Today I’m looking at two companies that have delivered three-year gains of 170% and 330% respectively for investors. Are you seeing these kinds of gains in your portfolio?

dotDigital

DotDigital (LSE: DOTD) is a company I have owned for several years now. I bought the shares back in 2013 for around 24p, and today they change hands for 95p, so I’ve made quite a decent profit. However, I won’t be selling just yet, as I believe there could be more gains to come in the medium-to-long term.

Founded in 1999, dotDigital is a leading provider of tools for digital marketing professionals. Its core product ‘dotmailer’ is a handy piece of software that enables clients to effortlessly construct marketing emails. It’s used by thousands of businesses, including Barbour, Screwfix and Crystal Palace Football Club.

While DOTD has experienced powerful growth in recent years, investors have been concerned this year that new General Data and Protection Regulation (GDPR) would derail the group’s growth. As a result, the shares have spent much of 2018 in a short-term downtrend.

However, it looks like these fears were overdone, as the company advised in a trading update last week that revenues for the year ended 30 June had grown approximately 35% to £43.1m with recurring revenue surging 41%, and that customer numbers had grown by 26% over the year. It also said that it had seen “no material impact” on either email volumes or recurring revenues from existing clients, following GDPR implementation. The shares have jumped 30% in less than a week after the update, putting an abrupt end to the downtrend.

Looking at these results, it’s clear that Dotdigital still has considerable momentum, and trading on a forward P/E ratio of 24, I think they still offer plenty of value. I’ll be holding on for higher profits.

Learning Technologies

Another small-cap technology stock that I have my eye on is Learning Technologies (LSE: LTG), which specialises in providing technology-driven workplace learning solutions.

With a client base that is becoming increasingly populated with national governments and blue-chip firms, the group has delivered some pretty impressive growth in recent years, with sales rising from £15m to £52m over the last three years alone. And City analysts expect this powerful growth to continue in the near term with sales of £101m anticipated this year, after the group recently completed the “transformational” acquisition of PeopleFluent Holdings, a leading provider of cloud-based integrated recruiting, talent management and compensation management solutions.

A trading update released this morning has confirmed that the firm’s financial performance for the six months to 30 June 2018 is “in line” with market expectations. Management advised that revenues for the period are expected to be at least £27.3m (excluding the recent acquisition of PeopleFluent), a rise of 27% on last year, with organic revenue on a constant currency, like-for-like basis increasing approximately 10%.

I like the long-term story here. However, the shares do look a little pricey at present, trading on a forward P/E of 44. As such, I’ll be keeping the stock on my watchlist for now.

The post Two small-cap growth stocks that could help you quit your job appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in dotDigital Group. The Motley Fool UK has recommended dotDigital Group. 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.

Encouraging progress

The market for learning technologies is growing. In the long run, it could continue to offer above-average growth prospects as the learning industry gradually becomes increasingly digital. As such, companies operating within the sector, such as Learning Technologies (LSE: LTG), could enjoy a tailwind.

It reported encouraging full-year results on Wednesday. Its revenue increased by 42%, while recurring revenues were 170% higher. Furthermore, it was able to increase its exposure to non-UK economies at a time when the UK is experiencing an uncertain future. This could prove to be a shrewd move and may allow the business to take advantage of weaker sterling in future.

The acquisition in January 2016 of Rustici Software has thus far proved to be highly successful, with its performance ahead of expectations. It has also recently acquired NetDimensions, which could have a further positive impact on its financial performance. And with greater use of the company’s blended service strategy, its organic growth rate looks set to remain strong in future years.

With earnings growth of 16% forecast for the current year, Learning Technologies has a price-to-earnings growth (PEG) ratio of just 1.7. This indicates that its shares could rise and help you to generate a seven-figure portfolio.

Income and growth potential

Also operating within the digital services segment is Kainos (LSE: KNOS). Surprisingly for a technology company, its income prospects are relatively bright. It currently yields around 2.4%, but is expected to increase dividends per share at an annualised rate of 14% over the next two years. However, this will still leave it with sufficient capital to reinvest for future growth, since the company’s dividend coverage ratio is expected to be upwards of 1.7 in the next financial year.

The reason for such a high coverage ratio is partly due to the growth forecasts for the business. Its bottom line is expected to increase by 6% in the current year, and then by 23% next year. Despite such a positive outlook, its shares trade on a PEG ratio of only 0.8. This seems difficult to justify when the company has a bright outlook and looks set to reward its shareholders by paying a rapidly increasing dividend.

Clearly, there is no guarantee that Kainos will make you a millionaire. But its shares seem to offer a wide margin of safety, as well as improving income prospects. Therefore, they could improve your portfolio performance and help you to achieve seven-figure status.

The post Could these 2 top growth stocks make you a millionaire? 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.

The deal fits in with Stride Gaming’s strategy of seeking out multiple small online gaming companies and, since it listed on the stock market in May 2015, its share price has now soared by almost 50%. And, with it continuing to diversify its brands and take advantage of appealing valuations across the sector due to increasing regulation, Stride Gaming could continue to be a strong performer over the medium term.

Also announcing an acquisition today is energy procurement business Inspired Energy (LSE: INSE). It has paid £2.75m for Blackpool-based Wholesale Energy, with the deal being made up of £1.5m in cash plus a further £0.5m in shares that will be crated by a placing that has also been announced today. And, should Wholesale Energy meet specific targets, a further £0.75m will be paid in future.

The deal has been positively received by the market, with Inspired Energy’s share price rising by 4% and, with the acquisition adding service specialism and increasing Inspired Energy’s customer base, it is likely to have a positive impact on its financial performance. In fact, Inspired Energy is forecast to increase its earnings by as much as 11% next year and, with its shares trading on a price to earnings (P/E) ratio of 12.6, it appears to offer good value for money – especially since it has a strong track record of profit growth in recent years.

Meanwhile, e-learning services provider Learning Technologies (LSE: LTG) has also announced an acquisition today, with it buying Eukleia Training for £7.5m, with £6m to be paid in cash and £1.5m in shares. As such, Learning Technologies will conduct a £7.5m placing, with the surplus capital to be used for future acquisitions.

Although shares in Learning Technologies have fallen by 3% today, the deal seems to make sense for the company. That’s because it provides Learning Technologies with additional scale and exposure to the government, risk and compliance marketplace, which is very much a growth market. And, with Learning Technologies forecast to increase its bottom line by 16% in the current year and by a further 17% next year, investor sentiment could be positively catalysed in the short to medium term.

That’s especially the case since the stock still trades on a price to earnings growth (PEG) ratio of 1.6, which indicates that there is substantial scope for capital gains in future.

The post Stride Gaming PLC, Inspired Energy PLC & Learning Technologies Group PLC Are Major Movers On Acquisition Updates 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. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.