Instead of hiding behind the sofa, I’ve been looking for great UK shares to snap up. Here are three I’d be keen to buy if things get really scary. 

CVS Group

Many investors (including myself) are drawn to invest in glitzy themes such as electric cars and robotics. That said, I think there’s one fantastic part of the market that’s easy to overlook, namely pet care. This is why I’m following the movements of CVS Group (LSE: CVSG) very closely. 

CVS provides veterinary services and, based on Thursday’s trading update, is doing very well indeed. Trading over the second half of 2021 was “comfortably in line with full-year expectations” with revenue climbing 11.4% on the previous year.

The mid-cap was also bullish on its outlook, saying that demand remains buoyant due to “increased ownership” and “the humanisation of pets“. 

The shares have fallen almost 11% in 2022, at the time of writing, but still change hands for almost 24 times earnings. That’s a little more than I’d like to pay, hence why I’m keeping my powder dry for now. If the sell-off continues however, I’ll be buying the stock quicker than a cockapoo chases a squirrel.

Bytes Technology

Another UK growth stock I’d have no issue in taking a nibble at eventually is Bytes Technology (LSE: BYIT).

Last year proved to be a hugely successful one for the software, security, and cloud services specialist. Back in October, it revealed increases of 13.7% and 19% in revenue and operating profit respectively in the six months to the end of August. 

As more corporate clients recognise the importance of updating their IT systems, I don’t think this kind of momentum is in danger of reversing soon.   

Stock in Bytes has declined 21% in value so far this year. Like CVS Group however, they still aren’t cheap enough to get me buying just yet (31 times earnings).

Then again, this is not the sort of business that will likely trade on a ‘cheap’ valuation. Returns on capital employed — what a company gets back for the money it puts in — are some of the highest I’ve been able to find.

I think shares will only fall so far before they rebound strongly.

Treatt

A final growth stock that takes my fancy is ingredients supplier Treatt (LSE: TET). This is another company enjoying robust trading. On Friday, it reported making “a good start” to its new financial year.

Notwithstanding this, it did caution investors that pre-tax profit would likely revert to being more weighted to the second half. This is due to the seasonality of drinks consumption in the Northern Hemisphere. 

Since any business needs to keep moving and raising its game, I’m encouraged by Treatt’s ongoing R&D spend. New headquarters are also expected to give the company “substantial extra capacity” to continue growing in the years ahead. As a Foolish investor, that’s the sort of long-term focus I’m drawn to.

Unfortunately, the valuation — an eye-watering 38 times earnings — is still too rich for me.  So while Treatt’s shares are already down 14% this year, I’d prefer to snap up this growth stock when/if markets really start to panic.

The post Stock market crash: 3 UK growth shares I’d buy hand over fist if the selling continues 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?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Treatt. 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 concerns over inflation, supply chain issues and the perpetual elephant in the room that is Covid-19, I think it’s wise to keep a wishlist of stocks I’d be ready to buy if the recent sag in momentum turns into a correction. Having already looked at the FTSE 100 and FTSE 250, today it’s the turn of AIM stocks.

On song

The progress of audio equipment and software supplier Focusrite (LSE: TUNE) has been a thing to behold. In five years, the share price is up almost 900%! So much for the general belief among investors that risky AIM stocks never deliver.

A beneficiary of multiple UK lockdowns, the High Wycombe-based business now expects to report roughly £173m in revenue for the year to the end of August. That’s 33% up on the previous year. It’s also ahead of what the market was expecting. 

This is not to say the £1bn cap is risk-free. In addition to being susceptible to the global shortage of semiconductors, Focusrite recently warned on “significantly higher than normal” freight and shipping costs. This makes the current P/E of 44 look very rich, in my opinion.

Yes, it may boast eight brands and a net cash position, but I feel no stock is worth buying at any price. If a market correction comes, however, I’ll be first in the queue. 

Growth potential

Global identity specialist GB Group (LSE: GBG) is another AIM stock that has rewarded long-term holders. While unable to compete with Focusrite’s gains, the shares are still up over 175% since 2016. Again, this demonstrates how I might be able to generate above-average returns by looking for quality businesses on the junior, rather than the main, market.

I wouldn’t bet against GBG continuing to deliver. As the AIM stock highlighted in July, the huge growth in online activity should mean trading remains buoyant at each of its divisions: Identity, Location and Fraud. Indeed, the near £2bn-cap company said that it had already made a “good start” to its new financial year following record business in FY21. 

Defensive AIM stock

A final AIM stock on my buy list in the event of a significant market wobble is CVS Group (LSE: CVSG). Having doubled in value over the last 12 months, I remain convinced the veterinary services provider is a great play on the UK’s enduring love for pets. There certainly won’t be a lack of demand considering the huge number of households that have bought a puppy, kitten or (insert animal of choice) over the last 18 months or so. 

Once again, however, the valuation looks unattractive. CVSG shares trade on a forward P/E of 32. That’s still high, especially as margins in this line of work aren’t particularly large. Another potential risk here is that it may struggle to recruit the best talent to meet growth targets. I still regret not snapping up the stock back in 2019 when concerns over the shortage of suitably qualified vets following Brexit sent the share price down to just above the 400p mark. 

For now, CVSG stays on my watchlist.

The post 3 AIM stocks to buy when stock markets next tumble 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?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Focusrite. 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.

“Strong revenue growth“

As one of the biggest vets businesses in the UK, it’s not surprising that business at CVS has boomed the last year or so. Positively, it would seem that this trading momentum has been particularly evident over the last couple of months. “Strong revenue growth” was achieved in May and June, according to the company.

As far as actual numbers were concerned, like-for-like sales growth for the financial year to the end of June came in at 17.4%. This was clearly far better than the meagre 0.7% achieved last year. Then again, like so many other businesses, CVS Group was massively affected by the introduction of Covid-19 restrictions. 

The firm now expects to report EBITDA (earnings before interest, tax, depreciation, and amortisation) “marginally ahead” of what analysts were expecting. 

But can all this last?

I think this can last. Although we now appear to be coming to the final few chapters of the pandemic, all those new pet dogs, cats, and iguanas will need regular checkups for many years afterward. This demand should provide some support to the CVS share price going forward.

In another sign of just how much the trading environment has improved, CVS said today that it now employs roughly 10% more vets compared to this time last year. It’s also advertising for new positions and planning to continue its acquisition-friendly strategy by snapping up independent practices. That sounds pretty bullish to me!

Buyer beware

If all this sounds like I think the shares of CVS can only go way, let me clear: I think there are still risks to investing here.

One I’ve already mentioned is the possibility of profit-taking in the months ahead. ‘Running your winners’ is a rule of thumb that I endorse. However, there will come a time when some long-term holders will want to move on. After all, the shares have climbed 116% over the last year. Anyone buying when this growth stock dipped to a low of 433p back in February 2019 would have a gain of over 400% by now.

At 31 times FY22 earnings, the valuation undoubtedly reflects this. One needs to remember that CVS isn’t the only veterinary services provider out there. So, while there may be more pet owners these days, it’s clear the company can’t rest on its laurels. Client numbers must keep rising.

Ongoing recruitment also has implications for the mid-cap’s bottom line. A shortage of vets and support staff will mean that CVS needs to make its pay and perks more attractive to get the best talent.

Defensive growth stock

So long as I were comfortable with the drawbacks of investing in CVS right now, I’d buy this defensive growth stock today. Regardless of what happens next in the economy, people won’t stop spending cash on their furry (and not so furry) companions. To me, that makes for a compelling investment. 

The post This UK growth stock is rocketing. Is there still time to buy? 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.

Inspecs

Since covering the company in September, eyewear frames designer, manufacturer and distributor Inspecs (LSE: SPEC) has performed well. Its share price has climbed 45%. Over the last year, it’s up 59%.

That may seem strange considering today’s full-year numbers. Revenue fell 22.5% to $47.4m in 2020. A pre-tax loss of $8.9m was also revealed.

Of course, the usual suspect — Covid-19 — was to blame. Early on in the pandemic, Inspecs’s production site in China was impacted. Lockdowns globally then forced clients to shut stores and distribution depots closed. This was never going to be an easy ride for the £350m cap. 

On a more positive note, Inspecs revealed today that trading had significantly improved in the second half of last year. This, coupled with the emergence of effective vaccines, goes some way to explaining why the share price has remained resilient.

Whether the valuation continues increasing over the rest of 2021 is hard to say. Like most businesses, Inspecs’ near-term outlook will depend on whether we really are coming to the end of the pandemic. Although trading has recovered, it would be brave (or foolish) to assume no risk remains.

Even so, I remain bullish from a longer-term perspective. As part of its growth strategy, 2020 saw Inspecs acquiring other businesses, increasing its manufacturing capacity and adding more brands to its portfolio. A new facility in Vietnam is now up and running and the AIM-listed company’s order books are “higher than at the same time in 2020 on a like for like basis”.

Taking all this into account, I’d still be happy to buy this growth stock at its current price.

CVS Group

Since I wrote about it at the same time, it makes sense to return to look at how shares in veterinary services firm CVS Group (LSE: CVSG) have performed too.

Thanks to the huge growth in pet ownership seen over the multiple UK lockdowns, it’s no surprise to see that the shares have pretty much doubled in value. In the last year, the price is up 131%!

Encouragingly, the company reported in April that the trading momentum seen earlier in 2021 had continued. Sales remained “strong“, helped by the Royal College of Veterinary Surgeons’ decision to permit non-essential services.

As a result, CVS now expects revenue for FY21 to be better than previous expectations. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) will also be “comfortably ahead“.  This is exactly what investors want to hear from companies they own.

So, is it time to take profit? I’m not so sure. Since spending on pets is non-discretionary (owners consider them members of the family), I actually think there’s more upside ahead. This is exactly why top UK fund managers such as Terry Smith love this part of the market. 

CVS Group has had a great run, reflected in its rich valuation of 31 times forecast earnings. However, I’d be far more comfortable buying a slice of this company today over a similarly priced but cyclical growth stock. 

The post 2 hot UK growth stocks I’d buy today 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.

Top growth stock

Its total sales grew by 9.4% to a little under £246m over the six months to the end of December. Like-for-like sales also increased by 7.8%. The latter may be slightly lower than over the same period in 2019 but I need to take into account just how bad 2020 was for most businesses.

According to CVS, this resilient performance was the result of growth in its main Practices division, coupled with higher demand at its online pharmacy and retail arm (Animed). As one might expect given the clamour for animal companions in 2020, the AIM-listed company saw an increase in new client registrations over the period.  Membership numbers of its Healthy Pet Club preventative medicine scheme also grew by 3.6% to hit 430,000. 

In other news, the company’s not-insignificant employment costs fell slightly, from 51% of total sales to 48.9%. The vet vacancy rate also declined.

To round things off, CVS Group was active on the acquisition front, purchasing four practices over the six-month period. I think this should only help to further cement its status as one of the leading veterinary services providers around. It now has more than 480 surgeries in the UK, Netherlands and Republic of Ireland. 

What now?

As far as trading is concerned, I suspect recent momentum will be sustained. All of CVS’s practices remain open, in line with guidance issued at the beginning of the third UK lockdown. Importantly, the company is now able to provide essential services relating to animal welfare rather than just emergency work.

Perhaps the biggest reason for continuing to be bullish on this growth stock, however, is that I simply can’t see the trend for pet ownership reversing. I also feel we’re unlikely to curtail spending on our furry friends, regardless of how the UK economy is performing. 

All told, the long-term prospects seem too good to me to bank profits this early. Even so, I have to be aware of the risks involved.

Volatility ahead? 

One thing that might lead the share price to lose steam is a good, old-fashioned bout of profit-taking. This wouldn’t feel unreasonable. After all, the value of CVS has more than doubled since the dark days of March. A forecast price-to-earnings (P/E) ratio of 27 suggests a lot of good news is already priced in. 

CVS certainly has form when it comes to violent, and protracted, share price swings. Between November 2017 and January 2019, the valuation of the company plunged as it struggled to recruit vets in light of the Brexit referendum outcome. While our departure from the EU might be one-off event, this doesn’t negate the fact that such falls are possible.

So, I wouldn’t sell had I bought a few months back. But while I do still think the shares could reward those with long investing horizons, I wouldn’t buy this growth stock today. I’m cautious over how much further the price could go in 2021 alone. As always, being sufficiently diversified elsewhere is key, regardless of how encouraging the outlook may be.

The post I was spot on about this UK growth stock. Here’s what I’d do now 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?

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.

Those who had the fortitude to buy a stake in the business back in mid-March would now be sitting on a gain of close to 80%! Is there still time for new investors to get on board? Here’s my take. 

FTSE 250 winner! 

Back in July, the company reported sales across all parts of its business had bounced back following the easing of lockdown and “normalisation of shopping habits.” The fact procedures at its veterinary operations could now be performed also contributed.

Today, Pets announced the momentum seen in all its channels since reopening in Q1 had continued. As a result of achieving “double-digit” growth in like-for-like sales, management now believes underlying pre-tax profit for the full year (ending late May 2021) will come in “ahead of current market expectations.“

As updates go, I’m not sure existing holders could ask for anything more.

But is it still worth buying?

Given what’s going on in the world and the general nervousness seen in markets, speculating whether this company is worth buying now, however, is tricky.

Shares in Pets At Home were already trading on 27 times earnings before today. That’s expensive for any stock, let alone a retailer. It’s also a mighty price to pay considering the threat of further restrictions due to the spike in coronavirus cases.

As the company itself remarked today: “Covid-19 continues to create a number of material uncertainties around the trading environment, including the risk of a second lockdown.”

Should that second lockdown come, it’s possible we could see a second stock market crash in 2020. If this happens, there’s certainly the potential for the Pets share price to be hammered along with everything else.

After all, highly valued companies will often be the first to be jettisoned from portfolios. Moreover, panicked investors will usually look to sell what they can (i.e liquid FTSE 250 stocks), not what they should.

Resilient sector

For me, ascertaining whether Pet At Home is a great buy really involves asking how long you plan to hold it for. Based on the points above, I’d be tempted to at least pause before reaching for that ‘buy’ button, if it’s only for a few months. These holding periods are for traders, not investors.

That said, those thinking of holding for years rather than months could still do well. As the company itself stated, one of the attractions of the pet care market is its “inherent resilience.” These days, we consider pets as family members and spending on our furry friends has become less discretionary.

Like veterinary services provider CVS Group, I think Pets At Home is a great way of tapping into this trend. Let’s not forget there has also been a boom in pet ownership this year as a consequence of lockdowns. All those new owners will need to shop somewhere. 

No investment is free of risk. For those willing to buy and hold, however, I think this FTSE 250 stock could be a great addition to most portfolios. Just be sure to be sufficiently diversified elsewhere first.

The post The Pets At Home share price is on fire! Is there still time to buy this FTSE 250 winner? appeared first on The Twelfth Magpie.

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• Should I buy this dirt cheap stock to start earning passive income?

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.

One way around this is to build stakes in companies providing products or services that are deemed ‘essential’ to daily life. Since earnings should be relatively constant (or rising), there’s less incentive to check out early. 

Here are a couple of small-cap stocks with great growth prospects I think fit this strategy well. 

Eyes on retirement

New-stock-on-the-block Inspecs (LSE: SPEC) designs, manufactures and distributes eyewear frames to global retail chains. It may not quicken the pulse like a glitzy tech share but, for me, that’s part of the appeal. Some of the best investments are those that rarely make headlines.

Unsurprisingly, Inspecs was doing rather well before arriving on the market in February. In 2019, group revenue rose 6.9% to $61.25m and pre-tax profit more than doubled to $7.35m.

Of course, all this was pre-coronavirus. Like most businesses, the pandemic has motivated the small-cap to reduce costs and save cash where it can.  

Looking further ahead, however, the investment case becomes compelling. As CEO Robin Totterman stated in May: “The structural growth drivers in the $131 billion global eyewear market remain unchanged.” Moreover, the number of people requiring vision correction looks likely to increase as we learn more about the damage done from staring at computer screens and mobile phones for too long. 

It may be early days, but shares have done very well given what 2020 has thrown at investors so far. Had you bought in early April, you’d be sitting on a near-60% gain by now. This leaves the business trading at 14 times FY21 earnings. Considering the aforementioned growth prospects, that looks pretty reasonable.

The only thing I’d watch out for with Inspecs is the buy/sell spread. The larger this is, the more you’ll need the shares to rise just to get back to break-even. 

Long-term winner

If there was one lockdown trend that stood out for me, it was the huge demand for pets. This should be great news for leading veterinary service provider and online pharmacy operator CVS Group (LSE: CVSG) once the coronavirus crisis subsides. All those new, pampered family members will need regular care for years to come.

This isn’t to say CVS hasn’t been impacted by the pandemic. During lockdown, vets were restricted to undertaking only emergency work in their practices, leading to a “significant reduction” in revenue.

In response, the company temporality shut half of its small animal practices and placed half of its employees on furlough. Thankfully, a recovery in revenues to “pre-Covid-19 levels” since has led management to predict that full-year revenue will now come in “comfortably ahead of the prior year.”

Changing hands for 22 times forecast FY21 earnings, CVS is unlikely to appeal to committed value investors. Some may also be concerned by the company’s reluctance to comment on its earnings outlook or pay a final dividend.

For me, however, all this seems very prudent. With more local lockdowns looming, the move to permanently close 33 mostly-small branches, a proportion of which were loss-making, also makes sense. 

The short-term outlook may be foggy but I think CVS is a great pick for those building their wealth for retirement.

The post Have £2,000? Here are 2 essential UK growth shares I’d buy and hold for retirement 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.

So it’s always worth keeping an eye out for companies making positive moves in the market and here are two of July’s biggest winners from lower down the spectrum.

On the mend

Despite an awful 2018 in which the share price pretty much halved in value, I’ve always had a soft spot for veterinary services provider CVS Group (LSE: CVSG). After all, pet-obsessed Brits spend a huge (and growing) amount of money on their companions every year. That won’t change, regardless of what happens on 31 October. 

Aside from operating in a resilient industry, last week’s update for the year to the end of June also suggested trading at CVS has bounced back to health. At £406.5m, total revenue was 24.2% higher than in 2017/18. Earnings are also expected to be in line with the new targets set by analysts following the company’s positively-received update in June. 

Importantly, CVS revealed it had seen a fall in the number of vacancies for veterinary surgeons and nurses — an issue that had dogged the company for some time. This has, in turn, led to a reduction in locum spend and overall employment costs over H2. 

In other good news, the firm said the disappointing performances of its three new divisions (The Netherlands, Farm and Equine) earlier in the financial year had been reversed as a result of actions taken by management. Existing holders may also be reassured by the decision to adopt a more cautious approach with regard to future acquisitions to ensure the company doesn’t overpay in attempts to expand its estate. 

Shares in CVS are up 25% in July and currently trade on a valuation of 19 times forecast FY2020 earnings. While not exactly cheap, I think anyone buying at this level will probably still do well, considering the recent return to form.

Seeing gains

Another market minnow making impressive gains over the last month has been driver monitoring specialist Seeing Machines (LSE: SEE). Shares in the £140m-cap — whose technology helps spot when people are tired or distracted behind the wheel — have accelerated 42% in July alone, thanks to a flurry of positive news.

Only yesterday, the company revealed it had won a four-year contract with coach operator National Express to have its Guardian Driver Safety system fitted in around 700 of the latter’s vehicles by the end of 2019.

This win follows hot on the heels of last week’s announcement that Seeing’s FOVIO driver monitoring system (DMS) had been selected by an automotive Tier 1 supplier to be installed in additional models for an existing German OEM customer in an effort to meet the safety targets set down by the European New Car Assessment Programme.

“This important milestone confirms Seeing Machines’ ability to scale our technology and participate in a broadening DMS market, including entry level solutions targeting Euro NCAP goals,” said new CEO Paul McGlone. 

With the European Parliament also calling for driver monitoring technology to become mandatory in all new cars sold in Europe from 2022, I’m optimistic that Seeing Machines will continue attracting more attention from (risk-tolerant) investors going forward.  

The post These under-the-radar stocks popped in July. I think there could 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 owns shares in Seeing Machines. 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 all changed about 18 months ago when the company was required to cut prices to stave off competition. The more recent announcement of a probe by the Competition and Markets Authority (CMA) into the sector only served to compound investors’ misery. Dignity’s share price was 70% lower yesterday than it was back in November 2017. 

While I remain positive on the company as a whole, there wasn’t much in today’s full-year results to suggest that this is poised to spring back to life any time soon. 

“A period of radical change”

Despite a 2% rise in the number of recorded deaths to 599,000, pre-tax profit dived 43% to £40.5m over the 12 months to 28 December as Dignity reduced its prices and unbundled its full-service package so that clients weren’t required to buy everything from the company. 

Good performance from its crematoria division was the only bit of positive news I could find, aside from the business maintaining its total dividend at 24.38p per share (for a trailing yield of 3.4%).

Reflecting on today’s numbers, CEO Mike McCollum stated that last year “marked the beginning of a period of radical change” for Dignity. He went on to say that the firm’s commitment to the quality of the service it provides gave him confidence that the £370m cap will get “ahead of the competitive curve“.

While that remains to be seen, I agree that regulatory pressure can be a blessing to established firms by removing less competent competition, while tacitly endorsing the services of the former. 

Before this morning, Dignity’s stock was trading on a little under 11 times forecast earnings for the current financial year. The fact that the share price (while lower) hasn’t fallen off another cliff suggests that today’s figures were pretty much as expected.

As such, I suspect that those who bought in after recent falls and are patient enough to stand by the company will be rewarded in time. It’s a ‘hold’ for me. 

In the doghouse

Veterinary services provider CVS Group (LSE: CVSG) has also seen its share price collapse over the last year on issues surrounding recruitment and the performance of new acquisitions.

Like Dignity (and based on its January trading update), a sustained recovery still looks some way off. 

Despite reporting a 23.7% increase in total sales over the first half of its financial year, the company “remains heavily reliant on locum cover” and costs relating to this are “well above” those of the previous year.

Combine this with news that its new divisions focusing on Farm and Equine practices haven’t been performing well, a growing net debt position and the prediction that full-year earnings will be “materially below current market expectations,” and it’s easy to see why investors are turned off. 

Nevertheless, this could still be one for patient contrarians. A reduction in locum costs is expected in the remainder of the year and the company has wisely decided to re-evaluate its pipeline of potential acquisitions. Despite recent share price falls, there’s also the fact that the services provided by companies like CVS are likely to remain resilient in the event of an economic downturn. 

The company will confirm its interim results on 29 March. 

The post Can this battered growth stock rise from the dead? 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.

As such, now could be the right time to buy it. However, not all falling shares could offer the same recovery appeal, with a profit warning sending one stock down as much as 30% on Tuesday.

Challenging outlook

The company in question is veterinary services group CVS (LSE: CVSG). It released a profit warning, with higher staff costs and challenging performance being recorded in its recently-acquired practices in The Netherlands. As a result, the company expects to announce EBITDA (earnings before interest, tax, depreciation and amortisation) for the first half of the year that are flat compared to the same period of the previous year.

The company has identified a number of cost-saving opportunities which are expected to have a positive impact on its efficiency over the medium term. It is also re-evaluating the prices it is willing to pay for potential acquisitions.

Clearly, CVS is experiencing challenging trading conditions. Investor sentiment appears to have declined significantly following its profit warning. As such, it may be prudent for investors to hold off purchasing its shares, and instead wait for positive news to emerge regarding the impact of the plans that it is set to put in place over the medium term.

Recovery potential

The decline in the Rolls-Royce share price could be reversed over the medium term. The company is putting in place a revised strategy that could lead to it being more efficient and capable of adapting to the change which is almost inevitable across the defence and civil aerospace sector. Investment in new products is likely to expand its global reach, and this could boost its financial performance over the coming years.

With the stock now having a price-to-earnings growth (PEG) ratio of just 0.3, it could offer a wide margin of safety. Certainly, a number of other industrial shares also trade on low valuations, but the diverse nature of the company’s business may make it more appealing over the long term. That’s especially the as since there is expected to be strong growth in a number of its key markets.

While Rolls-Royce’s shares may be impacted negatively in the short run by possible threats to the world economy, its strategy appears to be sound. It seems to have an improving position in a number of growth segments, and they could catalyse its financial performance. At a time when the uncertain prospects for the FTSE 100 mean that it is struggling to find direction, the stock could be a relatively appealing investment opportunity.

The post Why I think the Rolls-Royce share price crash could be an opportunity to make a million appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Rolls-Royce. 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.