With this in mind, here are what I believe to be three of the best penny stocks to buy now.

Growth-focused penny stock

Trading at just under a pound, as I type, is Record (LSE: REC). This is a business that tries to reduce the impact of currency movements on institutional clients’ investment portfolios. 

Unfortunately, Record’s recent move to invest for growth has been at the expense of a “short-term decrease in profitability.” However, the firm is still cash-generative and boasts a healthy balance sheet. The payment of a special dividend smacks of confidence too. 

Speaking of which, Record started its new financial year in April with its highest recorded Assets Under Management Equivalents (AUME). It’s also been developing new products, including the recently-launched Emerging Market Sustainable Finance Fund.

Aside from this, Record also scores well on the quality metrics, such as returns on capital and margins. These are high, relative to the market in general, and go some way to making up for industry risks, such as regulatory hurdles. Nevertheless, the latter still has the potential to knock the share price.

On a P/E of a little less than 20 for FY22, I think Record could be a good stock for me to buy now. 

Recovering well

Also featuring in my selection of the best penny stocks to buy now is retailer Topps Tiles (LSE: TPT). Unsurprisingly, this is a company that really suffered at the hands of the pandemic. However, the tide has clearly turned.

Last month’s update said the company’s retail business had “performed well” in Q3, helped by the reopening of stores in April. Topps went on to say it expected to benefit from “high levels of consumer demand” going forward as the home improvement boom continues. A return to sales growth at its Commercial business is also expected.

Of course, hindsight shows that March 2020 was the time to pile in. The shares have multi-bagged since then. However, a P/E of under 15 now still doesn’t feel unreasonable for a debt-free company with an encouraging outlook. That said, its cyclical nature coupled with warnings that Covid-19 could get worse before it gets better makes this a cautious rather than automatic buy.

Ahead of expectations

A final pick is EKF Diagnostics (LSE: EKF). For under a pound a share, I can buy inmto a company that achieved record sales and profits in 2020.

According to May’s AGM statement, this form has carried on into 2021, thanks to “a very meaningful recovery in trading.” EKF’s core business “performed more strongly than expected” in Q1, again thanks to ongoing demand for sample collection devices generated by the pandemic. Indeed, the company now believes that full-year numbers are likely to be “comfortably ahead of already upgraded management expectations.” 

Naturally, all this hasn’t gone unnoticed by the market. In the last year, EKF’s stock jumped by 72% in value and now trades on a forecast P/E of 28. Unfortunately, this high valuation could mean the share price falls heavily if the company disappoints.

With a solid growth strategy and balance sheet, however, I’d still buy EKF today.

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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.

EKF Diagnostics (LSE: EKF) was setting the pace in Thursday business following the release of terrific trading details.

The medical play was last 8% higher on the day after hitting two-and-a-half-year peaks of 26p per share earlier in the session.

EKF announced that “trading in the second quarter of the year has continued the favourable trends experienced in the first quarter,” adding that Junes sales had been particularly strong. The Cardiff business said that this “is entirely due to organic growth with no major tenders won during the period.”

As a result, the AIM-listed firm advised that adjusted EBITDA for 2017 should ring in “comfortably ahead” of current projections.

And to round off a perky announcement, the blood testing star declared that, as a result of strong cash generation, that net cash as of June 30 stood at £4m. This is a vast upgrade from net cash of £2.2m posted at the end of 2016.

Set to bounce?

The City had already been predicting strong bottom-line growth prior to today’s release, forecasts pointing to pre-tax profit of £3.6m versus last year’s £1m loss. And profits were expected to tip to £4m in 2018.

But today’s release is likely to lead to seismic upgrades to these numbers in the near term. And further upward revisions are very likely should EKF keep up the momentum. As such, I reckon the stock is a great pick despite its conventionally-high forward P/E ratio of 31.3 times.

A champion boxer

DS Smith (LSE: SMDS) is another London growth giant that investors should take a close look at.

The company has proven to be a reliable growth generator for some years now, and the number crunchers expect further expansion of 3% and 6% in 2017 and 2018 respectively. These figures also make it decent value for money, sporting a prospective P/E rating of just 14.5 times.

The box-builder’s stock value also exploded recently after the release of perky financials, the London business gaining fuel after last week’s full-year results and striding to fresh record peaks above 485p per share just today.

DS Smith declared that revenues detonated 18% in 2016, to £4.9bn, a result that powered adjusted pre-tax profit 18% higher to £391m. While sterling weakness gave the top line a welcome boost, this does not tell the whole story as sales at constant currencies still rose by a healthy 6% year-on-year.

The packager’s programme of spreading its wingspan across the continent continues to pay off handsomely. It noted “continued excellent growth from pan-European customers” and enjoyed growth in all of its regions last year.

DS Smith shelled out £85m on acquisitions last year alone, and its appetite for M&A shows no signs of waning. The company has also bought an 80% stake in Interstate Resources this month for £722m, with an option to buy the remaining share within five years, in a move that marks its first foray into the massive US market.

I am confident the huge investment it is making to bolster its global footprint and position in key growth areas should continue to deliver meaty earnings growth in the years ahead.

The post 2 brilliant growth shares I’d buy in July appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended DS Smith. 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.

Out of the red and into the black

Headline figures include a surge in revenue of 28% compared to 2015’s outcome,  with gross profit rising by 24%, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £6.1m, which trounces the loss of £0.3m suffered the year before.

This stellar performance shows in cash from operations, too, with the firm delivering an inflow of £8.8m, which compares to an outflow of cash during 2015 of £2.9m.  On 31 December, cash on the balance sheet had grown 300% for the year and stood around £7.9m, translating to net cash of £2.2m — a vast improvement on the net debt figure edging towards £9m we saw a year ago.

By most measures, this is a good financial performance that marks a turnaround in the firm’s fortunes into profitability. The shares have responded well, soaring more than 130% since February 2016. However, I think there could be much more to come for investors because the firm also announced today that it is evaluating plans to split the company into two separate entities, with the aim of achieving a fair reflection of the value of each separate business.

The parts could be under-valued

EKF Diagnostics describes itself as “a global medical diagnostics business with a long history in point-of-care testing and central laboratory manufacturing“. The firm makes HbA1c analysers and glucose analysers used by doctors, sports clinics and diabetes clinics, and distributes them to more than 100 countries.

The directors put today’s positive results down to a restructuring programme aimed at driving profitability and organic sales growth. Non-executive Chairman Christopher Mills reckons the firm moved fast to turn things around and predicts “continuing benefits” for shareholders during 2017.

I think the business separation idea is interesting, and demonstrates that the directors are focused on investor returns as much as they are on turning around and growing the business. The separation would divide the business based on the existing departments of Point of Care and Lab Diagnostics. The directors believe that the parts of the business are worth more than the firm’s overall valuation implies and separating them into stand-alone firms would give the opportunity for valuations to adjust in a way that may add to investor total returns.

Slight complications?

Around 39% of sales came from the US during 2016 and that leads to a challenge regarding tax implications surrounding the proposed split. To overcome this problem the directors plan to cancel the company’s shares from trading on AIM, followed by the pursuit a listing of the shares of both companies on a “market to be determined.”

Recognising that a period of being unlisted on a stock exchange could be uncomfortable for shareholders the directors are considering offering a 21.5p-per-share buyback prior to splitting the business for those who would rather exit their holdings than go through the changes.

With the share price sitting around 19.25p as I write, there’s a potential 2.25p immediate upside to get to the directors’ implied valuation, which, on top of the ongoing turnaround and growth trajectory of the business, adds to the attraction of the stock, in my view.

The post This ‘special situation’ stock looks set to fly appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

A strong end to the year

The fourth quarter was a very impressive period for EKF. Trading in the latter part of the year was materially better than budget. This means that the company’s performance will beat the figures provided in the trading update released in November. Specifically, revenue in excess of £38m has been achieved, versus previous guidance of at least £36.5m. Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) comfortably exceeded previous guidance of at least £5.5m.

Encouragingly, the better than expected performance was entirely due to organic growth. This shows that the strategy employed is proving successful and could deliver further growth over the medium term. Additionally, cash generation during the fourth quarter was also strong, with EKF being net cash positive by the end of the year. It expects to remain so during the first quarter of the new year and will use some of the cash generated in 2016 to reduce its debt pile by around £1.6m. This puts it on a firmer financial footing through which to deliver further growth in future.

Outlook

Following four years of losses, EKF’s move into profitability in 2016 is a big step forward for the business. It shows that it has the potential to deliver strong returns for its investors and looking ahead, impressive growth is on the cards. For example, in 2017 earnings are due to rise by 38%. This puts it on a price-to-earnings growth (PEG) ratio of only 0.7, which means that capital gains are on the horizon.

This growth rate is easily ahead of that of GlaxoSmithKline. The healthcare major is expected to record a rise in its bottom line of 10% in 2017. With it trading on a PEG ratio of 1.4, it lacks the exceptionally low valuation of EKF but remains good value for money nonetheless. A key reason for this is that GlaxoSmithKline is a highly diversified business with a wider economic moat, greater diversity and far lower risk than EKF. Therefore, it demands a higher valuation.

In terms of which stock could deliver the greatest gains for its investors, EKF clearly has the scope to double and remain good value for money. However, at the same time it’s more likely to endure a difficult period than its larger peer thanks to its higher risk profile. As such, GlaxoSmithKline remains the better buy based on risk and reward, although EKF could prove to be a star performer in 2017 and beyond.

The post Does EKF Diagnostics Holding plc have more upside than GlaxoSmithKline plc after beating expectations? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

EKF’s third quarter of the year was a successful one. It was materially higher than budget and at a run-rate above and beyond market forecasts. EKF now expects to record revenues and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) for 2016 that will exceed even the high end of current market forecasts.

Additionally, EKF has also announced that its cash generation during the third quarter has been strong and its net debt position has therefore been boosted considerably. Although EKF is expected to continue to invest for long-term growth through to the end of the year, it now expects to be cash positive within the next year. Crucially, this won’t be to the detriment of capex to increase consumables capacity in Germany and to replace equipment in the US.

The market has reacted positively to EKF’s update. Its shares are up by 15% and this takes them to a rise of 52% in the last six months. Looking ahead, there could be more capital gains to come, since EKF offers stunning earnings growth forecasts at a very reasonable price.

For example, EKF is expected to turn a profit in the current year after five years of straight losses. Next year, its bottom line is forecast to rise by 134% and this puts it on a price-to-earnings growth (PEG) ratio of just 0.3. This indicates that it offers significant upward rerating potential and it would therefore be unsurprising for it to continue to beat the wider index.

Upbeat outlook

Of course, there are other options within the healthcare space. A notable example is Smith & Nephew (LSE: SN). It offers a lower risk profile than EKF since it has an excellent track record of profitability. It also has a much stronger balance sheet, superior cash flow and greater diversity in terms of its product offering and geographic exposure.

Furthermore, Smith & Nephew offers an upbeat outlook. Its bottom line is expected to grow by 13% in the next financial year and this puts it on a PEG ratio of just 1.4. This shows that while Smith & Nephew is a large cap that may not be able to compete with smaller peers in terms of growth, it nevertheless offers substantial capital gain potential.

In fact, Smith & Nephew’s risk/reward ratio is more appealing than that of EKF. Certainly, EKF is worth buying due to its rapid improvement, growth prospects and low valuation. However, Smith & Nephew’s lower risk and still relatively high reward prospects make it the better overall investment for the long term.

The post Is Ekf Diagnostics Holding plc a buy as shares jump 10%+? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

However, investor sentiment in the company remains weak following the EU referendum. Realistically, sales could come under pressure as it now appears likely that the UK will experience an economic slowdown of some sort, so investors seem to naturally be demanding a wider margin of safety before buying Topps Tiles.

With the company trading on a price-to-earnings growth (PEG) ratio of 1.1, it seems to offer good value for money. However, due to its dependency on the UK economy and its lack of long-term sales visibility, it may only be of interest to less risk-averse investors.

Good time to buy?

Also reporting today was Low & Bonar (LSE: LWB), with the international performance materials group recording a rise in sales of 2.4% at constant currency in the first half of the year. This has translated to an increase in pre-tax profit (before amortisation) of 1% at constant currency and, encouragingly for Low & Bonar’s investors, it continues to successfully execute its strategy.

For example, it’s rebalancing the business and was able to negotiate the sale of its cyclical grass yarns segment during the period. Furthermore, it’s progressing towards the resolution of the Bonar Natpet joint venture, while also starting production in China.

Looking ahead, Low & Bonar is forecast to increase its bottom line by 9% in each of the next two years. It could gain a further boost from favourable currency movements and this could help to push its dividend higher at a brisk pace. It already yields 4.7% and due to interest rates being likely to fall, it could become a relatively appealing income play. Therefore, now seems to be a sound moment to buy Low & Bonar for the long term.

Shaking off Brexit

Meanwhile, shares in EKF Diagnostics (LSE: EKF) have soared by over 10% today after the point-of-care business reported a better than expected trading update. For the six months to 30 June, EKF’s sales and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) were ahead of budget and market expectations. As such, EKF is now confident it will achieve the high end of its targeted range of EBITDA for the current year of £3.5m-£4m.

Furthermore, it continues to make strong progress with its restructuring programme, with the majority of benefits set to come to the fore during 2017. EKF also believes that Brexit won’t hurt its business. Therefore, it would be unsurprising for today’s share price rise to continue over the short-to-medium term.

The post Should you buy Topps Tiles plc, EKF Diagnostics Holding plc and Low & Bonar plc after today’s updates? appeared first on The Twelfth Magpie.

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Encouragingly, the trading update showed that EKF is on-track to deliver cost savings of £6.7m from 2016 onwards and that it is putting in place the foundations for future growth. To aid this, EKF has adopted a singular focus on point-of-care and it remains focused on returning to core profitability and positive cash flow. Although EKF is expected to record a loss in the 2015 financial year, this is partly due to the expected impact of asset write downs of up to £60m.

While this is disappointing, EKF is anticipating core revenues of over £30m in 2016 and expects to have an EBITDA (earnings before interest, tax, depreciation and amortisation) of between £3m and £4m this year. As such, and while it remains a relatively high risk play, which is in the midst of a major turnaround, EKF may be of interest to less risk averse investors.

Also rising today are shares in Hydrodec (LSE: HDY), with the cleantech industrial oil re-refining company posting gains of 15% even though there’s no significant news . Despite this rise, Hydrodec is still down by 59% in the last year, a key reason for this being the falling oil price during the period. As a result of this, Hydrodec last week confirmed the disposal of its UK collections business and UK lubricant oil re-refining, with it retaining an economic interest in the latter through a potential profit share.

The deal seems to be a sound one for Hydrodec since it reduces the downside risk to the business by its UK operations given the relatively low oil price. It also allows the company to shift its focus towards its transformer oil technology business, where it could have a competitive advantage due to its proven technology. Although the company’s shares have performed well today, there is still some way to go as it proceeds with what is an ambitious turnaround plan. However, it may be worth a closer look for less risk averse investors.

Meanwhile, Hardy Oil & Gas (LSE: HDY) has also performed well today, with its shares being up 11%. As with Hydrodec, Hardy has been hurt by a falling oil price in the last year, with its shares being down by 49% during the period.

Looking ahead, Hardy could deliver improved share price performance since it continues to have no debt on its balance sheet and a cash position of $19.3m. However, as its recent results highlighted, the company may have the potential to develop its India-based assets, but the pace of activity has been rather slower than it had hoped. And with there being a number of oil and gas plays trading on low valuations and having bright futures, it may be prudent to look elsewhere rather than buying a slice of Hardy at the present time.

The post Are These 3 Small-Caps Set To Soar? EKF Diagnostics Holding PLC, Hardy Oil & Gas plc And Hydrodec Group plc appeared first on The Twelfth Magpie.

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The Cardiff business advised that, after the initial stages of a company-wide review by new non-executive chairman Ron Zwanziger, that full-year revenues are expected to register at around £32m for 2015.

This marks a huge fall from sales of £40.1m printed last year and puts paid to EKF Diagnostics’ strong revenues momentum — the firm reported sales of £31.8m and £21.6m in 2013 and 2012 correspondingly.

Alarmingly EKF Diagnostics added that “there are likely to be a number of items” to materially impact pre-tax profits during the period.

 These include possible impairments concerning the company’s Molecular division, discussions concerning the closure or sale of which are ongoing; provisions against, or the writing-off of particular debtors; and costs concerning the shuttering of EKF Diagnostics’ Separation Technology manufacturing site in United States.

The aforementioned closure of its site in Sanford, Florida, and subsequent relocation of centrifuge and hematocrit analyser operations to its plant in Boerne, Texas is part of EKF Diagnostics’ ongoing cost-cutting programme.

The business advised today that “the management team is making progress in realigning its cost base with the goal of achieving positive cash generation in the early part of next year.” But this was the only patch of good news in an otherwise dour market update.

Under the cosh

Indeed, today’s update is the latest bout of turbulence to hit the Welsh business in recent weeks.

The appointment of Zwanziger — a veteran of the industry who has previously enjoyed stints at MediSense, Inverness Medical Technology, and more recently US diagnostics giant Alere — has elected to slim the board down to two executives and five non-executives, including some outside appointments.

 On top of this, the death of non-executive director Kevin Wilson was announced last week, leading to the installation of ex-chairman David Evans as chair of the audit committee.

 Prior to Thursday’s announcement the City expected EKF Diagnostics to chalk up revenues of around £45.2m in 2015. But today’s downgrade is now expected to result in yet another loss thanks to the issues mentioned. And EKF Diagnostics’ situation is hardly helped by its significant cash burn, either — the firm reported net debt of £5m as of June, swinging from net cash of £2.4m six months earlier.

Chairman Zwanziger’s review has already revealed colossal problems at the firm despite it only being in its initial stages. Although today’s release may encompass the full extent of EKF Diagnostics’ problems, I for one will not be investing into the firm until further details concerning the state of the company are released.

The post Why Shares In EKF Diagnostics Holding PLC Halved Today appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

While this is a welcome relief for Serco’s shareholders, the company is still in dire trouble. Indeed, the company is still planning to conduct a refinancing and rights issue at some point in the next month or so as it looks to bolster its weak balance sheet. 

However, the group has started to recover from some of the accusations made against it last year. For example, the City of London Police recently found that the company wasn’t guilty of misleading the taxpayer over prisoner transfer contracts. The company has also won a contract to continue providing Australian immigration services. 

So, Serco is starting to recover but the company still has a long way to go.

Capital return  

Computacenter (LSE: CCC) has jumped by as much as 13% today after the company completed a return of capital to shareholders. Shareholders on the register as of 19 February will receive 71.9p existing ordinary share, equivalent to approximately £100m or around 11.2% of Computacenter’s current market capitalisation. The shares have jumped on a capital reorganisation. 

If you’ve missed Computacenter’s special payout, there’s no reason to worry. The company has a history of returning capital to shareholders. Computacenter’s dividend yield is set to hit 4.8% this year and the payout is growing at a double-digit rate every year. Additionally, even after returning £100m to investors, according to my figures, Computacenter has large net cash balance. So, I wouldn’t rule out further special payouts. 

Maiden profit 

Lastly, Ekf Diagnostics (LSE: EKF) has jumped by 10% today as investors position themselves ahead of the company’s full-year 2014 results. EKF will announce its preliminary results for the year ended 31 December 2014 on 16 March 2015 and the market is expecting the group to unveil its maiden profit. 

According to Ekf’s latest trading update, management expects 2014’s figures to be at the higher end of previous management guidance. Unaudited revenues of around £40.1m, a 26% improvement on the previous year, are expected. City analysts are expecting a pre-tax profit of £1.8m for the period and earnings per share of 0.34p. 

Based on these figures, the company is currently trading at a forward P/E of 54. However, based on the fact that Ekf’s earnings per share are set to jump by more than 140% net year, this premium valuaion is justifiable.

The post Why Ekf Diagnostics Holding PLC, Computacenter plc And Serco Group plc Are Rising Today appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.