2017 financial year which included a rise in revenue of 36%, as well as a profit after tax on continuing operations rise of 155%. This has enabled it to increase dividends per share from 6p to 9p, which means that it could offer significant income opportunities. In fact, with a dividend yield of 8.3%, it could deliver inflation-beating performance over the long run.

However, it is the company’s growth potential which may act as the biggest catalyst on its share price. It is due to increase earnings by 164% in the current year. And with it trading on a price-to-earnings growth (PEG) ratio of just 0.1, it seems to offer significant upside potential.

Certainly, the markets in which Cenkos operates are experiencing a period of significant volatility. This could create downward pressure on its share price in the near term. But in the long run the company appears to offer a potent mix of growth, value and income potential.

Possible turnaround

RBS also has a bright future according to its forecasts. It is expected to post a rise in earnings of 12% in the next financial year, which could show investors that the business is gradually moving on from the legacy issues it has faced in recent years.

Despite its impressive growth outlook, the stock has a PEG ratio of just 0.8. This suggests that it offers growth at a reasonable price and could generate capital growth. Alongside this, it has a forecast dividend yield of 5.2% for the next financial year. This could make it one of the highest-yielding stocks in the FTSE 100, while dividends are due to be covered 2.1 times by profit. This suggests that they are highly affordable and could increase over the medium term without hurting the financial strength of the business.

With interest rate rises expected over the coming years, RBS could enjoy a more positive trading environment. The potential for an improved net interest margin could lead to greater profitability, as well as a higher valuation. Therefore, now could be the perfect time to buy the stock, ahead of what may prove to be a strong turnaround.  

The post Royal Bank of Scotland Group plc isn’t the only growth stock I’d consider buying appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Royal Bank of Scotland Group. 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.

Shares in financial adviser Lighthouse Group (LSE: LGT) have fallen by over 10% today after AFH Financial stated that it does not intend to make an offer for the company. While this may be viewed as disappointing for investors in Lighthouse, since it means that its shares could fall back to the level at which they were trading prior to AFH’s initial approach, Lighthouse states that it is continuing to perform in-line with expectations.

Looking ahead, Lighthouse is forecast to increase its earnings by 32% in the current year, and by a further 22% next year. When combined with its price to earnings (P/E) ratio of 17.9, this rate of growth puts the company on a price to earnings growth (PEG) ratio of just 0.7, which indicates that capital gains are on the horizon. Clearly, Lighthouse is a relatively small and high risk play, but for less risk averse investors it could be worth a closer look.

Unfavourable mix

Also in the news today is Cenkos Securities (LSE: CNKS), with the stockbroking company reporting a fall in revenue and pretax profit for the 2015 financial year. The former declined by 14% in the 2015 financial year, while the latter slumped by 26% due in part to an unfavourable sales mix. While the total volume of funds raised by Cenkos increased versus the prior year, sales were hurt by a bias towards investment fund tap issues and larger average deal sizes.

The impact of this decline in profitability has been a reduction in dividends, with them being cut by 18% versus the previous year. And with the company’s shares being down by 10% today, it is clear that investor sentiment has come under a degree of pressure. As such, and while Cenkos could deliver improved performance, it seems to be a stock to watch rather than buy at the present time.

Maintaining momentum

Meanwhile, shares in BATM Advanced Communications (LSE: BVC) are also down today, falling by 4% following the release of a disappointing set of results for the 2015 financial year. Its pre-tax loss widened to $11.4m from $3.6m in the prior year, with higher financing costs being booked and a stronger US dollar also hurting its overall performance. In fact, the stronger greenback contributed $14.6m to the company’s fall in sales, and at constant currencies BATM posted a small rise in its top line.

Despite a disappointing 2015, BATM has a higher backlog now than at the same time last year and expects to maintain the momentum of last year across all of its divisions. And with BATM forecast to move into profitability in 2016, investor sentiment could pick up in the coming months and help to reverse the share price fall of 15% which has been recorded in the last six months. As such, for less risk averse investors BATM could be of interest.

The post Are Lighthouse Group plc, Cenkos Securities plc And BATM Advanced Communications Ltd ‘Buys’ After Today’s Updates? appeared first on The Twelfth Magpie.

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Peter Stephens 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.

So it is in the UK investment banking and advisory market right now. For a real-life example of such trend in action, look no further than gusher Cenkos Securities (LSE: CNKS). Compare the recent rise of this upstart to a dreadful year for top-tier bank, Barclays (LSE: BARC) (NYSE: BCS.US), and it’s easy to see how Cenkos makes for an attractive target for a competitor of pretty much any size bigger than itself.

A Simon Peter That’s Proving The Doubting Thomases Wrong

Last year, Cenkos posted interim profits of £23.5m – representing a 653% increase over the same period in the year before.

While impressive, many investors were a little weary of the results, since around half the company’s H114 revenue came from what looked like a one-time deal: the IPO of insurer AA. However, a round of mayhem in the financial sector mid-year, with Barclays, RBS and Lloyds getting slammed with big fines for mis-selling to their customers, compounded with a slow summer in equity issuances, meant that despite posting stellar profits and showing an increase of 164% in cash on its balance sheet, Cenkos was still trading for peanuts come the end of December. 

Right now, Cenkos is selling for around 5x earnings, despite having proven that it can play in the major leagues with much more established competitors.

With a market cap of £115m, there’s simply no better value publicly listed financial services firm on the UK market right now. Let’s look at some of the most compelling facts for the advisor being deeply undervalued:

• For a start, there’s that famous AA IPO, which pretty much every analyst in the City wrote off as being overpriced initially. Since June, however, the insurer has jumped 36% in value and it still looks cheap after paying off debt. Unbelievably, AA is starting to look like an enviable client.
• Cenkos has also had a number of wins recently fundraising for its other clients, further showing the strength of its distribution power. In the second half of the year, the advisor raised £424.9 million. Those placements will produce an estimated £20-£25m income for that period.
• Accounting only for the income derived from private placements conducted in the third quarter of 2014 (estimated at £15m), Cenkos is still trading at a valuation of less than 10x earnings for the period! On top of that are broking and advisory fees, which add up to another 20% on top at least. Contrast this scenario with rivals such as Numis, where the same multiple for the period is – at its most generous – in the 40s, and it’s easy to see the recent value on offer.

Cheap … But Hardly Just Chips

Barclays looks like a firm with distinctly average pools of talent in dire need of reinvigorating their lacklustre and heavily institutionalised investment banking operation. In the past year, Barclays has posted a 16% decline, wiping out all its shareholder’s 5-year gains and making the stock a 15% money-loser for the period. 

While Cenkos is up just 44% in the past 5 years, more than half of that has been earned in the past year alone. And the company is still a fraction of the price of any other comparable competitor!

Cenkos is exactly the kind of fountain head gushing from the spring with great management, a bulging client base and a healthy cash position that both firms need to look at to take part in what appears to be a return to exciting times for mid-cap stock issuance.

The post Cenkos Securities PLC Looks Like A Target For Barclays PLC appeared first on The Twelfth Magpie.

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Daniel Mark Harrison 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.