I reckon most investors have room in their portfolio for a growth share or two, and I’m looking at three that I think have great potential for the coming year and beyond.

A falling bargain

Shares in BTG (LSE: BTG) have had an erratic year, losing 14% over 12 months to today’s 565p, despite a number of upwards spikes along the way. The firm operates in the specialist healthcare market, and that’s a solid business to be in.

At the first-half stage reported in November, BTG announced a 24% rise in revenue (10% at constant exchange rates), and recorded a modest 4% rise in adjusted operating profit — although adjusted EPS did drop by 5%.

Chief executive Louise Makin said that “the outlook for the full year is strong,” and told us the firm is expanding its Interventional Medicine business with a view to building “leadership positions in selected areas of interventional medicine.“

Why the share price fall? Well, growth investors often desert a company when earnings rises slow. But such years are to be expected, and forecasts for the following year suggest earnings growth of 45%. That would give us a P/E of 17 and a PEG ratio of just 0.4 (where less that 0.7 is usually seen as very good).

I see an emotional over-reaction that’s left us with a nice buying opportunity.

A storming rise

My second pick is also in the health business, and it’s NMC Health (LSE: NMC). In this case we’ve seen a very strong year with the share price up 61% to 1,452p — and over five years it’s soared by 575%.

You might balk at buying shares after they’ve climbed so far — you might not want to be holding them when a slow year comes along. But the thing is, even with that track record, NMC shares still look cheap on fundamentals to me.

For 2016, analysts are expecting a 47% rise in EPS, with a further 34% next year. There’s a dividend too, though it’s still early days in the firm’s development and yields are tiny. PEG ratios stand at 0.5 for this year and for next, with a 2017 P/E of 18.

Prospects look great, with the firm having acquiring the Al Zahra Hospital this month and having launched a successful placing.

Resurgent oil?

Finally I’m turning to small oil and gas explorer Indus Gas (LSE: INDI). Indus shares were flying high until September, when they took a tumble as it looked like the wheels might be coming off the tentative oil price recovery.

Full year results were positive overall, but Indus’s cash and debt position was looking a little risky. Although there was an operating profit of $33.15m, capital expenditure was high, there wasn’t much cash on the books, and debt at 31 March stood at $321m with $37.56m due within a year.

But we also heard that “during the next 12 months, we expect a further step change in the growth of the company,” and the analysts do seem to be on board. EPS by March 2107 is expected to rise by 134%, putting the 292p shares on a PEG of just 0.1, with a 2018 PEG of a still very attractive 0.4.

The price of oil does need to recover further and I can see investors remaining cautious, but this year could be transformational for the fortunes of Indus.

The post 3 growth shares to buy for 2017 appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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

But you know what? A fall that small is completely lost within its usual day-to-day volatility, and the UK’s top index hasn’t even given up the gain it made in the week leading up to the vote.

On top of that, some shares are soaring.

Here are three that could be among the year’s big winners:

Pharma boost

Speciality pharmaceuticals developer Indivior (LSE: INDV) enjoyed a boost in early June, when a patents case in the District Court of Delaware went in its favour and confirmed the validity of the firm’s Suboxone patent. On the day, Indivior shares climbed by 36%, and since this year’s low point on 9 February they’re up 71% to 224p.

The downside is that Indivior is expected to see earnings per share dropping both this year and next, which would put the shares on a P/E based on 2017 forecasts of 15.3 — which is only a little behind GlaxoSmithKline‘s multiple of 16.2 for the same year (with EPS growth and a 5.8% dividend on the cards).

In its first full year as a public company after demerger from parent Reckitt Benckiser, chief executive Shaun Thaxter told us “We significantly outperformed our financial plan for the year“. Indivior’s focus on opioid misuse coupled with its pipeline for developing “potentially transformational treatments for addiction” could well see it ending the year on a high.

Services recovering

Services firm Serco (LSE: SRP), which manages labs, education services, leisure centres and prisons, has not done well in recent years, with its shares losing 80% since their high point in July 2013. But we’ve had a 33% recovery since February’s low, to 102p.

Full year results in February provided a boost, with underlying trading profit coming in ahead of guidance at £96m, and although cashflow was negative, an outflow of £16m was better than expected. A rights issue during the year enabled the company to almost wipe out its debts with a reduction of £605m to just £78m, and Serco saw its pipeline of larger opportunities growing by £1.5bn to £6.5bn.

The shares are on a big forward P/E of over 50, but this looks like a company that is genuinely into recovery — an update in May said performance in the first four months of the year had been “stronger than we anticipated” and that profit for the year should be ahead of previous expectations.

Oily riches

Are smaller oil explorers finally coming to the fore? Indus Gas (LSE: INDI) has suffered badly though the oil price crash, with its shares down 80% since December 2012, but again we’ve been seeing a powerful comeback in 2016 — from a February low, the price has more than doubled to 215p. Strengthening oil prices have help for sure, although the price of a barrel has dipped below $50 again.

In September last year I found it hard to understand the low valuation of Indus Gas shares when they were trading at around half their current price, so I’m pleased with the movement since then. There hasn’t been a great deal of news, so I think the recovery has largely been due to a change in sentiment towards what are actually very thinly-traded shares.

If we see further oil price gains over the next 12 months and more, Indus’s resources in Rajasthan could look very attractive.

The post Will Indivior plc (+71%), Serco Group plc (+33%) & Indus Gas Limited (+105%) be among 2016’s big winners? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Reckitt Benckiser. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Small oily

Invest in a small oil explorer now? Am I mad? Maybe, but I’ve been looking to see what’s wrong with Indus Gas (LSE: INDI) and why its shares are valued so lowly, and I can’t see it. We’re not looking at a loss-maker here, no: Indus has been in profit for several years and there’s a near doubling of EPS expected for the year just ended, which would put the 108p shares on a P/E of just 10.

That expectation is based on the firm’s Indian resources, with last December’s Competent Person’s Report suggesting the presence of 872 billion cubic feet equivalent of natural gas! That’s a lot of gas, but even that hasn’t pleased the punters over the past 12 months as the shares have lost 70% of their value.

Indus isn’t one to bet the farm on, but I reckon a small punt could easily turn into a multibagger.

Telecoms wealth

I have to confess to taking my eye off the ball with AdEPT Telecom (LSE: ADT), which I really liked the look of a few years ago. I let it slip off my screen — and the share price has rocketed by nearly 1,300% in the past five years! That included a 126% rise in the past 12 months alone, and yet at 265p the shares are still on a P/E of a modest 15 with further growth predicted.

It’s growth with a good track record too. The year to March 2015 brought in the firm’s twelfth consecutive year of increased underlying EBITDA, with a rise of 13.5% — and it’s that kind of steady growth that builds into the big money.

Dividends only commenced in 2013 with 1.5p paid, but by this year shareholders saw 4.75p, and 6.7p per share by 2017 is currently forecast. The early massive share price appreciation is surely over, but AdEPT looks like it’s set for long-term profits.

Picks and shovels

My third choice is Gulf Marine Services (LSE: GMS), which provides various sized floating barge things to the oil industry in the Gulf. Not too exciting, you might think, but I’m seeing a picks and shovels business that has serious potential over the long term, especially when oil starts to recover.

Right now, Gulf Marine is on a valuation that’s so low it looks silly to me, with forward P/E multiples of just 6.8 for the year to December 2015, dropping to only 5.5 based on 2016 forecasts. And it’s currently profitable, with H1 revenue this year up 8% on 2014, although adjusted EPS did fall a little in line with a forecast full-year drop. But forecasters expect a return to growth in 2016, and there’s a unanimous Strong Buy rating on the shares from the analysts.

The post Are Indus Gas Limited, AdEPT Telecom plc And Gulf Marine Services PLC Set To Make You A Fortune? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Alan Oscroft 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.

Of course, Genel’s asset base is extremely appealing. It has the potential to deliver stunning levels of profitability in the long run and, with a strong, experienced management team, it appears to be well-placed to capitalise via a growing bottom line.

In fact, even with a depressed oil price and challenges surrounding its operations, Genel is expected to return to profitability in the current year following a tough 2014. Having posted a pretax loss of over £200m last year, Genel is expected to deliver pretax profit of £43m this year, followed by a pretax profit of £65m next year. This turnaround has the potential to stimulate investor sentiment in the stock and push Genel’s share price higher after it has fallen by 63% in the last year. And, while its future is highly uncertain, a forward price to earnings (P/E) ratio of 11.4 indicates that it offers good value considering its upbeat long term prospects.

Similarly, Rockhopper Exploration (LSE: RKH) also operates in a region which is somewhat politically unstable. Although the Falkland Islands are clearly much more stable than Iraq/Kurdistan at the present time, the issue of sovereignty remains in the foreground and looks set to be a feature over the coming years. Still, Rockhopper is making excellent progress with its drilling operations and its management team appears to be relatively prudent regarding its finances, with sufficient cash on hand to push through its planned drilling programmes over the medium term.

While Rockhopper is set to make a loss in each of the next two years, this is to be expected for an oil exploration stock. And, while there are concerns among investors regarding the finances of smaller exploration stocks, Rockhopper’s cash flow appears to be sufficient to provide a degree of confidence in its future activities. Moreover, with it trading on a price to book (P/B) ratio of just 0.88, it appears to offer good value for money, too.

Meanwhile, Indus Gas (LSE: INDI) continues to make excellent progress regarding its profitability. For example, it is forecast to increase its earnings by 181% in the current year, followed by further growth of 37% next year. Despite this, it trades on a price to earnings growth (PEG) ratio of just 0.2, which indicates that its share price has considerable scope to move upwards after falling by a whopping 73% in the last year.

Clearly, investor sentiment in the company is somewhat weak. However, it is highly profitable at the present time and offers a superb growth rate. Furthermore, it could be argued that it suffers from less geographical risk than either Genel or Rockhopper and, with its growth rate being higher and valuation being lower, Indus Gas appears to be the pick of the three companies at the present time.

The post Genel Energy PLC vs Rockhopper Exploration Plc vs Indus Gas Limited: Which Resources Stock Is The Best Buy? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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.

Indeed, even though the two oil & gas minnows operate in different regions of the world, they are both severely undervalued and have a huge amount of untapped potential. 

Undervalued

Indus holds a participating interest in a petroleum exploration and development concession in India known as Block RJ-ON/6.

According to the recent competent persons report on the block, RJ-ON/6 has proven plus probable reserves of 872 billion cubic feet equivalent of natural gas. And Indus’ accountants believe that this resource could be worth $2.3bn to the company, before capital expenses, or $1.8bn net of capital expenses. 

Indus’ market capitalisation is only £224m at time of writing.

What’s more, unlike many of the market’s smaller oil & gas companies, Indus is already profitable and generating cash. City analysts expect the company to report earnings per share of 10.4p for this year, which means that the company is currently trading at a forward P/E of 8.1.

Further, analysts expect Indus’ earnings per share to jump 170% during 2016 to 28p. On that basis, the company is trading at a 2016 P/E of 3. 

So overall, based on Indus’ bargain-basement valuation and volume of untapped resource, the company has all the hallmarks of a potential multi-bagger.

Plenty of support

Unlike Indus, IGAS’s future is more uncertain. City analysts believe that the company will continue to lose money for the next three years. A pre-tax loss of £2.1m is expected for 2015, a loss of £6.4m is pencilled in for 2016 and a loss of £2.5m is expected for 2017.

Still, there’s no denying that IGAS is well positioned for growth over the long term. The company has inked deals with several major partners over the past year, giving the group $285m of total spend from third parties across its key shale gas acreage. This funding will cover the cost of around 15 wells, flow tests and gas handling stations.

There’s also IGAS’s recent deal with partner, INEOS to consider. Under the terms of the deal, INEOS will pay IGAS £30m for a 50% interest in several of the company’s oil & gas licences around the UK.

In addition, as part of the deal INEOS will fund a work program on the licences of up to £138m. The £30m cash infusion will help alleviate the pressure on IGAS’s balance sheet. 

Foolish summary

All in all, it’s clear that Indus has the potential to become a multi-bagger from present levels, although IGAS’s future is more uncertain. That said, IGAS’s partners are some of the biggest energy companies in the world, and they wouldn’t invest in the company unless it had a bright future.

The post Could IGAS Energy PLC And Indus Gas Limited Be Potential Multi-Baggers? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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