Is the AIM-listed, growth stock now a solid buy? Here’s my take.

“Ahead of expectations”

They may feel irrelevant at the current time, but numbers go some way to demonstrating just how popular e-learning is becoming.

Revenue jumped 39% to a little over £130m in 2019. Encouragingly, 74% of this was recurring and 80% was generated outside of the UK. Stable sales and geographical diversification feel like great qualities to have these days.

The headline number, however, must be the whopping 316% rise in pre-tax profit to £14.3m. Perhaps unsurprisingly, this was said to be “ahead of expectations“.

While not a stock for income seekers, I think it’s also worth noting the decision to raise the final dividend by 43% to 0.5p per share. If that’s not a sign that business is going well, I don’t know what is. The only snag is that shareholders won’t receive this payout until after the coronavirus storm has passed.

In addition to withholding the dividend, Learning has made big cuts to spending. Salary increases have also been paused, bonuses postponed, some directors have deferred their entire salaries and recruitment has been frozen. All told, the company has estimated that these actions will save over £20m. Despite boasting net cash of £3.8m at the end of last year, this all seems very prudent to me. 

Worth buying?

The share price of Learning Technologies has staged a minor recovery since markets collapsed last month. Nevertheless, it’s still far below February’s peak of 172p. Does this make the stock a buy? Possibly.

One big positive is the company’s belief that the coronavirus has not had “a material impact” on its performance and that recurring revenues will be “largely unaffected“. The only slight negative is that new business wins might be pushed back as customers take steps to conserve their finances. Compared to the troubles experienced by some listed companies, this is hardly disastrous news.

As a sign of just how useful the company’s services can be, it’s worth noting that Learning has been working with a long-term client to produce healthcare courses for all the former doctors and clinicians returning to the NHS. Considering this, I really can’t see demand going anywhere but up once things get back to normal. 

On the flip side, the valuation still looks pretty full. Based on current estimates (which must be taken with a pinch of salt), its stock was priced at 24 times earnings before markets opened. That’s expensive during the good times, let alone the bad. And although no one has a crystal ball, I suspect those ‘bad times’ will continue for a while yet.

In sum, I’m certainly optimistic on the Brighton-based firm’s ability to continue increasing revenue and profits over the medium term. Would I want to buy much at the current price, ahead of what some economists are forecasting to be the worst crisis since the Great Depression of the 1930s? Probably not.

If I were to get involved, buying in instalments over the next few months feels like the best way of mitigating risk. 

The post The share price of this growth stock has rocketed today. Here’s why 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?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Learning Technologies. 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, Provident Financial (LSE: PFG) now seems to be worth buying after what has been a difficult period for the company. Its recent update showed that it is now making progress with its turnaround. But it’s not the only growth stock that could be worth buying today, with another stock delivering an impressive update on Monday.

Strong performance

The company in question is integrated corporate e-learning services and technologies provider Learning Technologies Group (LSE: LTG). It reported strong 2017 results which showed a rise in revenue of 84% versus the prior year. Part of the reason for this was the company’s account management approach. It has caused a broadening and deepening of client relationships, which has increased average revenue per client and driven strong organic growth.

The business was able to diversify its revenue during the year. Exposure to a wider range of geographies, market sectors and technical capabilities may mean that it has a more resilient outlook. In the current financial year it is trading ahead of market expectations and seems to be well-placed to generate further growth.

In fact, Learning Technologies is expected to post a rise in earnings of 18% in the next financial year. This puts it on a price-to-earnings growth (PEG) ratio of 1.8, which suggests that it offers good value for money. With the company having a solid track record of growth in the last three years, it seems to offer upside potential at the present time.

Recovery potential

Also offering growth at a reasonable price is Provident Financial. As mentioned, the company released an update recently which showed that it may now offer an improving outlook after what has been a difficult period.

Notably, it has raised capital in order to make provision for the FCA investigations which have been ongoing in recent months. Furthermore, it seems to be making progress in turning around the underperforming parts of its business. This seems to have changed the viewpoint of a large number of investors, since the company’s stock price has gained 38% in the last month.

However, Provident Financial still offers a wide margin of safety even after its recent gains. It trades on a price-to-earnings growth (PEG) ratio of just 0.3, which suggests that it could offer upside potential. While still a long way off being fully recovered, it seems to now be on the path to a successful turnaround and could be worth buying for the long term. Although volatility may be high, its low valuation suggests that it could be one of the more attractive stocks in the index at the present time.

The post Provident Financial plc and this growth monster could make you stunningly rich 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?

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.

Expectations-beating

With a market capitalisation of just £80m, it’s not surprising if many market participants are unfamiliar with bio-decontamination and containment equipment supplier Bioquell (LSE: BQE). This could be all set to change.

Over the last year, the Andover-based company’s stock has climbed almost 170% in value — yet another demonstration of just how profitable small-cap investing can be if you pick the right stocks at the right time.

While some may claim that the ‘easy money’ has already been made, I’m not so sure. Based on recent trading, it looks like positive momentum seen over the last six months could continue for some time to come.

This month’s trading statement revealed that revenues for the 2017 financial year would be ahead of management’s previous expectations at roughly £29.3m — a 9% rise on the £26.8m achieved in 2016. Even better, the company now predicts that its pre-exceptional earnings before tax will now be significantly ahead of market expectations.

Aside from these encouraging numbers, Bioquell boasts a solid balance sheet with a net cash position of £14.5m at the end of last year. Free cash flow has become healthier over the last couple of years as a result of a reduction in capital expenditure. There’s no dividend right now but this is perhaps to be expected. 

Bioquell confirms its full-year numbers in early March. With its relatively small free float (the proportion of shares in the hands of investors), expect further good news to push the share price firmly onwards and upwards.

“Exceptional” growth

E-learning solutions provider Learning Technologies (LSE: LTG) is another company that’s put in solid gains recently. Its shares have already climbed 55% in value since I last looked at the company in September.

As a result of “exceptional” organic growth and a contribution from a new acquisition, last week’s pre-close update revealed that group revenue would now come in no less than £51.8m — an 83% rise on the £28.3m achieved in 2016. Adjusted earnings before interest and tax (EBIT) are also expected to be “materially ahead” of market expectations of at least £14m — a 100% increase. Based on current performance, it seems the company is well on the way to realising its goal of delivering run-rate revenues of £100m and run-rate EBIT of £25m within the next three years.

With the company’s order book becoming increasingly populated with blue-chip firms and national governments, a promising pipeline of acquisitions and £1m in net cash at the end of December (compared to 38.5m of net debt at the end of 2016), Learning Technologies looks an ideal pick for risk-tolerant growth aficionados.  

Like Bioquell, the company will provide its full-year figures to the market in March. 

Only your watchlist?

So, why not simply buy the shares if I’m keen on them? In a word, valuation.

Thanks to their superb performance over recent months, neither Bioquell nor Learning Technologies come cheap. At 31 times and 39 times forecast earnings respectively, a lot of good news appears already priced-in, suggesting that it might be prudent for prospective investors to consider waiting for short-term traders and early holders to depart with their profits before building a position. 

The post 2 hot growth stocks I’ve added to my watchlist 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?

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.

Growth mindset

Reporting “exceptional” interim numbers to the market this morning was Learning Technologies (LSE: LTG) — a market leader in providing e-learning solutions to corporate and government clients.

Revenue jumped 68% to £21.5m in the six months to the end of June, of which £17.6m was organic. Pleasingly, the proportion of the former generated outside of the UK also increased to 46% from 32% a year before — handy to know as we crawl towards our EU departure. Another positive was the fact that recurring revenues — a highly sought after quality — rose to 37%. Adjusted earnings before interest and tax grew 41% to just over £4m.

Commenting on results, CEO Jonathan Satchell was particularly enthusiastic on the firm’s outlook, stating that Learning Technologies was achieving “excellent trading momentum” as it moved into H2. Its order book is “significantly ahead” of the prior year on a like-for-like basis with the recent acquisition and integration of talent management solutions provider NetDimensions also likely to help the firm realise “significant growth” in 2018.

Over the last year, shares in the Brighton-based business are up 66%, leaving stock trading on an eye-watering 33 times forecast earnings. With a fairly low price-to-earnings growth (PEG) ratio of just 0.9 and the likelihood of e-learning solutions becoming even more popular over the medium-to-long term, however, I think the shares could still be worth snapping up (or adding to a watchlist in the hope that a general pullback in the markets will provide a cheaper entry point).

Shining light

Another growth stock that’s caught my eye recently is LED lighting manufacturer and distributor Luceco (LSE: LUCE). Last week’s half-year report made reference to a “strong start to the year” for the £382m cap, coupled with a “strong order book” for H2.

Revenue climbed 25.5% higher — to just over £75m — in the first half of 2017 compared to the same period in 2016. Even when currency fluctuations are taken into account, this still came in at an admirable 17.3%. Operating profit rose to £9m from £7.2m with margins remaining consistent. The reduction in net debt from just under £48m to just over £26m is something to be applauded as well.

According to CEO John Hornby, Luceco’s revenue and profit growth can be attributed to “strong market share gains” in both the UK and newer international markets along with the expansion of its product ranges. Looking forward, its Chinese manufacturing centre should help to further increase its competitive advantage and ensure that the company continues to generate seriously high returns on the money it invests.

Like those of Learning Technologies, a forecast price-to-earnings (P/E) ratio of 23 for the current year means that Luceco’s shares are far from cheap. Having climbed 60% in value over the last year alone, that’s hardly surprising. Nevertheless, a similarly low PEG ratio (1.1) again implies that prospective investors are still getting a great deal given the firm’s growth strategy.

The post 2 fast-rising growth stocks that could make you a millionaire 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?

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Luceco. 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 that does include a $133.5m impairment due to the downgrading of the firm’s intangible exploration assets, compared to an impairment of $76m in the same period last year, all due to the ongoing cheap-oil environment. And the company remains upbeat, pointing out that it had $108m of cash on the books at 31 December, and no debt.

By 29 March, there was approximately $100m of that left, and BowLeven should have around $40m coming in from its farmout agreement for its Etinde project in Cameroon, so it shouldn’t be facing any funding squeeze any time soon. Is BowLeven a good investment today? I’m not one for oilies in their loss-making phases myself, but I see it as one of the less risky ones.

Transformational

Shares in Learning Technologies (LSE: LTG) have shot up by 81% since a recent low on 1 December, to 37.25p. Acquisitions, including a couple announced in January, have helped, but the rise has surely been mainly in anticipation of the e-learning firm’s maiden full-year pre-tax profit.

With revenue up 33% to £19.9m in a year that has been dubbed as “transformational” by chairman Andrew Brode, that pre-tax figure came in at £1.55m compared to a loss of £127,000 a year previously. Adjusted EPS doubled to 0.756p, and the dividend was lifted by 50% to 0.15p per share, albeit for a yield of only 0.4%.

Looking forward, a “landmark” contract, in alliance with KPMG UK, to provide the UK Civil Service with learning facilities for 400,000 staff over three years could well mark a real turning point for the company.

Volatility

Shares in Circle Holdings (LSE: CIRC) have had a very erratic 12 months, reaching 57p in May 2015 before crashing as low as just 9p in January this year. As I write today they’re back up at 21.25p, though that is after a 4.5% fall on the day of the company’s 2015 full-year results.

The healthcare services group saw revenue rise by 15% to £127.8m, with EBITDA losses reduced by more than half to £4.9m — and we heard that all segments of the business, excluding Head Office, are now EBITDA positive. Chairman Michael Kirkwood CMG opines that the company is “well poised to realise its potential through a sustainable business model while generating consistent returns for our shareholders“.

He may be right, but with no profit yet and no forecasts, I’d hold off a little while longer myself before making any commitment.

The post Should You Buy BowLeven PLC, Learning Technologies Group PLC And Circle Holdings PLC After Today’s Results? 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?

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.