Today, I’m looking at two businesses which, thanks to their line of work, should be able to keep growing whatever the economic weather. The question is whether they’re worth buying at their current prices.

Killer growth

If all investment decisions were based on how exciting or attractive the companies were, Rentokil Initial (LSE: FLTA) would be unlikely to feature on many investors’ watchlists. The FTSE 100 giant is the world leader in pest control — about as far removed as you can get from a sexy tech stock. 

Despite this, Rentokil’s shares have been on a tear over the last 12 months, rising over 45% following some very positive trading. Despite operations in the US being impacted by poor weather during Q2, for example, July’s interim results showed a 4.2% rise in organic revenue — the company’s highest growth rate in H1 for over 10 years. 

The comforting thing about Rentokil’s line of work, of course, is that pests continue to thrive in good times and bad. The fact that it already operates in over 70 countries (and continues to acquire smaller rivals at a fair clip) should also help to mitigate any impact of Brexit. 

As mentioned above, however, adding this company to your holdings won’t be cheap. Rentokil’s shares currently trade on almost 33 times earnings. Even the most bullish market participants would say that’s expensive for any stock, especially as there are plenty of other companies operating in non-cyclical industries available for much less. 

For now, I’d be tempted to see what happens when a third-quarter trading update lands on 17 October. Should a wave of profit-taking follow, the valuation could become a little more attractive.

Dirty profits

Small-cap Filta Group (LSE: FLTA) could also be worth looking at even though, once again, it’s not cheap to buy.

The company specialises in the unglamorous business of removing fat, oil, and grease from commercial kitchens. This month’s interim results, however, were far from unpleasant.

Revenues rocketed 86% to £12.2m over the first six months of 2019 with £4.2m of this coming from its acquisition of peer Watbio. Adjusted pre-tax profit rose a healthy 14% to £1.3m. 

Elsewhere, a forecast yield of 1.5% might generate guffaws from those investing for income, but it’s worth highlighting that the interim dividend was increased by 39% from the previous year to 1p per share. As we never tire of saying at the Fool UK, fast-growing dividends are indicative of healthy businesses and, for this reason, are often preferable to sky-high yields that prove unsustainable. 

Filta is also doing its best to expand in markets other than the UK with “steady growth” in franchise numbers reported in North America and Europe. According to CEO Jason Sayers, the fact that its services are only being used “by 2% or less of the available markets in each geography” gives the company a lot of ‘white space’ to target. Increased regulation relating to hygiene should also act as a tailwind.  

Like Rentokil, Filta’s valuation is high at 37 times forecast earnings. Nevertheless, a price-to-earnings-growth (PEG) ratio of below 1 suggests investors should still get a lot of bang for their buck. 

The post This FTSE 100 growth stock looks Brexit-proof, but is it too expensive? 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.

When a growth share becomes widely followed, speculation can drive up the valuation so high that any investment you make in the company’s shares can face downside risks brought on by a valuation reversal. And that can happen despite strong operational progress in the underlying business.

New to the stock market and growing fast

I like the look of two small-cap shares and I think they could do well for investors during 2019 and beyond. The first is Filta Group Holdings (LSE: FLTA), which provides cooking oil filtration and fryer management services to restaurants and other food establishments. During 2017, around 72% of the firm’s revenue from continuing operations came from the US and 28% from the UK.

The company started up around 20 years ago in the UK and has expanded both at home and abroad, organically and through acquisitions. The outlook is bullish and the firm expects to grow further by both methods in the short, medium and long term. Yet despite its long history, Filta only arrived on the stock market with its Initial Public Offering (IPO) at the end of 2016, which I see as another positive. I believe firms can be at their entrepreneurial best and often well-financed when they first go public, which means a strong growth phase can follow. Getting into a share within a short time following its IPO can work out well for investors in some cases.

Decent quality indicators

If you dig into Filta, you’ll find decent quality indicators such as a return on capital running close to 21% and an operating margin at about 15%. There’s also a robust outlook for earnings growth, a reasonable valuation given the firm’s prospects and a handy dividend to collect. Meanwhile, the balance sheet is strong with a decent net cash position. There’s a lot to like about Filta despite its small market capitalisation close to £69m.

The second share I’m keen on has a higher market capitalisation near £118m. Sopheon (LSE: SPE) provides software and services for product lifecycle management. In 2017, around 60% of revenue came from America and 40% from Europe, but 92% of the operating profit was earned across the pond and just 8% from Europe, so America is an important geography for the firm.

Building a blue-chip client base

Sopheon has been making solid progress building up its blue-chip client base and the outlook is positive. Other attractions include a strong balance sheet with a net cash balance and robust quality indicators, such as a return on capital of around 30% and an operating margin running at about 20%.

Although the valuation looks full and fair given the growth on offer, there is a small dividend to keep investors company and a recent history of robust operational and share-price momentum. I think both these companies would sit well in a diversified portfolio aimed at capturing ongoing growth potential. 

The post These are my top 2 small-cap shares for 2019 appeared first on The Twelfth Magpie.

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Kevin Godbold owns shares in Filta Group and in Sopheon. 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’s why, in addition to building up my cash reserves, I’ve started drawing up a list of ‘expensive’ looking businesses I might just buy a slice of if they were to come on sale in a general market meltdown. Here are just three I’ve got my eye on.

Not cheap enough…yet

£700m cap ticketing and virtual queuing solution firm Accesso Technology (LSE: ACSO) has thoroughly earned its market darling status. Had you bought the shares five years ago and learned to sit on your hands, the value of our capital would have grown by 300%. 

Given the growth opportunities available — such as providing solutions for music concerts and sporting events, in addition to building on its established presence at many tourist attractions — I still think the company warrants attention from growth investors. Last week’s announcement of a strategic partnership with Groupon is yet another positive development. 

Nevertheless, all this promise comes at a price. On 46 times earnings, it could be argued that the company still looks priced to perfection, even if this valuation is set to become far less punchy next year if analyst targets are hit. 

Having looked at the business back in June, challenger law firm Keystone Law (LSE: KEYS) continues to grab my attention. I’m not alone. Even after taking into account the market’s recent wobble, the shares are still worth twice what they were when it listed on AIM in November last year. 

Keystone continues to grow at a rapid pace, so much so that it’s already smashing its own earnings estimates. Revenue rose just under 30% in the six months to the end of July with profit before tax soaring 40.3% to £2.3m. As evidence of its growing profile, the £120m cap also increased its number of lawyers by more than 50% to 31 over the reporting period and continued investing in its IT platform. 

A forecast price-to-earnings (P/E) of 33 is too hot for me in the current political and economic climate, but with first mover advantage, the defensive qualities of its work, and CEO James Knight describing the UK legal services sector as “ripe for disruption“, I’m keen as mustard to add the company to my portfolio. 

Doubled in value

Fryer management firm Filta Group (LSE: FLTA) is certainly the least glamorous of the trio, not that you’d know by the performance of its stock.

Since coming to the market in 2016, the Rugby-based business has more than doubled in value — further evidence that backing market minnows can seriously improve your wealth, so long as you can accept greater volatility and are fortunate/skilled enough to get in early.

It’s not hard to see why growth aficionados have warmed to it. Last month’s half-year results revealed a 22% rise in both revenues (£6.6m) and pre-tax profit (£1m). Currently expanding into Canada and Germany at a fair clip, Filta added 10 new franchises and 28 mobile filtration units in the period, bringing the total in operation to 192 and 422 respectively.

Right now, the stock is trading on 28 times earnings for the current year — too punchy for my liking. That said, a general market sell-off could be just the ticket to get me involved.

The post 3 quality growth stocks I’d consider buying if the market crashes 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.

It appears to be performing well at the present time while the wider retail sector continues to struggle. As such, now could be the right time to buy it alongside a small company that reported positive results on Friday.

Strong performance

The small-cap in question is provider of fryer management and other services to commercial kitchens, Filta Group (LSE: FLTA). It released a pre-close trading update for the first half of 2018 which showed that it is performing in line with expectations. It has benefitted from new franchisees being added in the latter part of 2017, with further growth in its UK-based seals business and an increasing contribution from recently-acquired GMG also boosting its performance.

The company has been able to successfully dispose of its lower margin refrigeration business, while changing the structure of its European activities. It is seeking to make further acquisitions in order to add to its organic growth potential over the medium term.

With Filta Group forecast to post a rise in its bottom line of 22% in the next financial year, its strategy appears to be working well. Despite this, the company trades on a price-to-earnings growth (PEG) ratio of just 1.2. This indicates that it offers a wide margin of safety and may be able to generate significant share price growth. As such, it has the potential to outperform the FTSE 100 over the medium term.

Improving business

The prospects for Boohoo may also be better than for a range of FTSE 100 shares. The company appears to be well-placed to benefit from changing consumer trends both in the UK and across the globe. Its online focus means that it has managed to escape the painful transition being felt by bricks-and-mortar retailers. This could allow it to outperform many of its retail sector peers, while also offering investors a more consistent performance over the next few years.

In terms of growth potential, Boohoo is expected to post a rise in earnings of 17% this year, followed by further growth of 26% next year. Its PEG ratio of 1.8 does not appear to be excessive given that it is well-placed to generate continued growth beyond 2019. And with a continued focus on customer service and a relevant product offering, it could become a stronger operator due to improving customer loyalty.

Although the FTSE 100 may contain cheaper stocks than Boohoo at the present time, the growth potential on offer from the business could make it a worthwhile investment. While volatile, its risk/reward ratio appears to be favourable for long-term investors.

The post Why I’d back the Boohoo share price over a number of FTSE 100 stocks appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo 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.

But today, I’m taking a look at two businesses that I feel can be safely included within the former category and — notwithstanding black swan events — look likely to continue to power ahead in the next year.

Strong progress

Shares in small-cap fryer management service provider Filta Group (LSE: FLTA) were on fire early this morning after the company released a bullish statement on recent trading to coincide with its annual general meeting. 

The Rugby-based firm stated that it had made “strong progress” since the beginning of 2018. In addition to the sale of 17 mobile filtration units, a total of six new franchises, including one each in new markets of Germany and Canada, had started over the period. 

Elsewhere, Filta’s existing franchises and its own operations were trading in line with expectations with FiltaGMG — the company’s grease management business — making an “increasing contribution” to the market minnow’s overall performance.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were roughly 11% ahead of that achieved by this point in 2017. Once exchange rate fluctuations are taken into account, this works out at growth of 23%.

Unfortunately, Filta’s shares certainly aren’t cheap to acquire, trading as they do at a forecast 27 times earnings.

That said, a PEG ratio of 1.2 before today implies that the price isn’t absurd considering the company’s promise. Indeed, the fact that it boasted of having a “good pipeline of enquiries” from potential franchisees in both Europe and North America certainly bodes well for the rest of the year.

Its line of work may be unappealing but I think that Filta will continue to perform for its owners.

Golden opportunity

Another growth stock I’d consider at the current time would be holiday purveyor On the Beach (LSE: OTB).

Recent interim results were more than satisfactory, in my view, with group revenue rising 19% to £45.3m. Adjusted pre-tax profit came in at £14m — 15% higher than over the same period in 2017.  This was a particularly impressive performance when you consider that the collapse of Monarch airlines led to an increase in seat prices and — for On the Beach — “a corresponding reduction in bookings“.

Despite management’s confidence in being able to meet expectations for the full year, the share price has fallen almost 30% since the numbers were announced. When you consider that the very same shares changed hands for below 200p shortly after the EU referendum, it’s perhaps understandable that some early investors are banking profits. Even so, this seems like a serious overreaction to a fairly rare event.

Right now, a forecast price-to-earnings (P/E) ratio of 22 seems fair considering the progress the company is making in grabbing market share and expanding overseas. The number of daily unique visitors rose almost 24% over the reporting period (to 34.1m) and its decision to branch into Denmark — its third international market — should reap returns over the medium-term. What’s more, a PEG ratio of under 1 suggests all this growth still isn’t fully appreciated by the market.

Having been the victim of nervous sellers over the last few months. I suspect now might be a great opportunity for patient, new investors to begin building a position.

The post Why I’d still consider buying these top growth stocks 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.

It’s a model that’s worked stunningly for Domino’s Pizza Group (LSE: DOM). Domino’s shares have risen by 365% plus dividends over the last 10 years.

I’ll take a fresh look at the pizza takeaway specialist in a moment, but first I want to consider a small-cap I reckon could be a millionaire-maker stock.

Recyling profits

Shares of Filta Group Holdings (LSE: FLTA) have doubled in value since the firm floated in November 2016. The firm’s main business is providing fryer maintenance and oil recycling services for deep fat fryers in commercial kitchens.

It’s a clever idea as this is job can’t be avoided, but isn’t always easy for kitchen staff to do themselves. Having a specialist contractor to provide this service can really make sense.

Fryer maintenance has proven to be a good business to franchise. Recurring revenue from the group’s Fryer Management business rose by 36% to £8.4m last year, and provided 62% of total revenue of £13.5m.

Although Filta Group operates in the UK and Germany, the majority of the business is in the USA, where the highest grossing franchise owner made over $2m in revenue last year. This kind of earning potential should make it easy for the group to attract new franchise owners as it expands across the USA and into Canada.

Is now the time to buy?

Revenue from continuing operations rose by 36% to £11.5m last year. The group moved from an operating loss of £0.25m to an operating profit of £1.7m, giving an operating margin of 14.7% and a return on capital employed (ROCE) of 22%.

A high ROCE is often a characteristic of franchised businesses. I suspect Filta Group’s ROCE may rise further. By way of comparison, Domino’s average ROCE over the last five years was 47%.

Filta stock currently trades on a 2018 forecast P/E of 27, with a prospective yield of 1.1%. That’s quite pricey. But if growth continues at the current rate, I think that today’s price could seem cheap in a few years.

More pizza outlets planned

Domino’s has been a tremendous growth investment. But the share price hasn’t really gone anywhere over the last few years. The shares first hit 350p at the start of 2016. That’s still where they are today.

I think there’s a risk that the business is reaching saturation point in the UK.

Management has increased the target store count for the UK to 1,600, from a current store count of 1,045. Achieving this means splitting existing franchises into two or more parts. Franchisees then run several stores in areas previously covered by just one outlet. This means there’s a risk of ‘cannibalisation’ — new branches taking sales from the old ones.

Profit growth may be slower

Analysts expect Domino’s to report adjusted earnings of 16.2p per share this year. That’s only a tiny improvement on last year’s figure of 16.0p per share.

The picture is expected to improve in 2019, when earnings are expected to climb 10% to 17.9p. But with the shares trading on 21 times 2018 earnings, I think the good news is already in the price. I’m not tempted at current levels.

The post Why this growth stock could help you retire a millionaire appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Domino's Pizza. 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 this in mind, here are two market minnows I’ve recently added to my own watchlist.

Strong sales growth

Holders of personal care and beauty products supplier Swallowfield (LSE: SWL) endured a roller coaster 2017 as the company’s shares bounced up and down within the 300p to 400p range — a decent illustration of just how volatile market minnows can be over a short period of time. Nevertheless, I think the company could prove to be a great medium-to-long term pick if today’s interim results are anything to go by.

In the 28 weeks to 6 January, underlying operating profit rose 11% to £3.4m. Revenue came in at £40m with “strong sales growth momentum” seen in the company’s portfolio of owned brands (which now contribute 31% of total sales). It was supported by decent trading over Christmas, “further retail distribution gains” in the UK and Europe and new product launches. While starting from a low base, online sales also grew “significantly“, according to the company.

Even though an 18% rise in the interim dividend and confirmation that PZ Cussons Brand Director Tim Perman will take over CEO duties in July are encouraging developments, it’s Swallowfield’s growth potential that most attracts me to the stock. No slouch when it comes to acquisitions, the company backed up today’s numbers with the announcement that it had purchased the men’s grooming brand Fish for a total of £3m. With net sales of £1.7m and EBITDA to the tune of £400,000 last year, this seems like a good deal.

Priced at 13 times forward earnings, shares in Swallowfield aren’t particularly dear for what appears to be a well-run business. A forecast PEG ratio of just under 1 also suggests that investors should expect positive share price momentum going forward.

Record revenue

Another small-cap that’s caught my attention recently is Filta Group (LSE: FLTA).

The company specialises in cleaning fryers used in kitchens in a huge number of locations (including hospitals, restaurants and schools) and recycling the oil it collects. While not the most exciting line of work, the £49m cap is clearly doing something right based on this month’s trading update for the previous financial year (ending 31 December).

Revenue rose “over 30%” in 2017 to stand in excess of £13.25m — a record for the company. Strong organic growth in the UK was attributed to excellent trading at the firm’s FiltaSeal business, which installs refrigeration seals on site. Similar performance across the pond was explained by the increase in the number of franchises and Mobile Filtration Units in operation in the market.

Like Swallowfield, Filta seems set for a period of sustained growth. Indeed, having acquired Grease Management Ltd in August last year, CEO Jason Sayers has stated that Filta is committed to expanding “through both acquisitive and organic means over the short, medium and long-term“.

On a forecast price-to-earnings (P/E) ratio of 25 for 2018, there’s already a lot of positive news priced-in. That said, with the company now gearing up to grow its fryer management franchise business throughout Europe, I think the stock could still prove rewarding for new investors.

The post 2 small-cap growth stocks I’m watching closely 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?
• 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.

I think further growth is likely, but I’ve also found a £45m minnow which could be worth watching.

Can Boohoo keep climbing?

Boohoo.com’s group sales rose by a stunning 100% during the final four months of last year, compared to the same period in 2016. The secret to the group’s continuing expansion seems to be that it’s discovered a successful growth formula which it is now duplicating.

During the period in question, Boohoo brand sales rose by 25% to £142m. But sales at the newer PrettyLittleThing brand rose by a stunning 191% to £73.8m. And the group already has a third brand lined up that’s still at an early stage. Sales from Nasty Gal reached £11.9m during the four months to 31 December, from start-up in March 2017.

Although the UK still accounts for 59% of revenue, sales growth in the rest of Europe and the USA is equally strong. If Boohoo’s brands can establish a strong reputation in these markets (and Nasty Gal already has a head start as it’s a US brand), they could become much larger.

Are the shares still a buy?

Boohoo.com’s managers are very experienced fashion specialists with a big stake in the business. Under their guidance, annual profit has outpaced sales, rising from £8.4m in 2015 to £27.3m over the 12 months to 31 August.

Strong cash generation has allowed the group to build a net cash balance of more than £100m, providing funding for warehouse upgrades and expansion.

Although a 2018/19 forecast P/E of 49 looks demanding, earnings are expected to grow by around 30% this year and next year. If this pace can be maintained, today’s share price of 180p could soon look quite affordable.

Cleaning up

One growth stock you may not have considered before is AIM-listed Filta Group (LSE: FLTA). This company’s main business is managing deep fat fryers in restaurant kitchens. This is an essential service that has to be performed regularly, and the group currently visits more than 5,000 customers every week.

In a trading statement today, Filta said today that sales for the year ending 31 December are expected to have risen by over 30% to “in excess of £13.25m”. Profits are expected to be in line with market forecasts of £1.6m.

Growth over the last year looks fairly healthy. The number of Mobile Filtration Units rose by 15% to 392 last year. In the UK, the recently acquired FiltaSeal business is said to have delivered “a strong performance”.

US sales currently account for around 80% of revenue, with the remainder coming from the UK. Filta is also expanding into Canada and Germany. The group uses a franchised business model, which normally means that expansion costs are low.

I believe the outlook for shareholders is fairly positive here. One concern is that a slowdown in the restaurant market or a spate of closures could derail Filta’s growth plans. It’s also worth noting that a fair amount of growth is already priced into the shares, which trade on a forecast P/E of 24.

However, the group’s franchise model should limit losses if the market slows. On balance, I believe these shares may be worth a closer look.

The post 1 ‘secret’ small-cap growth stock I’d consider with Boohoo.com plc appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo.com. 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.

AIM-listed Filta Group (LSE: FLTA) started out providing used oil filtration and fryer cleaning services. It’s since expanded and offers a range of related services to customers in the UK, US and most recently Canada.

Filta only floated on AIM in November 2016, so we don’t have much history to go on. But the company published its latest interim results on Thursday morning, sending the shares up by 9%. This sounds like a potentially interesting growth business to me, so I’ve been digging into the figures to find out more.

Sales up 39%

The group reported 12 new franchise sales for the period, taking its total number of franchisees to 182. Growth was strong in most areas of the business, and a recent acquisition will also broaden the firm’s service offering.

Filta’s headline financial figures suggest that this operational growth is translating into rising profits. Group revenues rose by 39% to £6.6m during the six months to 30 June, while the group’s underlying operating profit rose by 62% to £1m.

Filta reported earnings per share of 2.6p for the half-year period, and the board has declared an interim dividend of 0.65p per share. In my view, both of these figures are consistent with analysts’ full-year forecasts for earnings of 6p per share and a total dividend of 2p per share.

These figures give the firm’s shares a forecast P/E of 26 and a prospective yield of 1.4% for 2017. This isn’t cheap, but it could be a reasonable basis for an investment if the firm’s growth continues at current rates.

Too cheap to ignore?

One of the small-cap stocks in my personal portfolio is recruitment group Harvey Nash (LSE: HVN). This £60m firm operates in three main areas — executive search, professional recruitment and outsourcing.

The majority of the group’s profit is generated in the UK and mainland Europe, but the firm’s outsourcing operations mean that it’s also quite active in Asian markets such as Vietnam. Like other small companies in this sector, Harvey Nash was affected by last year’s Brexit vote.

The group’s results for 2016/17 suggested that market conditions were mixed, as pre-tax profit fell by 6% to £8.5m and earnings per share were 8% lower, at 8.7p. However, the group’s strong cash generation wasn’t affected, and year-end net cash rose from £0.2m to £5.6m. Shareholders were rewarded with a 7% increase to the final dividend.

Looking ahead, Harvey Nash’s latest trading update indicates that trading is in line with expectations so far. Ongoing recruitment of contractors is said to be “comfortably ahead of last year” and measures are being taken to cut overheads by around £1m per year.

Brokers’ consensus forecasts for the year have risen sharply over the last few months. Earnings are now expected to rise by 20% to 10.4p per share this year, putting the stock on an undemanding forecast P/E of 8.

The dividend is expected to be lifted 5% to 4.3p, providing an attractive and well-covered yield of 5.2%. I continue to view this stock as a buy for income and growth.

The post 2 under-the-radar small-cap stocks you probably haven’t considered appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
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Roland Head owns shares of Harvey Nash. 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.