Likewise, the Brexit process and the geopolitical risk in various parts of the world could cause investor sentiment to come under pressure.

Therefore, obtaining a mix of capital growth potential and income returns could be a shrewd move. With that in mind, this income stock could be worth buying alongside a growth company that reported positive results on Thursday.

Strong performance

The growth company in question is cloud communications software and solutions provider IMImobile (LSE:IMO). The company’s trading update for the year to 31 March showed a rise in organic revenue of 45%, which was ahead of expectations. This helped to deliver a year-on-year gross profit increase of over 17%, with net profit being in line with expectations after the anticipated investment in various growth initiatives.

The company’s recent acquisitions appear to provide the potential for a move into new markets. There has also been further progress in cross-selling opportunities, while ongoing product innovation and the development of intellectual property could have a positive impact on the company’s long-term outlook.

With IMImobile forecast to generate growth in earnings of 22% in the current year, it appears to have a strong outlook. Despite this, it trades on a price-to-earnings growth (PEG) ratio of 1, which suggests that it may be undervalued by the market. This could mean that there is capital growth ahead for the stock, with what appears to be a solid strategy having the potential to generate rising profitability in future years.

Improving performance

While growth stocks could hold appeal at the present time, so too do dividend stocks such as Direct Line (LSE: DLG). It has a dividend yield of over 8% at the present time, which is around three times the rate of inflation. This should ensure that it offers a relatively high total return if the FTSE 100 fails to find a clear trend in the coming months. Given the volatility of late, there is a good chance that this could be the case.

Since Direct Line is forecast to grow its bottom line by 8% this year and by a further 3% next year, it seems to be delivering on its strategy. It trades on a price-to-earnings (P/E) ratio of around 13, which suggests that it offers good value for money at the present time. And with dividends being covered 1.1 times by profit, they appear to be affordable given the company’s current outlook.

Although the motor insurance industry has experienced an uncertain period due to changes in the Ogden discount rate, the prospects for growth seem to be fairly positive. As such, Direct Line now seems to offer impressive income and capital growth potential for the long term.

The post One FTSE 100 dividend stock and one growth stock I’d buy today appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Peter Stephens owns shares of Direct Line Insurance. 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.

Built around customers 

Maintel is a cloud and managed services company, which focuses on the provision of digital communications for clients. In plain English, the firm provides cloud-based conference calling software as well as business management software to help streamline companies’ customer communication operations, such as call centres. 

This is just a basic overview of Maintel’s operations. The group also has several partnerships with other cloud-based service providers such as Cisco, Talk Talk Business, BT Wholesale, SSE Telecom and Microsoft, which allows it to build the best package of services around customers’ needs. 

And it certainly looks as if customers are pleased with the offering. Indeed, today the firm reported that its revenue jumped 23% to £133m for the year to 31 December and basic earnings per share leapt 36% to 21.7p. 

Since 2012, revenues have expanded nearly 400%, from £28m to £133m as reported today. Unfortunately, the company has failed to convert this sales rise into bottom-line growth. Earnings per share have hardly budged since 2012 as the firm is having trouble building a sustainable competitive advantage to support profit margins. 

For example, last year management had hoped that a contraction in margins reported during the first half would be reversed by the end of the year thanks to new customer agreements and synergies from acquisitions. However, it was clear this was not going to be the case.  Lower-than-anticipated revenue from two large legacy contracts and the greater-than-expected impact of contract delays prompted management to issue a profit warning at the beginning of December. 

Still, despite Maintel’s problems, there’s no denying that the company is growing rapidly, and right now, it looks as if the market is giving no credit to this growth. Specifically, the shares are currently trading at a forward P/E of 9.6 and support a dividend yield of 4.6%. The payout is covered twice by adjusted earnings per share and today management has announced a 10% increase in the full-year distribution

Growth at a reasonable price

Another tech stock that’s recently caught my eye is IMImobile (LSE: IMO). Like Maintel, this company provides cloud communications software for businesses. However, unlike Maintel, IMImobile has been able to transfer sales growth to the bottom line. Since 2012, net profit has grown at a rate of around 20% per annum as revenue has expanded at a compound annual rate of 15%. 

City analysts are expecting IMI’s profit growth to continue on its current trajectory. Analysts have pencilled in earnings per share growth of 51% for 2018 followed by an increase of 22% for 2019. These projections suggest that the shares offer growth at a reasonable price trading at a PEG ratio of 0.5 for 2018. 

As well as this growth, IMI also supports a cash-rich balance sheet with net cash of £14m at the end of fiscal 2017. Maintel has a net debt position of £28m. With this being the case, I’m inclined to believe that IMI is a better buy than Maintel if you’re looking for a fast-growing small-cap tech stock trading at an attractive valuation. 

The post 2 top tech stocks I’d buy in March appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Rupert Hargreaves owns no share mentioned. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK has recommended Cisco Systems. 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.

Keywords Studios

After floating on the London Stock Exchange back in mid-2013 at a price of 123p, Keywords Studios’ (LSE: KWS) shares have enjoyed an exponential rise over the last four years, and now change hands just under the 1,300p mark. For investors who were on board from the IPO, a £5,000 investment would now be worth over £50,000.

The £750m market cap company classifies itself as an “international technical service provider to the global video game industry.” The group works with some of the best known video game developers in the world, and helps to localise games such as Halo and Pro Evolution Soccer by translating the language and cultural references for international audiences.

With the help of a very aggressive acquisition strategy, the company has enjoyed prolific sales growth over the last five years, with the top line rising from €10.3m to €96.6m, a compound annual growth rate (CAGR) of an incredible 56%. Can this momentum continue?

Today’s half-year numbers certainly look quite strong. Revenue for the six-month period increased another 50% to €63.8m and adjusted earnings per share rose 55% to €0.132. Chief executive Andrew Day commented: “We have delivered another strong set of results for the first six months of the year as we continue to pursue our strategy of organic and acquisition-led growth as we build our global games services business.”

So is there still time to get on board or has the horse already bolted?

City analysts have pencilled in full-year earnings of €0.30, which at the current share price, equates to a forward P/E ratio of a high 48.6. While I don’t mind paying a premium valuation for a high-quality company, that valuation doesn’t leave much margin for error, in my view. Therefore, while Keywords Studios does look exciting, I’d be hesitant about jumping on board at the current valuation.

IMImobile

Trading at a less demanding valuation is cloud communications software and solutions provider IMImobile (LSE: IMO). The company helps its clients use mobile and digital technologies to communicate and engage with customers, and notable clients include Vodafone, O2 and Betfair.

I last covered IMImobile back in April, and at the time, the stock had just broken out into ‘blue-sky territory’ after clearing its previous high of 197p set in August last year. While the shares did temporarily rise higher, to almost 220p, they’ve since fallen back to the 185p mark.

At that price, the stock offers value in my opinion. With earnings of 11.6p expected for FY2018, the forward P/E ratio here is 15.9, which looks reasonable for a company that generated 15% organic revenue growth last year. With a market cap of just £113m, this is a small-cap growth stock I’ll be keeping a close eye on going forward.

The post This stock turned £5,000 into £50,000 in four years. Is it too late to buy now? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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 Manchester-headquartered firm announced that, although revenues fell 1% in the 12 months ending April 2017, to £49.7m, that adjusted pre-tax profit climbed 9% to £4.9m.

Executive chairman Ric Traynor commented that “we have had a year of further progress in developing the group and broadening its service offerings.” He added that “the results reflect a solid performance in business recovery together with the benefit of our diversification into property services, which now contributes approximately 30% of the group’s revenue and profit, and is an important focus of our growth strategy.”

Growth and great value

Begbies Traynor’s resilience can be considered impressive given that, as the company noted, the last fiscal year marked the lowest level of corporate insolvencies since 2004.

And investors can take added heart from news that activity levels picked up during the second half, resulting in an improved performance from the first six months as well as the comparative  period last year.

Head honcho Traynor announced that the firm is well-positioned to take advantage of the cyclicality of this market. And he said the firm anticipates growth in earnings in the new financial year as the board continues to look for further opportunities to develop and enhance the business, both organically and through selective acquisitions. The company snapped up commercial property auction house Pugh & Co only last June.

City brokers certainly expect earnings at Begbies Traynor to maintain its upward march, the Square Mile anticipating a 24% rise during fiscal 2018. And this results in a forward P/E ratio of 12.1 times, far beneath the broadly-regarded value watermark of 15 times.

On cloud nine

I also reckon IMImobile (LSE: IMO) offers plenty for savvy growth seekers to sink their teeth into.

The cloud communications specialist saw revenues shoot 24% higher in the year to March 2017, to £76.1m, a result that powered adjusted pre-tax profit 10% higher to £7.5m.

The business reported organic sales growth of 15% in the period, and noted that the top line had improved “across all regions and business units.” Not only did the software star renew all major contracts that fell in the year, but it also inked new contracts with major customers in all regions including Norwegian telecoms giant Telenor.

Investors should take confidence from the success of recent M&A activity. IMImobile has said that the acquisitions of Textlocal and Archer Digital in recent years are “performing well”. And the company’s appetite for further purchases bodes well for the future. It took over multi-channel messaging and middleware specialist Infracast in March.

The number crunchers expect earnings to rise 18% in fiscal 2018, and a further 9% rise is anticipated next year. With sales shooting higher across the group, I think the Buckinghamshire business is worthy of serious attention, despite its slightly-toppy prospective P/E multiple of 18.1 times.

The post Could these be the growth heroes you’ve been searching for? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

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.

Today I’m looking at full-year results from IMImobile (LSE: IMO). 

What we saw from these was a 19% boost for operating profit to £4.9m, provided by a 24% rise in revenue to £76.1m. Operational cash generation of £11.9m with a cash conversion factor of 104% suggest the firm is producing the actual hard stuff in good measure — and even after the £5.5m cost of acquiring Infracast, IMImobile was left with £14.7m in cash on the books.

Unfulfilled need

Chief executive Jay Patel said: “There continues to be an overwhelming need for companies such as banks, mobile operators, retailers, utilities and major brands to invest in improving customer experience, predominantly through digital channels.” Surely every one of us is painfully aware of that need and can think of at least one example of a big company reacting to problems with a woefully incompetent approach to social media.

Mr Patel went on to say: “We will continue to invest further in marketing and product development to establish a leading position in this growth market.“

This year, adjusted earnings per share came in 6% ahead at 11p, for a P/E multiple of 19, and with modest rises forecast for the next couple of years, I’m quite happy with that. 

Fundamental ratios don’t matter so much with companies at this stage of their life as long as they don’t get crazy, and IMImobile is best evaluated on the subjective nature of its business. I see it as a risky but attractive proposition.

Picks and shovels

Turning to a company offering services to the technology industry, I’m drawn to Gattaca (LSE: GATC), a specialist engineering and technology recruitment business — firms like these can do well whichever leading-edge tech companies they serve.

I’m particularly intrigued by Gattaca’s earnings growth record, its further growth forecasts, and its impressive dividend prospects.

Despite a drop in 2016, EPS has risen by 32% between 2o12 and 2016, and forecasts for the next two years would see further growth of 27% by July 2018.

On top of that, the dividend has soared from 15.6p per share in 2012 to 23p last year, and though it’s expected to remain flat this year, we’d still see a yield of 7.6% on today’s 302.5p share price.

Shares look cheap

In P/E terms, we’re looking at a forward multiple of under 10, dropping to a bit over eight on 2018’s EPS growth forecasts, so are there any negatives? 

Well, a trading update in April suggested that profits for the full year would be approximately 10%-15% below prior expectations. Weaker trading conditions in the post-Brexit era were partially blamed, as were a few one-off cost overruns — and I’m a little disturbed by the effects of that apparently not having been seen sooner.

But recruitment is very much a cyclical business, and a modest short-term underperformance is not unexpected. I’m a little cautious, but I feel the sector has a strong long-term future, and I can’t help seeing the current share price weakness as a buying opportunity.

The post Two bargain stocks with great growth potential appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

Alan Oscroft 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.

This was primarily caused by strength in Marshalls’ Domestic segment, where sales rose by 12%. This division represents around a third of its sales and even though order books fell to 11.7 weeks from 12.4 weeks in April, the outlook for the segment remains upbeat. Similarly, Marshalls’ larger segment, Public Sector and Commercial, also performed well and recorded a rise in sales of 2% in May and June.

Looking ahead, the uncertainty facing the UK economy could hurt Marshalls’ outlook. However, it trades on a price-to-earnings growth (PEG) ratio of just 0.7 and so there appears to be a wide margin of safety on offer. Plus, its strategy of reducing costs and improving operational efficiency should aid its financial performance even if sales disappoint, which makes now a good time to buy it for the long term.

Promising but pricey

Also reporting today was IMImobile (LSE: IMO). The provider of cloud software and solutions recorded a rise in sales of 26% in its most recent financial year, with organic growth contributing close to half of that figure. This resulted in adjusted pre-tax profit rising by 21%, with IMImobile’s European and American operations performing well and recording an increase in gross profit of 21%.

IMImobile’s future growth potential remains upbeat. It has a number of stable client relationships, a pipeline of new deployments and a high mix of recurring revenues that provide it with a good visibility of future performance. Its bottom line is expected to rise by 8% next year and while this is an impressive rate of growth, IMImobile’s PEG ratio of 1.7 indicates that it’s rather fully valued. As such, it may be prudent to await a keener share price or improved forecasts before buying a slice of it.

Profits ahead

Meanwhile, Quadrise Fuels (LSE: QFI) has fallen by 8% today after the release of an end-of-year update. The manufacturer and supplier of oil-in-water emulsion fuels reports that excellent progress has been made with the marine project since its half-year results. However, delays have been experienced regarding Quadrise’s pilot programme in Saudi Arabia, as well as on the technical evaluation work it’s undertaking for a number of clients.

In terms of Quadrise’s outlook, it’s expected to move from loss to profit in the next financial year and this has the potential to significantly improve investor sentiment in the stock. This would be highly welcome after Quadrise’s share price fall of 25% in the last six months. However, with investor sentiment being relatively weak and there being a number of highly profitable stocks trading on wide margins of safety, there may be better opportunities for investors to profit elsewhere.

The post Are Marshalls plc, Quadrise Fuels International plc and IMImobile plc star buys after today’s updates? appeared first on The Twelfth Magpie.

More reading

• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• 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?

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