However, the company’s share price has delivered strong growth during that time. It has risen by around 57% with investors having become increasingly positive about its capacity to overcome the ‘patent cliff’ it has faced.

Despite this, it still seems to be cheap given its future prospects. Could it therefore be worth buying alongside a FTSE 250 growth stock which seems to have a wide margin of safety?

Changing outlook

While the last five years have been tough for AstraZeneca, with its bottom line falling during that time by around 37%, its future looks set to be much brighter. Although a further earnings decline of 22% is expected in the current year, growth is due to restart next year. The company’s bottom line is forecast to rise by 13% in 2019, and this has the potential to act as a positive catalyst on investor sentiment.

The acquisition programme which has been pursued by the business in recent years could help to improve its financial outlook. It has repositioned the business so that it is better placed to capitalise on growth trends, and a solid balance sheet and cash flow mean that further M&A activity could be ahead over the medium term.

Value opportunity

Despite its improving outlook and share price growth of recent years, AstraZeneca trades on a price-to-earnings growth (PEG) ratio of 1.6. This appears to be relatively low given its improving outlook, and could mean that its capital growth prospects are high. That’s especially the case since pharma stocks may prove popular if market volatility returns. They have lower positive correlation to the wider index and economy than many of their peers.

Of course, other stocks within the FTSE 350 also offer growth at a reasonable price. Releasing a trading update on Monday was FTSE 250 secure payment solutions specialist Eckoh (LSE: ECK), which seems to have a bright future.

Improving outlook

Eckoh’s performance in the year to 31 March was in line with the company’s expectations. It has continued to make good progress in the US, with strong momentum in the Secure Payments business. In fact, revenues in the US Secure Payments division more than doubled during the period, with its order book continuing to build.

While there were more challenging trading conditions in the UK, the company has started to see the benefits of its renewed UK sales function, as well as an increasing focus on its larger, more strategic accounts. And with new contracts having been won of late, it continues to have turnaround potential.

With Eckoh expected to post a rise in its bottom line of 22% in the current year, followed by 15% next year, it seems to be performing well. Despite this, it has a price-to-earnings growth (PEG) ratio of 1.4, which suggests that it could offer a wide margin of safety and may offer index-beating performance over the medium term.

The post Is the AstraZeneca share price a FTSE 100 bargain or value trap? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of AstraZeneca. The Motley Fool UK has recommended AstraZeneca. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Growing out of a slump

Trinity is suffering from declining newspaper circulation volumes. Declining sales volumes mean that papers are less attractive to advertisers and the group’s chief income stream, advertising revenue, has been steadily declining for some time now.

Still, despite these pressures, Trinity remains profitable and highly cash generative. Since the end of 2011, the company has reduced net debt from £211m to approximately £22m and initiated a dividend in 2014 for the first time since the financial crisis. Analysts believe the firm can earn 34.5p per share, and 2017 and 34p in 2018 as earnings from the group’s online properties begin to pick up the slack from traditional income streams.  

As part of management’s drive to stave off the decline, it is also currently in talks to acquire certain assets of Northern & Shell, the owner of the Daily Express. Current speculation suggests that the company could offer £127m for these assets with the consideration paid over several years. It’s likely any merger would result in substantial synergies between the two entities, improving Trinity’s outlook, although it would have to receive the approval of its pension fund trustees before getting the green light. The group currently has a pension deficit of around £400m. 

Deep value 

Even though the outlook for Trinity is mixed, I believe that the shares are an attractive prospect because of the group’s rock-bottom valuation.

Indeed, at the time of writing the shares trade at of forward P/E of just 2 and yield 8.7%. This valuation indicates that Trinity is priced for the worst case scenario and any improvement in trading could lead to a substantial re-rating of the shares. That’s why I think this is one of the best value Investments around.

Refocusing 

Trinity is one of my favourite value investments and Eckoh (LSE: ECK) is one of my favourite growth stocks. 

This company offers payment software for call centres, and over the past six years, its revenue has more than tripled as customers flock to its offering. However, despite revenue growth, profits have been unpredictable, which is why management decided to restructure the business. A trading update published today hints that these efforts are beginning to pay off. 

Management’s decision to focus on large strategic accounts has resulted in six substantial UK contract wins occurring in the second half of its fiscal year across multiple service offerings. According to the trading update, one of these contracts is with “one of the UK’s largest mobile network providers.“

These contracts should mean the company is now well on its way to hitting analyst forecasts for growth. Currently, the City is expecting the group to report a net profit of £4m for fiscal 2018, rising to £5m for fiscal 2019. These forecasts translate into earnings per share of 1.6p and 2p respectively giving a 2019 P/E of 20.7 and a PEG ratio of 0.9.

The post 1 value stock and 1 growth stock on my watchlist appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Year-to-date shares in the company have gained 40% thanks to improved trading, and it looks as if this is set to continue. According to a trading update from the firm today, for the six months to the end of September, the group achieved double-digit percentage year-on-year growth in both revenue and gross profit. 

In the UK, trading is going to plan with revenue coming in at a similar level to the same period last year. Heading into the second half, management reports that the firm has a robust pipeline of deals in progress. Over in the US, where management has been concentrating on growth, the push is going well with seven contract wins worth $5.1m secured during the half year, up from three wins worth $2.7m the year before. 

Since 2014 when Eckoh entered the US market, the firm has won 30 contracts and growth is picking up. The company has secured the same volume of contracts during the past six months as were won during the full 12-month period ending 31 March 2017.

Global leader 

Eckoh is a global provider of secure payment products and customer contact solutions, which include the group’s patented CallGuard software that can be deployed on a client’s site to remove sensitive personal and payment data from contact centres. The company is capitalising on the shift away from brick & mortar stores towards an online shopping experience as consumers seek more for less. And as this market expands, City analysts are expecting big things from the firm. 

Indeed, the they are forecasting earnings per share growth of 172% for the fiscal year ending 31 March 2018, followed by growth of 16% for the following financial year. Looking at today’s trading update, it would appear that the company is on track to hit these targets. Even though the shares look pricey, trading at a forward P/E of 31.5, considering Eckoh’s explosive growth rate, I believe investors will be able to pocket a healthy profit even buying at this level. 

Exceptional level of demand 

Another top growth champion is Microgen (LSE: MCGN). Over the past year, its shares have risen 140% as demand for the company’s services has exploded. 

The tech company reported earnings growth of 28% and 34% for 2015 and 2016, respectively. It looks as if the group is on track to report a similar performance this year. At the beginning of July, management reported that there had been an “exceptional level of demand” for its Aptitude Software, which is designed for the financial services industry. 

I believe that as regulators demand more of financial firms, all of which are trying to keep costs low, companies like Microgen will benefit as software takes the place of humans. And the City seems to agree. Analysts are projecting earnings per share growth of 24% for 2017 and 20% for 2018 justifying the high valuation of 28.7 times forward earnings. But considering the high level of demand for the latest products, I believe that the firm could smash City expectations for this year, which would mean that this valuation is out of date. 

The post Could these two small-cap growth champions make you a million? appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Tremendous growth opportunity

Eckoh reported an impressive 30% increase in revenue to £29.1m from £22.5m for its financial year ended 31 March. This was its fourth successive year of double-digit top-line growth. Revenue from the UK increased by a reasonable 5% but in the US it soared by 145% and now represents a third of the group’s total revenues.

The US growth was all the more impressive because Eckoh transitioned from ‘capex pricing’ to ‘opex pricing’ during the year. Under the former model, the company receives a large initial payment and then small annual payments, while under the latter, revenue is recognised across the term of the contract. As a result, only $1.8m or 21% of the $8.3m contract value won in the year has been recognised, with the remaining $6.5m to come through largely over the next three years.

The US provides Eckoh with a tremendous growth opportunity. The average contract size has climbed from $53,000 to approaching £1m over the last couple of years. As the company builds scale, the combination of strong revenue increases and expanding profit margins are set to turbo-charge earnings growth.

The company trades on a current-year forecast price-to-earnings (P/E) ratio of 29, falling to 24 next year. With annual earnings growth expected to run at a mid-20s percentage for the foreseeable future, the shares look good value and very buyable to my eye.

Hugely attractive

Wealth manager AFH Financial (LSE: AFHP) is another under-the-radar small cap where recent results persuade me that the company has a bright future. And in my view, a share price of 265p (market cap £80m) undervalues the growth prospects of this business.

For all the growing popularity of low-cost DIY investing, AFH demonstrates that there’s continuing strong demand for advisors who provide financial planning and wealth management services. AFH’s client base is mass affluent and high net worth individuals, as well as a number of companies. And it’s growing both organically and by acquisitions.

Recent results for the half-year ended 30 April saw revenue increase 19%, with funds under management rising 17% to £2.2bn from £1.88bn at April 2016. The balance sheet is cash-rich, bolstered by a £10m placing in March, and the company says it see a strong pipeline of acquisition opportunities.

As with Eckoh, increasing scale is set to push down costs. So, again, we have the prospect of twin drivers of strong top-line growth and rising profit margins to power earnings higher at a rate of knots.

For the company’s financial year ending 30 November, earnings growth of 90% is forecast, followed by over 50% next year, leading to P/Es of 19.5 and 12.5, respectively. These multiples look hugely attractive given the anticipated levels of earnings growth and suggest to me that now could be a great time to buy a slice of this business.

The post These promising small-cap stocks could help you become a millionaire appeared first on The Twelfth Magpie.

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• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
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G A Chester 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.

Perfect timing

Reporting on Tuesday was wealth manager St. James’s Place (LSE: STJ). It has enjoyed a highly prosperous first quarter of the calendar year, with rising stock markets helping to boost its overall performance. Gross inflow of funds increased by 32% during the quarter. This was supported by a high retention of clients and their investments, which resulted in net inflows of almost £2bn for the quarter. This took total funds under management to just under £80bn.

Looking ahead, the company faces an uncertain future. Political risk in Europe remains high, which could mean that the recent share price rally comes under a degree of pressure. Despite this, St. James’s Place has a strong business model which should generate impressive returns due to the continued personal finance challenges people face. For example, rising inflation could lead to greater demand for the company’s services.

St. James’s Place is forecast to record a rise in its bottom line of 95% in the current year, followed by further growth of 21% next year. This puts its shares on a price-to-earnings growth (PEG) ratio of just one, which indicates that it offers high growth at a reasonable price. While there is scope for disappointment over share price returns in the near term, in the long run the company appears set to deliver a rapidly-rising share price.

Consistent growth

Also offering upside potential is multi-channel customer service and secure payments solutions provider Eckoh (LSE: ECK). Its track record of growth has been somewhat disappointing, with it making a pre-tax loss in two of the last four years. However, it is currently forecast to offer a relatively consistent and robust growth outlook, which could make now the right time to buy it.

In the current year, Eckoh is expected to deliver a rise in its bottom line of 20%, followed by further growth of 22% next year. With a price-to-earnings (P/E) ratio of 29, this means that it has a PEG ratio of just 1.4. This suggests that its share price could mount a recovery following its 17% decline during the course of the last year.

The company continues to make progress with new contracts and has enjoyed notable success in the US. This means that its US division could surpass the operations it has in the UK in a relatively short space of time. As well as delivering strong profit growth, this could help to diversify the company’s operations and lead to a lower risk profile in the long run.

The post 2 top growth stocks trading at ultra-low valuations 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?

Peter Stephens 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.