The last year or so has been decent for many London-listed companies. However, some lower down the market spectrum have absolutely shot the lights out. Here are two examples, both of which still look like great UK shares to buy now.

Growing at a fast clip

One business that’s been going great guns recently is Clipper Logistics (LSE: CLG). The self-styled ‘retail logistics expert’ and returns manager has benefitted from the explosion in e-commerce in recent years. Multiple UK lockdowns have further boosted trading (and the share price).

June’s update provided a snapshot of just how well things have been going. Revenue for the full year to the end of April is now expected to come in at £698m. That’s a 39% jump on the previous year, partly due to the company winning new contracts with Joules and JD Sports, among others.

In addition to this, CLG recently signed a three-year extension to its contract with ASOS to handle the latter’s returns on the continent.

Taking all this into account, it’s perhaps no surprise Clipper believes EBIT (earnings before tax and interest) for FY22 and FY23 will now be ahead of consensus estimates “by mid-single-digit percentages in both years.“

Right now, the stock trades on 29 times forecast earnings. That’s pretty high, especially as a rise in unemployment post-furlough could prove a setback for retailers and possibly Clipper. Margins, while improving, are also fairly low in this kind of work.

However, this valuation seems more reasonable when looking at the company’s growth strategy. In addition to building its presence in Europe, the £800m-cap plans to launch a B2B online marketplace in September. This will target buyers from the “highly fragmented” elderly care market. Should it prove successful, Clipper may consider expanding the platform into other sectors.

A rapidly reducing debt pile is another positive.

Lighting up the market

A second company whose share price has been soaring has been Luceco (LSE: LUCE). The company is a market leader in LED lighting, portable power products and wiring accessories. Brands include Luceco LED, BG Electrical and Masterplug.

Half-year results are due early next month. However, we already know from July’s update they’ll be decent. Back then, LUCE announced that demand for its products had been “stronger and broader than expected.“

As a result, it now expects to hit revenue of £108m for the first six months of 2021. Adjusted operating profit is likely to come in at £19m. Both numbers are slight improvements on previous guidance.

To round things off, Luceco said figures for the whole of 2021 would now be ahead of what analysts had been predicting. Indeed, CEO John Hornby expects “another year of record results.” No wonder the shares have been in such great form.

But how much is this in the price? Personally, I don’t think the valuation of 20 times earnings is excessive. As such, I’d feel comfortable adding Luceco to my list of UK shares to buy.

This isn’t to say it’ll be plain-sailing. Despite managing to protect margins so far, “industry-wide” cost inflation looks like being a headwind for a while. The home improvement boom will surely moderate at some point too.

Still, there’s a very secure dividend to compensate for any turbulence.

The post 2 ‘unstoppable’ UK shares to buy now appeared first on The Twelfth Magpie.

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• 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 recommended ASOS, Clipper Logistics, and Joules Group. 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.

Let’s look at three examples.

Growing at a fair clip

Last week’s record full-year results from logistics firm Clipper Logistics (LSE: CLG) were lapped up by the market and understandably so. 

New frontiers

Another company doing very well for investors is videogames developer Frontier Developments (LSE: FDEV). Last Friday’s update sent the share price to an all-time high and, again, it’s easy to see why.

Having met sales expectations so far in the financial year, Frontier now believes it will deliver revenue “within the top half of the current range of analyst projections” (between £83m and £95m). At least some of this will be generated from the slate of releases due between now and the end of May 2021. 

Jurassic World Evolution will hit the Nintendo Switch in November. Two other titles – Lemnis Gate and Struggling – are being launched under the Frontier’s new label for third-party publishing (Frontier Foundry). This part of the company forms a big part of its strategy over the next few years.

In addition to this, there will be updates to existing titles: Elite Dangerous, Planet Coaster, and Planet Zoo. 

Frontier’s shares now trade on an eye-watering 61 times earnings. That’s too high for me (even for a growth share) but it could be one to pick up on general market weakness. 

Hot stock

I’ve covered kettle safety control manufacturer Strix (LSE: KETL) quite a few times now. I can’t resist drawing attention to the small-cap once again. Since April, its shares have been on the boil, rising almost 90%.

In July, Strix reported that performance over the first six months of 2020 had been “resilient“. A “marked recovery” in June coupled with a strong order book means it expects to report similar profits to those achieved last year. That’s not a bad outcome considering the supply side disruption it faced earlier in the year when factories in China needed to shut.

Highly cash generative, Strix continues to reduce its debt pile. At the end of June, net debt stood at just under £37m. Due to cost-cutting, this was roughly £6m lower than originally targeted.

Once a bargain, the stock now trades on a P/E of 16. With 14 new products due for launch this year, however, I can still see it moving higher. There’s a forecast yield of 3.5% to boot. 

The post Forget the stock market crash. I found 3 UK growth shares that have been flying! appeared first on The Twelfth Magpie.

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• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
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• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Paul Summers owns shares of Strix Group. The Motley Fool UK has recommended Clipper Logistics and Frontier Developments. 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.

There are plenty of exciting mid-cap and small-cap companies in the UK that are growing quickly, and these kinds of companies can often outperform their larger-scale FTSE 100 peers.

With that in mind, here’s a look at two small-cap dividend stocks that I think have the potential to smash the FTSE 100 over the next five years.

Macfarlane Group

Macfarlane Group (LSE: MACF) is the largest distributor of protective packaging products in the UK, serving over 20,000 businesses across the nation. Packaging may not be the most exciting industry, but don’t let that put you off – sector stocks can still generate excellent returns for investors. For example, since I last covered the company in April 2017, its share price has risen 40% while the FTSE 100 has gone nowhere.

Macfarlane released its annual results for FY2018 this morning and, in my view, the numbers look pretty good. For the full year, turnover rose 11%, and profit before tax increased 17%, representing the ninth consecutive year of profit growth for the group. Furthermore, it also announced a healthy 10% dividend increase and said that despite uncertainty from Brexit, it’s confident it will demonstrate further progress in 2019.

From an investment point of view, I really like the look of Marfarlane right now. The stock trades on a very reasonable valuation (its trailing P/E is 16.3), is growing its dividend, return on equity is solid (averaging 16% over the last five years), and debt is low. Overall, I believe the stock offers a lot of potential and I think it should continue to outperform the FTSE 100 in the years ahead.

Clipper Logistics

Another fast-growing smaller company I believe could beat the FTSE 100 in the coming years is Clipper Logistics (LSE: CLG). It’s an innovative logistics group that counts the likes of ASOS, Sports Direct and John Lewis as customers.

Clipper shares had a fantastic run between 2015 and 2017, rising around 170%. Yet over the last year, the shares have been dumped by investors on the back of Brexit concerns. I think that’s created a fantastic opportunity for value hunters. Trading at around 400p a year ago, the stock can now be purchased for 233p.

Clipper’s recent half-year results in December looked good, with revenue rising 14% and profit before tax jumping 17%. The company also increased its dividend by an impressive 14%, which suggests management is confident about the future (and directors have been loading up on the shares themselves which is another bullish sign).

With the stock currently trading on a forward P/E of 13.9 and offering a prospective dividend yield of more than 4%, I believe now is the right time to buy.

The post Two dividend stocks I think could smash the FTSE 100 over the next five years appeared first on The Twelfth Magpie.

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• 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 owns shares in Clipper Logistics. 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, the retailer’s share price has fallen recently and may now offer good value for money. Could it be worth buying right now? Or, does a smaller dividend growth share which released positive news on Thursday offer a stronger outlook?

Improving performance

The company in question is value-added logistics solutions and e-fulfilment and returns management services specialist Clipper Logistics (LSE: CLG). The company released interim results which showed a rise in revenue of 14.1% to £227.9m. Operating profit was 16.1% up on the same period of the previous year at £10.7m, with its e-fulfilment and returns management segments performing especially well.

The company believes that it is well-placed to benefit from a continuing migration of shoppers to online retailing, with click-and-collect’s increasing popularity potentially offering a catalyst for its future performance.

Recent contract wins could provide momentum as the business moves into the second half of the year. Clipper Logistics is forecast to post a rise in earnings of 22% in the current year, followed by further growth of 14% next year. Despite a strong earnings growth outlook, it trades on a price-to-earnings growth (PEG) ratio of 1.3, which suggests that it may offer good value for money.

Dividend growth looks set to continue after it has raised shareholder payouts by 20% per annum over the last three years. Dividends are due to rise by 15% per annum over the next two years, which could boost its 3.4% yield.

Uncertain future

As mentioned, the outlook for UK-focused retailers such as Tesco could become increasingly challenging. The general consensus among consumers seems to be that Brexit could cause a period of disruption and uncertainty, and they are therefore adapting their spending in response to this. Consumer confidence is at a relatively low ebb, and is due to remain weak over the coming months.

At the same time, the company faces increasing competition from discount stores. This could put further pressure on sales and margin growth. And with a gradual transition of shoppers towards online options, margins may experience slower growth than the market has been anticipating.

Despite these risks, the Tesco share price could prove to be relatively appealing at the present time. Investors appear to have factored in the risks facing the business, with its valuation declining by over 20% in the last six months. It now has a PEG ratio of just 0.8, which suggests that it offers growth at a reasonable price. Having turned around its performance in recent years and surprised many investors in doing so, the company could be a better investment than the stock market is currently anticipating over the long run.

The post Is the Tesco share price a bargain or should I buy this dividend growth stock? appeared first on The Twelfth Magpie.

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

K3 Capital

K3 Capital (LSE: K3C) is a leading business sales and brokerage firm that acts for businesses valued between £50,000 and £100m. With a market cap of just £126m, this is certainly a small company, but given the speed the group is growing at, I think K3C has the potential to develop significantly in coming years.

Indeed, full-year results released last month demonstrated that the company has considerable momentum at present. For the year ending 31 May, group revenue rose 53%, earnings per share surged 114% and the full-year dividend payout was increased 56% – an impressive performance. Furthermore, the company advised that for FY2019, all three of its businesses have started the year strongly and that the group as a whole is “trading ahead of market expectations.”

K3C shares are up 83% over the last year, yet have pulled back around 25% since April to now trade on a trailing P/E ratio of 21.1. At that price, I think value is on offer.

Clipper Logistics

Another small-cap stock that I think warrants a closer look right now is £302m market cap Clipper Logistics (LSE: CLG). The company is an innovative logistics company that has grown significantly in recent years and counts Asos, John Lewis and Asda among its customers. 

While full-year results released in July looked quite robust with revenue rising 17.6% and earnings per share climbing 13.6%, investors dumped the stock after the company advised it was bringing “an element of caution” into its planning due to the wider forces affecting the UK retail sector. Yet I think the sell-off has been overdone, because top-tier directors have been loading up on shares recently, suggesting that they have confidence in the outlook.

At the current share price of 304p, Clipper trades on a forward P/E of 17.5 and offers a prospective yield of 3.3%. Those metrics look attractive, in my view.

Somero Enterprises

Lastly, check out £217m market cap Somero Enterprises (LSE: SOM), which produces laser-guided equipment that assists in the installation of concrete slabs, and has operations in the US, Europe, China, the Middle East and Australia.

Somero shares have had a good run recently and are up more than 20% since I last covered the company in 2017. But with the stock trading on a forward P/E of 13.8 at present, I believe there’s plenty more to come from this exciting smaller company.

Recent interim results certainly looked solid, with revenue rising 6%, cash flow from operations jumping 31% and diluted adjusted earnings per share surging 20%. A 100% increase in the interim dividend was another highlight. It’s also worth noting that Somero has practically no debt and has generated an average return on equity of 35% over the last three years.

Overall, I see a great deal of long-term potential in Somero Enterprises.

The post 3 buy-and-hold small-cap growth stocks for October appeared first on The Twelfth Magpie.

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• 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 owns shares in K3 Capital and Clipper Logistics. The Motley Fool UK has recommended Somero Enterprises, Inc. 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.

With that theory in mind, today I’m going to highlight some recent director dealing activity that looks very interesting to me.

Clipper Logistics

Clipper Logistics (LSE: CLG) is a leading logistics company that counts high-profile companies such as John Lewis, Asos and Asda among its clients. In the last three years, revenues at Clipper have exploded higher on the back of the online shopping boom, rising from £235m to £400m and net profit has surged too, rising from £7.3 to £14.3m. As a result, CLG shares have climbed significantly from their 2014 IPO price of 100p, trading as high as 485p in early January.

Yet investors weren’t impressed with full-year results released on 30 July and the stock has taken a beating recently, plummeting from over 400p to 310p today. Despite the fact that revenue for FY2018 rose 17.6%, earnings per share climbed 13.6% and the dividend was hiked 16.7%, investors dumped the stock. Why? The group made little reference to future expectations and Chairman Steve Parkin said it was bringing “an element of caution” into its planning due to the wider forces affecting the UK retail sector. So what should investors make of these results and the share price fall?

Top-tier directors are loading up

Well, looking at recent director trading activity, I think the market may have overreacted here. I say this because on 30 July, both CEO Tony Mannix and CFO David Hodkin reached into their own pockets and bought significant amounts of stock. CEO Mannix bought 80,000 shares, costing him around £240,000 and CFO Hodkin bought 240,000 shares costing him around £720,000. There are not going to be many people who have a better insight into Clipper’s prospects than these two. And these transactions are sizeable purchases. Clearly, these top-level directors are confident about the future. Should you follow Mannix and Hodkin and buy Clipper stock while the share price is depressed?

Strong numbers

There’s obviously no guarantee that following these director trades will lead to profits. Top level insiders often time their purchases poorly. Yet analysing the numbers, there’s a lot to like about Clipper, in my opinion.

For example, as I mentioned above, revenue has grown at an annualised rate of 19.4% over the last three years and City analysts expect further top-line growth of 13% this year and next. Similarly, after a 13.6% rise in earnings per share last year to 14.2p, analysts expect further growth of 23% this time and 13% next year. Cash flow looks healthy and return on equity is high, averaging 47% over the last three years. On the downside, debt is perhaps a little higher than ideal.

With the stock now trading on a P/E ratio of 17.6 and offering a prospective yield of 3.2%, I like the risk/reward profile here. I believe Clipper is a good way to play the e-commerce boom.

The post A director trade ‘tip-off’ that could help you beat the FTSE 100 appeared first on The Twelfth Magpie.

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• 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 owns shares in Clipper Logistics. 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.

Down over 20% in early trading following the release of its latest set of full-year results, Clipper’s valuation hasn’t been this low since October 2016.

As long as investors can see beyond today’s fall, however, I think this might prove a good opportunity to acquire a slice of what remains a promising growth story.

Decent results but… 

Revenue (£400.1m) and profit (£14.3m) increased 17.6% and 14.6% respectively in the 12 months to the end of April. That’s hardly shabby. Nor was the 16.7% increase to the dividend.

Over the year, the Leeds-based business began new contracts with retailers such as M&S and ASOS as well experiencing “significant growth in activity” with many of those already signed up to its services, including Asda and Morrisons. In line with its strategy of expanding further into European markets, the company also won three new contracts in Poland and will open a second facility to accommodate one of these later in 2018. Factor-in two “immediately earnings-enhancing” acquisitions (RepairTech and Tesam Distribution) and a brand new agreement with Boohoo-owned Pretty Little Thing and it’s hardly tin hat time.

No, today’s dramatic fall might have been prompted by Executive Chairman Steve Parkin’s comment that the company has been required to bring “an element on caution” into its planning as a result of ongoing problems in the retail sector. With trading on the high street continuing to be sluggish, not helped by wider political and economic uncertainty, this seems eminently sensible.

The only problem is that Clipper’s rich valuation relative to industry peers means that any chinks in its outlook will always be punished. Even after taking into account today’s fall, earnings per share of 14.2p for the last year leaves the stock trading on a seriously high trailing P/E of 28.

While I’d wait for things to calm, I certainly don’t think there’s anything fundamentally wrong with Clipper as a business. Having sold my stake for a decent profit some time ago, the company is back on my watchlist.

For those unnerved by today’s fall, however, there are lot of other opportunities out there.

Guidance unchanged

I’ve been positive on £1.7bn cap meats provider Cranswick (LSE: CWK) for quite a while now. Although the shares have been fairly volatile so far this year, I’m still finding it tough to come up with reasons why this shouldn’t be a long-term hold for growth hunters.

Today’s Q1 statement — covering the three-month period to the end of June — was reassuringly surprise-free. With revenue up 3.2% compared to the same period in 2018 and the contribution from exports “modestly ahead“, guidance for the full year was unchanged.

At 22 times forecast earnings for the year, Cranswick’s stock isn’t cheap and perhaps explains the rather lacklustre market reaction to these numbers.

That said, a rock-solid balance sheet (£8m net cash), consistently growing dividends and masses of potential overseas can’t be ignored. Once up and running, a newly-commissioned continental products factory — along with a separate poultry primary processing facility — will also add substantial capacity to support the company’s growth strategy going forward. I remain a fan.

The post Is this small-cap growth stock a falling knife to catch after crashing over 20% today? appeared first on The Twelfth Magpie.

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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.

Shares in the UK postal operator Royal Mail (LSE: RMG) have hammered the FTSE 100 so far this year, climbing 28% during a period when the big-cap index has fallen by 3%.

Of course, such short-term movements aren’t especially significant. Looked at over the 3.5 years since the postal group’s flotation in 2013, both investments are up by around 10%. Despite this, I believe this 500-year old firm is in a good position to face the future and deserves closer attention from investors.

I’ll come back to this in a moment, but first I want to look at a faster-growing alternative investment in the same sector.

A modern business

One of the challenges faced by Royal Mail has been to adapt to a huge increase in parcel volumes from internet shopping.

One company that’s benefited from this change is Leeds-based Clipper Logistics (LSE: CLG). This £441m firm provides logistics services to the retail sector, specialising in e-commerce. Existing customers include ASOS, Sainsbury’s, John Lewis and Superdry.

Clipper shares edged higher today after the firm announced a new contract to run a 600,000 square feet warehouse for Boohoo.com subsidiary PrettyLittleThing.com. This brand is a big player in the youth fashion market and is growing fast — sales rose by 228% to £181.3m last year.

Clipper will handle goods from a range of suppliers and provide fulfilment services for online orders. It’s a big win for the firm and will require 1,200 new staff, increasing existing headcount by more than 25%.

A smooth delivery

Clipper already has a strong track record of growth.  Revenue has grown by an average of 15% per year since 2012, while operating profit has risen at a compound average rate of almost 22% each year.

The group’s operating profit margin of about 5% is good for this sector. And last year’s return on capital employed of 34% suggests to me that this is a very well-managed business, as it implies that the company made £34 of operating profit for each £1 invested in its operations.

An increasing level of scale and automation is required to compete in retail logistics. I think Clipper’s growth is likely to continue — a view shared by City analysts who expect the group’s earnings to rise by almost 25% this year.

Although the stock looks pricey on 28 times forecast earnings, this multiple could soon fall. I’d continue to hold and would buy on any short-term dips.

Why I’d still buy Royal Mail

The shares aren’t quite the bargain they were towards the end of last year, but I believe Royal Mail still offers good value for investors looking for reliable long-term income growth.

Chief executive Moya Greene surprised markets recently when she announced plans to leave. But Ms Greene’s time in charge has been well spent. She’s managed a successful privatisation and strengthened the group’s finances. She’s also reached new deals on pay and pensions with unions, increased automation, reduced headcount, and positioned the group for a parcel-led future.

Analysts expect earnings to be broadly flat over the next year or so, suggesting that the forecast P/E of 14 may be high enough. That may be true for now, but I feel Royal Mail’s strong free cash flow and 4.1% yield mean that the shares are still worth buying.

The post Why the Royal Mail share price is smashing the FTSE 100 this year appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
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• 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 owns shares of and has recommended ASOS. The Motley Fool UK has recommended boohoo.com and Superdry. 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.

Gresham Technologies

£136m market cap Gresham Technologies (LSE: GHT) is a software and services company that specialises in providing real-time transaction control and enterprise data integrity solutions to financial services institutions. Its key product Clareti has been designed to assist companies with internal risk management, data governance and regulatory compliance.

Gresham released full-year results for 2017 this morning and the numbers look pretty good. For the year ended 31 December, group revenues increased 26% to £21.7m, easily beating consensus estimates, with revenues from Clareti surging 48% to £11.1m. Adjusted EBITDA rose 34%, while adjusted earnings per share climbed 38% to 6.5p. The company had a cash balance of £8.5m at year-end, up from £7.2m last year.

Management stated that it was confident about the group’s prospects, with CEO Ian Manocha commenting: “With Clareti sales now generating more than half of all Group sales and with the Group now generating surplus cash for the first time in many years, we are confident our strategy is on track and certain about our ability to deliver sustainable long-term profitable growth for our shareholders.”

One thing that stands out to me about today’s results is that the firm has initiated a progressive dividend policy. A final dividend of 0.5p per share was proposed. To my mind, this is a signal of confidence from management and suggests that the outlook for the firm is positive.

Given today’s strong numbers and the dividend initiation, I believe the story here looks exciting. It seems the market agrees with my stance, with the shares up 3% today. This is a stock to watch closely in 2018 and beyond.

Clipper Logistics

Another small-cap worth keeping a close eye on in 2018 is Clipper Logistics (LSE: CLG). Back in late December, I listed CLG as a ‘blockbuster growth stock’ to watch in 2018. However, so far the stock has not lived up to the hype. After an initial run higher in early January to 485p, the shares have fallen by nearly 20%. Yet that has not put me off the growth story.

Clipper provides bespoke logistical services to clients such as John Lewis, New Look and Asda. As such, the company should benefit as the popularity of online shopping increases and consumers become increasingly more impatient. Revenue and profits have grown significantly in recent years, and City analysts expect the growth to continue in the near term. For the year ended 30 April, Clipper’s top line is expected to grow 18%, while net profit is anticipated to climb 20%.

The recent share price decline has lowered Clipper’s forward P/E ratio to 25.6, a valuation which I think is reasonable. A prospective dividend yield of around 2.2% is also on offer. Like Gresham Technologies, this is a stock to watch closely in 2018.

The post Two hot growth stocks to watch closely in 2018 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 owns shares in Clipper Logistics. 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.

2017 has been a great year for many growth investors. A high number of UK mid-cap and small-cap stocks have performed exceptionally well. However, despite the strong gains registered this year, 2018 is likely to bring plenty more opportunities for share price gains. With that in mind, here’s a look at two stocks that I believe have fantastic prospects for 2018 and beyond.

GB Group

£650m market cap GB Group (LSE: GBG) specialises in identity data intelligence. It helps its clients verify identities, protecting against fraud and financial loss.

Identity fraud is a huge problem in the world we live in today, with criminals relentlessly targeting both individuals and businesses. No one is safe. In the UK alone, around 500 identities are stolen every single day.

GB Group is benefitting. Over the last five years, revenue has surged from £32m to £88m. Net profit has climbed from £3.6m to £10.8m. Recent half-year results in November showed continued momentum. Revenue increased 40% year-on-year, while adjusted earnings per share rose 69%. CEO Chris Clark was upbeat about the future, stating: “The Group continues to perform well, demonstrating the strength of our business and the capability of our people globally. With the investments we have made in products, data and technology, we are confident of making further strategic progress in the second half of the financial year.”

While the growth story here looks exciting, one downside to the shares is that they don’t come cheap. Investors have acknowledged the potential here, and as a result, the stock trades on a forward P/E of 35. That’s clearly not bargain territory. However, while the long-term share price trend is clearly up, the stock is prone to regular pull-backs. These dips can provide excellent entry points for long-term investors. 

Clipper Logistics

Another exciting small-cap growth prospect is Clipper Logistics (LSE: CLG). The £430m market cap group provides bespoke logistical services to clients such as John Lewis, New Look and Asda. In my opinion, Clipper is a great way to profit from the online shopping boom, without investing in individual retailers.

Like GB Group, Clipper’s revenues and profits have exploded in recent years. Over the last five years, sales have grown from £167 to £340m. Net profit has surged from £3.8m to £12.5m. Looking ahead, City analysts expect the growth to continue, with revenue of £400m expected next year, along with a net profit of £16m.

The stock has been a strong performer since its 2014 IPO, rising over 320%. Long-term investors should be pretty happy with that return. However, while Clipper now trades on a lofty forward P/E of 26.6, I think there could be more gains to come.

Looking at the chart, 2017 has very much been a consolidation year for the stock. The share price is up 10% year-to-date, but the stock has spent much of the year hovering around the 400p mark, consolidating past gains. If the company can deliver on analysts’ estimates going forward, I believe it’s only a matter of time until the share price continues moving higher.

The post 2 blockbuster growth stocks for 2018 appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in GB 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.