An opportunity to buy? 

Shares in Spire are falling today after it was revealed that the company is no longer in merger talks with larger peer Mediclinic International. Even though Mediclinic was interested in its smaller peer, it seems that the two parties couldn’t agree on a price, which resulted in merger talks breaking down. 

Commenting on the breakdown, Spire Chairman Garry Watts said: “The board carefully considered Mediclinic’s approach but determined that it did not reflect the true value of the company and was not in the best interests of shareholders as a whole.“

I believe that this is an excellent opportunity for investors. Spire is the most significant leading independent hospital group in the UK with 39 private hospitals, 10 clinics and two Specialist Cancer Care Centres. 

Over the past few years, management has capitalised on its unique position in the market by expanding its offering into new regions and acquiring smaller peers. Several new premises are being opened this year. Initially these will hold back earnings growth, but City analysts expect the company’s spending to begin to pay off in 2018. After falling by 22% in 2017, analysts are predicting 5% earnings per share growth for 2018. 

Even though this near-term outlook might not look attractive, I believe that over the long term, Spire will become a millionaire-maker stock. The firm is well positioned to grow in the UK market and management has a record of profitable growth. That being said, there are some concerns about the firm’s exposure to the NHS. 

Meanwhile, the shares trade at a forward P/E of only 18, below the Healthcare Providers & Services Industry sector average of 23. There’s a dividend yield of only 1.3% on offer but the payout is covered four times by earnings per share, leaving plenty of room for further rises. 

As Spire returns to growth, I believe the shares should re-rate and when management decides to slow the company’s expansion plan, shareholder returns should quickly materialise. 

Emerging market growth 

Spire has many attractive qualities, but for those investors who are willing to take more risk by investing overseas, Georgia Healthcare (LSE: GHG) might be a better buy. 

Listed in London, it offers exposure to the fast-growing economy of Georgia via the healthcare sector. The business is one of the largest in the industry and its size (as well as vertical integration) is helping to accelerate growth. 

For the first nine months of the year, it reported a 44% increase in EBITDA and a 26% increase in profit before tax. For the full year, City analysts have pencilled in a 22% decline in earnings per share, thanks to the ramp-up in spending on capital projects. 

However for 2018, growth is expected to return with a vengeance. Earnings per share are projected to rise 91% year-on-year to 17.9p giving a forward P/E of 21. Compared to Spire, this valuation might look expensive, but when you factor-in growth, the shares are trading at a PEG ratio of 0.2, which is exceptionally cheap. 

The post 2 mid-cap growth stocks with millionaire-maker potential appeared first on The Twelfth Magpie.

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

Georgia Healthcare (LSE: GHG) and NMC Health (LSE: NMC) are two fantastic plays on this trend. Both companies operate healthcare facilities in rapidly growing emerging economies. NMC Health is a private health services provider in the United Arab Emirates while Georgia Healthcare provides services such as medical facilities and health insurance in the Georgian market.

Explosive growth

Over the past few years, demand for these companies’ services has surged and so have profits. Even though Georgia Healthcare has only been an independent public company for a little more than a year, this year the City expects the company to report a pre-tax profit of £25m, up 400% from 2014’s reported figure of £5m. Over the same period sales have grown from £67m to £253m and earnings per share have exploded by 463% from 2.7p to 15.2p.

It looks as if this growth is set to continue. Today Georgia Healthcare released its first quarter results with an increase of profitability of 8.4% year-on-year to £4.3m. Group revenue exploded 157% year-on-year thanks to growth at the firm’s pharmaceutical business after the consolidation of Pharmadepot. While the shares haven’t moved much on this news, today’s results show that it is on track to hit City forecasts for growth this year. Analysts have pencilled-in earnings per share growth of 27% for 2017 and 41% for 2018.

Even though shares in the company are currently trading at a relatively expensive forward P/E of 23, this valuation seems appropriate considering the group’s projected growth. If earnings hit City targets the next two years, shares in Georgia Healthcare are trading at a 2018 P/E of 15.9 and PEG ratio of 0.4.

Middle East exposure

NMC has reported similar growth. This year City analysts expect the company to report revenues of £1.24bn, up from around £330m for 2012. Pre-tax profit is expected to hit £181m, up from £60m five years ago. Earnings per share have risen 240% over this period.

Considering this explosive earnings growth, it’s no surprise shares in Georgia Healthcare, and NMC have risen by 87% and 105% respectively over the past 12 months.

Undervalued growth

Just like Georgia, shares in NMC also look cheap compared to the company’s projected growth rate. City analysts believe the firm can grow earnings per share at 28% per annum for the next two years. The shares are currently trading at a forward P/E of 25.6 and a 2018 P/E of 19.9.

So overall, with City analysts expecting high double-digit earnings growth for these two healthcare providers, it looks as if the shares still have plenty of upside ahead of them and now could be the time for investors to buy in before it’s too late. 

The post After rising 100% in a year, I see more upside ahead for these 2 uncovered growth shares appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves 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.

Those expectations are for a rise in earnings of 7% versus the prior year. And with Lookers expected to post a rise in its bottom line of 6% next year, investor sentiment could pick up in the coming months and push the company’s share price higher. That’s especially the case since Lookers trades on a price-to-earnings growth (PEG) ratio of just 1.3, which indicates that its shares offer strong growth prospects at a very reasonable price. As such, now seems to be an opportune moment to buy them for the long term.

Shares up despite losses

Also among today’s major gainers are shares in Speedy Hire (LSE: SDY). They’ve risen by over 7% despite the company releasing a rather disappointing set of results for the year to 31 March. They show that the tool and equipment hire company has gone from a pre-tax profit of £2m in the previous year to a loss of over £57m as a result of almost £60m in exceptional administrative costs. These were made up of impairments and restructuring charges, while Speedy Hire also finalised the rollout of its new network structure. With these one-off costs excluded, Speedy Hire remained in the black.

Looking ahead, Speedy Hire is expected to increase its adjusted profit by 88% in the current year and by 71% next year as its new strategy starts to take hold. Although there’s a significant risk that its turnaround plans disappoint, Speedy Hire seems to have a sufficiently wide margin of safety to merit investment at the present time. Evidence of that can be seen in its PEG ratio, which stands at just 0.2 and indicates that the company’s shares could continue today’s rise.

Georgia on my mind

Meanwhile, Georgia Healthcare (LSE: GHG) is up by 18% today after it reported a strong set of first quarter results. Its pre-tax profit increased by 84% to over £2m, while its top line rose by around a third versus the same quarter of the previous year. This was at least partly due to improved performance in the company’s healthcare services segment, with an improving macroeconomic performance from the Georgian economy and favourable currency movements also having a positive impact on the company’s results.

With Georgia Healthcare on track to post a significant rise in profitability this year, investor sentiment could continue to improve. And with the company’s bottom line forecast to rise by 42% next year, now could be an opportune moment to buy – especially with the company’s shares trading on a PEG ratio of only 0.4.

The post Why are Lookers plc, Georgia Healthcare Group plc and Speedy Hire plc surging today? 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.