Of course, a number of FTSE 100 stocks offer significantly higher yields than the index. One example is SSE (LSE: SSE), which has a 7%+ dividend yield. Could it therefore be worth buying alongside a dividend growth stock which released a positive update on Tuesday?

Improving prospects

The company in question is specialist technical fluid power products supplier Flowtech Fluidpower (LSE: FLO). It released a trading update which showed revenue increased by 54% in the first nine months of the year. Of this, 6.7% was organic, while the remainder was from acquisitions.

The company continues to have a positive outlook about future growth rates for the fluid power market. Its diverse range of customers in the UK and EU could provide it with a degree of resilience over the medium term.

In terms of its income prospects, Flowtech Fluidpower currently has a 3.7% dividend yield, which is covered 2.6 times by profit. This suggests that it could rise at a faster pace than profit, without hurting its financial standing. And with earnings due to rise by 9% next year, inflation-beating dividend growth could be on the cards. With the stock trading on a price-to-earnings growth (PEG) ratio of around 1.4, it seems to offer a wide margin of safety at the present time.

Low valuation

As well as a 7%+ dividend yield, SSE also seems to offer a low valuation. The company continues to face uncertainty from a variety of areas. For example, regulatory and political risk remains high, and could continue to weigh down investor sentiment. There are continued fears surrounding the prospect of nationalisation, and this may help to explain why the stock has a price-to-earnings (P/E) ratio of under 11 at the present time.

Additionally, a recent profit warning hurt investor sentiment, while the general optimism among investors (which remains in place despite the recent stock market correction) means that defensive shares are less popular.

SSE may not be as defensive as it once was, as a result of the risks it faces, but it could prove to be a worthwhile investment should market volatility continue.

With the threat of a global trade war and rising US interest rates, its inflation-beating dividend growth and high yield could offer relatively strong returns for investors over the medium term. And with plans to reshape the business through a split in the coming months, the long-term prospects for the company appear to be improving. As such, now could be the right time to buy.

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Peter Stephens owns shares of SSE. 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.

The sharp drop was triggered by a profit warning caused by contract delays and management guidance that “growth may be softening”.

Lost profit

Delays to a £1.5m contract for the Thames Tideway project mean that this revenue will now slip into 2019. Operating profit is now expected to be “marginally below market expectations” this year.

Another surprise is that long-serving chief executive Sean Fennon has decided to retire this year, and will “relinquish his executive duties … with immediate effect”. Mr Fennon will be succeeded by chief financial officer Bryce Brooks, so there should be no leadership vacuum. But I get the feeling that Mr Fennon’s departure may have been rushed slightly.

Growing pains?

Today’s half-year figures from Flowtech suggest to me that after a string of acquisitions, the group may be experiencing some growing pains.

Revenue rose by 65% to £56m as acquisitions added volume, but underlying operating profit only rose by 26% to £5.7m. This means that the group’s operating margin fell from 13.1% to 10.1% during the period.

Alongside this, net debt has risen by 114% to £18m over the last year, mostly due to acquisition spending. Another concern is that customers are taking an average of almost six months to pay their bills, leaving a lot of cash tied up in the business.

The company says it is putting its acquisition programme on hold to focus on developing its corporate infrastructure. This sounds sensible and may explain why Mr Fennon is being replaced by his top bean-counter — a traditional choice when financial improvements are required.

Flowtech shares look cheap after today’s fall, on about 7 times forecast earnings with a forecast yield of 5%. But I think there could be more bad news to come. I’d steer clear of this stock for now.

A rising star

The share price of FTSE 100 firm Ashtead Group (LSE: AHT) has doubled over the last two years. This equipment rental firm hires out gear to construction companies and industrial customers. It operates the A-Plant business in the UK, but 85% of revenue comes from the Sunbelt business in the USA.

Like Flowtech, Ashtead has been taking advantage of a fragmented market to make regular acquisitions and increase market share. The firm spent £145m on small acquisitions during the three months to 31 July. This helped to lift revenue by 22% to £1,047m and pre-tax profit by 23% to £274m.

Note how both revenue and profit rose by roughly the same amount. This shows that profit margins are holding up as the company expands. That’s something I like to see.

Is it too late to buy?

The group would be exposed in the event of a slowdown in the booming US market. But the company reported “strong end markets” during Q1 and said that full-year profits are now likely to be ahead of expectations.

Analysts’ are forecasting earnings of 165p per share for the current year. This puts the stock on a forecast P/E of 14, with a prospective yield of 1.6%. The yield is low due to cash flow being invested in growth. But debt is under control and this valuation doesn’t look excessive to me.

I believe Ashtead could still be worth buying if you want exposure to the US economy.

The post Why I’d shun 25% faller Flowtech Fluidpower and buy this FTSE 100 rising star 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 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.

Consolidating the market

In a drive to consolidate the “highly fragmented” hydraulic and pneumatic industry in the UK and Europe, Flowtech completed six acquisitions during 2017. Revenue surged 46% compared to the year before and underlying operating profit moved up 22%. The firm managed to extract an increase of 58% in cash from operations and used some of that to raise the total dividend for the year by 4.9%. Meanwhile, the latest figure for net debt is around £13.2m, which is around one-and-a-half times the level of annual underlying operating profit, so manageable for the time being.

Chairman Malcolm Diamond said the firm’s acquisition activity “strengthened our position with important pan-European and global branded suppliers, enhanced our technical strength, and reinforced our position in our current core geographies of UK, Ireland, and Benelux.” During the first quarter of 2018, the firm completed another acquisition, of Balu Ltd. However, the directors don’t plan any further acquisitions during 2018 and aim to concentrate on integrating the new businesses already added to “achieve synergistic benefit and capitalise on the entrepreneurial and technical skills of the new operations.”

Looking forward, we can expect both organic and acquisitive growth over “the short, medium and long term.”  And Flowtech Fluidpower continues to shape up well against popular quality, value and momentum indicators. I think the stock is more attractive than supermarket giant Tesco(LSE: TSCO), for example.

Turnaround, or long-term falling star?

When I look at Tesco today I see a falling star in a challenged industry. Others may see a turnaround candidate that is turning, and I can’t argue with the double-digit percentage earnings increases the firm has been posting lately, or with recent share-price progress. However, I think the valuation is ahead of itself.

Today’s share price around 237p throws up a forward price-to-earnings ratio of just over 14 for the trading year to February 2020 and the forward dividend yield is around 3%. But to me, what we are seeing with Tesco is an efficiency-driven rebound from a catastrophic earnings collapse and not a sustainable growth story emerging. I think the market should be much more cautious with Tesco’s valuation, perhaps setting the forward P/E at around seven and the forward yield near 6%.

Even then I’d be wary, because the threat from the rise of big-discounting competition, such as Aldi, Lidl and others, is relentless. The old way of doing business is dead and buried for Tesco and it will have to continue to adapt to survive. But will it thrive in the long term? I wouldn’t bet on that and see the most likely outcome as a managed decline of this once-mighty business. So, I’d avoid Tesco and buy shares in Flowtech Fluidpower instead.

The post Why I’d avoid Tesco and buy this superstock instead appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The business, which provides collateral management and regulatory reporting solutions, announced that revenues ducked 16.4% during the six months to September, to £12.7m, a result it put down to “a temporary fall in services revenues and some delays in contract signings.”

As a result, pre-tax losses at Lombard Risk ballooned to £5.9m, from £100,000 a year earlier.

Chief executive Alastair Brown called the results “unsurprisingly pretty sober.”

He said: “A number of opportunities we had hoped to secure in the period remain in the pipeline as market distractions such as MiFID II caused companies to delay on committing to new projects.

“This leaves us much to do in the second half, and converting our strong visible pipeline will be crucial to us meeting market forecasts,” he added.

A risk too far?

The City’s army of analysts had been expecting Lombard Risk to continue on its path of steady bottom-line improvement, flipping from losses of 0.18p per share in the year to March 2017, to earnings of 0.5p in the present period.

And earnings were predicted to continue tearing skywards beyond this year with the number crunchers touting a 152% earnings improvement — to 1.2p — in fiscal 2019.

Thanks to today’s whopping 31% share price slide, these current projections result in a forward P/E ratio of 14.7 times, below the widely-accepted benchmark of 15 times that signals decent value for money.

And some share pickers could argue that the scale of transformation over at Lombard Risk makes it worthy of consideration at these prices — indeed, Brown commented today: “during the period strong foundations have been put in place, with an improved salesforce, a new development centre in Birmingham, and a renewed effort to target new business as well as extant cross-selling opportunities.”

However, potential buyers should be on guard for meaty downgrades to earnings forecasts given the challenging trading conditions Lombard Risk is toiling in. I reckon risk-averse investors may want to sit on the sidelines for now.

Powering on

Flowtech Fluidpower (LSE: FLO) is another stock expected to deliver perky profits growth in the near-term and beyond, and I am much more happy to endorse its earnings outlook than Lombard Risk’s.

With demand for its hi-tech products continuing to swell — these shot 34% higher during January-September to £54.5m, Flowtech advised last week, or by 12.4% on an organic basis — it comes as no surprise that the company’s share price is following suit. It has just topped out at 179p per share, taking total gains since the turn of 2017 to 43%.

City experts anticipate much, much more to come, and are predicting a 35% earnings rise in 2017 to be followed with a 17% advance next year. And current estimates make Flowtech stunning value, too, with the firm rocking up on a prospective P/E multiple of 13 times, and a sub-1 PEG readout of 0.4.

I reckon those seeking great growth shares on a budget could do a lot worse than pile into the AIM star.

The post 2 secret stocks expected to deliver brilliant profits growth appeared first on The Twelfth Magpie.

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Royston Wild 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.

However, I believe this impressive performance needs to be kept in context. The shares have only risen by 23% over the last five years (FTSE 100: +31%) and are worth 18% less than 10 years ago (FTSE 100: +16%).

These share price movements highlight the cyclical nature of the mining business. So it’s important to consider what stage of this cycle we’re currently at. Opinions vary, but my view is that we’re somewhere in the middle. I believe well-run companies with low-cost mines should be able to continue generating attractive returns for some time to come.

Strong performance

Tuesday’s third-quarter production figures from Rio Tinto seem to confirm this view. The group’s new automated rail system helped to increase iron ore shipments by 6%, compared to the same period last year. Bauxite production rose by 4%, while coking coal was 3% higher.

The only downbeat remarks related to copper production, where various delays mean that guidance for full-year copper output is between 460 and 480 thousand tonnes, down from 500 to 550 thousand tonnes.

Tempting shareholder returns

Rio Tinto has announced plans to return more than $8bn to shareholders so far this year. And recent press reports suggest to me that the group’s focus on selling non-core assets could result in further returns. Among the potential candidates for disposal are its remaining coal operations and part of its aluminium business.

The stock currently trades at 2.1 times book value, which isn’t obviously cheap. But the current £37 share price is equivalent to just 11 times trailing free cash flow. There’s also a well-covered forecast dividend yield of 5.4%. I’m holding on for more.

Sales up 34%

Another cyclical business performing strongly this year is small-cap Flowtech Fluidpower (LSE: FLO). This AIM-listed company specialises in supplying “technical fluid power products,” such as parts for hydraulic systems.

The group’s sales rose by 34% to £54.5m during the nine months to 30 September. Of this growth, 12.4% was organic, meaning that it came from existing businesses. The remainder came from acquisitions.

Flowtech’s shares have risen by 34% so far this year, compared to a gain of 22% for the AIM market as a whole. Tuesday’s update confirmed that management expects full-year results to be in line with expectations.

This suggests that earnings per share should climb 23% to 13.5p this year, putting the stock on a forecast P/E of 12.5. Dividend growth is expected to be about 5%, giving a prospective yield of 3.5%.

Still a buy?

In my view, this valuation still looks attractive, given the group’s solid fundamentals. Net gearing was just 12% at the end of June, and the dividend has been consistently covered by free cash flow since the firm’s flotation in 2014.

Strong sales growth and stable profit margins suggest the shares could have further to go. I continue to rate these shares as a buy.

The post One FTSE 100 dividend stock I’d buy more of today appeared first on The Twelfth Magpie.

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Roland Head owns shares of Rio Tinto. 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.

Highlights in today’s half-year report include revenue almost 25% higher than a year ago, underlying operating profit moving up 11% and a decline of just over 40% in the firm’s net debt figure on the balance sheet. The directors pushed up the interim dividend almost 5% in a sign of confidence in the outlook.

Acquisitive growth

Earnings per share declined by almost 12%, but I don’t think that’s anything to worry about. Last year, a deferred tax credit flattered the earnings result and this year the share count is a little higher because of a £10m capital raising event in March. The company wanted the money to move forward with its acquisition programme and reports five completed during 2017 so far and 11 since first listing on the stock market in 2014.

The directors reckon they are “confident” of completing more acquisition deals in the second half of the year, which is encouraging because the firm has become a consolidator in the fragmented fluid power sector. I reckon such a strategy could lead to a critical mass of business that leads to an irresistible offering for Flowtech’s customers, based on an efficient and lower-cost distribution service.

Organic progress

Acquisitive growth in the UK, Ireland and continental Europe is running alongside good organic progress, and City analysts following the firm expect earnings to advance 36% this year and 12% during 2018. Meanwhile, at today’s 134p share price, the forward price-to-earnings (P/E) ratio for 2018 sits just below nine and the forward dividend yield at almost 4.6%. Those forward earnings should cover the payout around two-and-a-half times. Assuming that Europe’s economies are not about to fall off a cliff, I think these indicators represent good value.

Over at Servelec Group (LSE: SERV), yesterday’s interim results report sent the shares into a bit of a tail spin and at 240p, the price is around 16% lower than it was at the end of last week. The UK-based technology firm provides software, hardware and services to the UK healthcare, local government, nuclear, power, utilities, oil and gas sectors, but as you might have guessed, there’s a problem.

Positive long-term outlook

Chief executive Alan Stubbs tells us in the report that a deferment in customer demand in its technologies division, and in the power and infrastructure segment of its controls division, will likely affect short-term progress. But he assures us that the health and social care division, and the oil and gas segment of the controls division, are performing well and he is positive about the longer-term prospects of the company.

Such short-term challenges in an otherwise decent long-term story can spell opportunity for us investors and the first-half numbers show us the firm’s potential when things are going well. Compared to a year ago, revenue lifted 11%, adjusted diluted earnings per share rose 45%, and the firm’s net debt figure declined by a healthy-looking 54%. The directors indicated their ongoing confidence in the bigger-picture outlook by pushing up the dividend by 21%. I think Servelec is interesting right now and one to keep a close eye on.

The post 2 ‘under the radar’ growth and income shares appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

Investor appetite for Fidessa (LSE: FDSA) has failed to meaningfully recover after the IT services giant’s chilling trading statement in April.

The company’s share price descent cannot be described as catastrophic. But I expect its value to continue dropping in the weeks and months ahead.

In its spring update Fidessa announced that while it “continues to see structural and regulatory drivers within the market, the increasing number of European elections, the forthcoming Brexit negotiations and the establishment of the new US administration are clearly creating some uncertainty.”

This environment had seen a number of its customers delay decisions during the first quarter, Fidessa advised. And given that the political malaise on both sides of the Atlantic is intensifying, I reckon its next financial update (half-year numbers are scheduled for July 31) could prompt another sharp fall.

Projections in peril?

In this tricky environment the City expects the Woking business to endure a 1% earnings slip in 2017, although clearly this estimate is in danger of being downgraded should market conditions indeed remain difficult. And this scenario puts Fidessa’s perky dividend projections in serious jeopardy, in my opinion.

The trading, investment and information services provider is expected to pay a total dividend of 92.1p per share this year, creating a market-beating yield of 3.9%. However, this projection is barely covered by predicted earnings of 92.8p.

And the situation does not improve much for next year, either. A projected 10% earnings improvement, to 101.6p, also barely covers an anticipated dividend of 95.8p (which creates a 4% yield).

I believe those seeking chunky dividends in the near term and beyond can find much safer picks elsewhere, and certainly ones which carry much better value — Fidessa currently boasts a forward P/E ratio of 25.7 times, sailing above the broadly-considered value watermark of 15 times.

Pumping powerhouse

I am far more optimistic over the investment outlook over at Flowtech Fluidpower (LSE: FLO), particularly after this month’s latest trading update.

The builder of hydraulic, pneumatic and industrial instruments saw revenues detonate 24.7% in January-June, it advised. Flowtech continues to enjoy rampant demand across its businesses, with solid organic growth supplemented by the positive impact of recent acquisitions. And the likelihood of further M&A action should keep revenues on an upward tilt. The firm snapped up OCL, a specialist in the movement and storage of fuels, liquids and gases, earlier in July.

So it comes as little surprise that the Square Mile expects earnings to keep sparking higher.

A 29% bottom-line rise is predicted for 2017, a forecast that is expected to push the dividend from 5.51p per share last year to 5.8p. Not only does this create a handsome 4.3% yield, but also leaves the anticipated reward well covered — indeed, coverage of 2.3 times sails above the safety benchmark of two times.

And the good times are predicted to roll into 2018, an estimated 5% earnings rise is expected to drive the dividend to 6.1p. The yield for next year subsequently stands at 4.5% and dividend cover is retained at 2.3 times.

With Flowtech also dealing on a multiple of 10.3 times forward earnings, I reckon value-hungry investors need to give the Skelmersdale business a close look.

The post One dividend stock I’d buy right now, and one I’d avoid 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 Fidessa. 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.

Improving performance

Reporting on Monday was technical fluid power products distributor, Flowtech Fluidpower (LSE: FLO). The company reported a rise in revenue during the first half of the current year of 24.7%. This was driven by the continued momentum experienced across all of its business divisions, as well as the positive contribution from acquisitions.

The Flowtechnology division increased revenues by 6.8%. It recorded strong organic growth in difficult trading conditions. It also benefitted from the performance of Indequip, which was acquired in February 2016. The company’s Power Motion Control division increased revenues by 53.7%, with recent acquisitions and organic growth combining effectively.

Looking ahead, the company is on target to meet expectations for the full year. It also announced today the acquisition of Orange County Limited, which is an exclusive UK supplier and distributor of storage equipment. This could contribute positively to the company’s future performance, while other acquisitions look set to form part of the firm’s pipeline.

With Flowtech Fluidpower forecast to record a rise in earnings of 29% in the current year, it seems to offer upside potential. This is enhanced by a price-to-earnings growth (PEG) ratio of just 0.4, which suggests that now could be the right time to buy a slice of the business for the long term.

Return to growth

Also offering the prospect of share price growth is Wynnstay (LSE: WYN). The supplier of products and services to the agricultural sector has experienced a couple of challenging years, with its bottom line forecast to decline in the current year by 3%. This could lead to a rather disappointing performance from its share price in the short run after its 0% return since the start of the year.

However, looking ahead to next year the company is due to return to high levels of growth. Its earnings are forecast to increase by 10% next year, which puts its shares on a PEG ratio of 1.8. Beyond 2018, more growth could be on the cards as the company’s strategy may continue to bear fruit.

In addition, Wynnstay could become a more enticing income share over the medium term. Its dividends are currently covered 2.3 times by profit, which suggests they could increase at a faster pace than profit and leave the company in a strong financial position. Therefore, while the stock may only yield 2.3% right now, its yield may increase in future and become more enticing to a wide range of investors as inflation moves higher.

The post 2 bargain growth stocks I’d buy right now 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. 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.

Profit margins remained stable across the group, resulting in pre-tax profits rising by 18.4% to £182.9m. Adjusted earnings per share were 22% higher, at 14.9p.

B&M opened 53 new stores in the UK last year and 19 in Germany. The company is planning a further 40-50 new UK stores for 2017/18 and 15 in Germany. The board is bullish about the firm’s growth prospects and has upgraded itsUK store target from 850 to “at least 950” stores.

Given that the group currently has 527 UK stores, the growth potential is clear. If B&M can reach its target size and then scale back capital expenditure, shareholder returns could be impressive.

The downside is that this stock is already priced for growth. It trades on a forecast P/E of 24.5 and offers a prospective yield of 1.8%. The firm’s shares haven’t moved following today’s results, suggesting that much of the good news was already in the price.

B&M shares look fully priced to me for now, but I think the firm could still deliver decent gains for shareholders on a three-to-five-year view. I certainly wouldn’t sell just yet.

A niche player with potential

Unlike B&M, Flowtech Fluidpower (LSE: FLO) isn’t a household name. It’s one of the UK’s leading suppliers of parts for hydraulic and pneumatic systems. This niche business was founded in 1983 and has become one of the main players in its sector.

Flowtech is targeting further growth through acquiring peers in related areas, thus broadening its offer without losing its in-depth focus. An oversubscribed £10m placing in March has provided funds to do this without debt levels rising too high.

Today’s AGM trading statement confirmed that management expects the company to meet current market forecasts for this year. This puts the stock on a P/E of 11 with a prospective yield of 4%.

What could go wrong?

There are a couple of risks potential investors might want to beware of. The first is that consensus earnings forecasts for the current year have been cut by 16% since January, falling from 15.6p to 13p.

So when management says it’s confident of meeting current forecasts, this seems to confirm that analysts covering the stock were right to downgrade their guidance. The second risk is that this is a fairly cyclical business. Demand for the parts sold by the firm naturally rises when conditions are strong in sectors such as manufacturing and construction. A recession could trigger a reduction in demand.

For this reason, I don’t think the stock deserves a very high valuation. However, Flowtech’s balance sheet seems reasonably strong and cash generation has been good since the group’s flotation in 2014. I can see further value here and would be happy to buy at current levels.

The post These high-flying growth stocks could help you retire appeared first on The Twelfth Magpie.

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Roland Head 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.

Flowtech’s share price has added 8% in value since Tuesday’s update, investors sweeping the fluid power product designer to 11-month highs. But I believe the firm is still undervalued by the market despite these chunky gains.

Flowtech advised that group revenues surged 32% during January to March, to reach £17.5m, with sales at its core Flowtechnology division moving 11% higher in the period, to £10.1m.

The West Lancashire business advised that a combination of good organic sales growth, and the impact of the Indequip acquisition last year, have helped to drive the top line in recent weeks.

Flowtech also announced on Tuesday that total annual revenues climbed 20% during 2016, to £53.8m, a result that powered operating profit to £6.14m, a rise of 12% year-on-year.

While sterling’s steady erosion has seen costs mount since the summer, the firm’s ability to effectively lift prices has helped muffle the impact. Meanwhile, a £10m share placing last month boosted the probability of fresh acquisitions, enhancing Flowtech’s position in heavily-fragmented markets and underpinning long-term revenues growth.

Go with the Flow

Following this bounce-back into earnings growth in 2016, the City expects the bottom line to really rev up this year with a 38% rise. An extra 12% rise is anticipated for next year.

These prospective numbers result in mega-low P/E ratios of 10.1 times and nine times respectively, around and below the benchmark of 10 considered bargain territory. And sub-1 PEG readouts of 0.2 and 0.7 underline Flowtech’s position as great value.

Furthermore, there’s also plenty for dividend chasers to get excited about. A perky profits picture is expected to propel Flowtech’s total payout to 5.8p per share in 2017, up from 5.51p last year, and to 6.1p in 2018. These forward figures yield a delicious 4.1% and 4.3%.

Loans leviathan

Auto finance giant S&U (LSE: SUS) is another brilliant value pick that fits the bill for both growth and income investors.

The business saw revenues shoot 34% higher in the year ended January 2017, to reach £60.5m, driving pre-tax profit 29% higher to £25.2m. S&U saw profits at its Advantage Finance car finance arm hit record levels for 17 years on the spin. And toughening economic conditions in the near term and beyond should keep customer demand for the company’s credit on an upward tilt — loan applications shot 53% higher in fiscal 2017.

S&U is anticipated to report earnings rises of 19% and 12% in 2018 and 2019 respectively, resulting in hugely-attractive P/E multiples of 10.3 times and 9.2 times. And PEG readings clock in at a mere 0.5 and 0.8 for these years.

In addition, dividend chasers also have a lot to look forward to if City forecasts prove correct. An estimated 106.9p per share payout for 2018 yields 5.1%, while 2019’s expected 118p dividend yields a smashing 5.6%.

The post 2 of the best value shares you’ve probably never heard of 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. 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.