Lockdown beneficiary

In retrospect, the time to pick up stock in online casino and gaming operator 888 Holdings (LSE: 888) was just before Boris Johnson announced the first national lockdown. Back then, the share price was around 80p. A couple of months ago, 888 achieved a 52-week high of 494p. 

Unfortunately, I didn’t act on my own bullish call in 2020, due to the sheer number of attractively-priced options out there during the market crash. Even so, I’d still be prepared to buy now, especially as 888’s valuation has now fallen back below the 300p mark.  

Aside from general market skittishness, some old-fashioned profit-taking is probably behind this selling pressure. Some investors may have taken the 15% reduction in business-to-consumer betting revenue in Q3 as a sign that trading momentum is now slowing. A more likely catalyst, however, is the recent legal shake-up in the Netherlands that requires online betting firms to obtain a licence. In response, 888 has ceased to operate there — a decision that’s expected to hit profit by $10m. 

I’d snap up this cheap UK share

Since this is a temporary measure, I think the fall may be overdone. Shares in 888 now trade at just 14 times forecast FY22 earnings. That looks great value, considering 888’s agreement to buy William Hill’s non-US assets could put a rocket under profits in time. What’s more, the stock comes with a potential 12p per share dividend next year (or 4.1% yield at the current share price).

All this before we’ve even considered the increase in business 888 could see if there’s a fourth national lockdown.

Buy the dip?

Another cheap UK share I’m interested in buying would be commercial and domestic lighting firm Luceco (LSE: LUCE). Despite staging a brief comeback in November, shares in the mid-cap were back to 337p by last Friday. That’s a significant drop from the 52-week high of 513p it hit back in September. 

This fall leaves Luceco’s forecast P/E at a little under 16. This may not look like a screaming bargain initially. However, this number should never be looked at in isolation, especially if the company scores well on quality metrics.

While past performance is definitely no guide to the future, Luceco has long generated high returns on invested capital. It’s this, according to UK top fund managers like Terry Smith, that plays a significant role in great long-term returns. Luceco could therefore prove to be a steal at current levels.

I must emphasise the word could here. There is a chance that recent cost pressures may not peak in early 2022 as the company expects. The fact that less than half of the company is available to buy on the market (i.e. a low ‘free float’) may also mean the share price lurches rather than drifts lower.

Still, I’m not concerned with trying to time the market exactly. What’s more important to me is buying a decent business at a sane price and holding on. I remain bullish on Luceco.

The post I’d buy these cheap UK shares today appeared first on The Twelfth Magpie.

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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.

The skittish mood among UK investors in recent weeks has led to many growth stocks tumbling in value. This morning, I’m going to pick out two that were already on my share watchlist as potential buys at the right price. Has that time arrived?

Victorian Plumbing

I took an initial look at Victorian Plumbing (LSE: VIC) back in June. At the time, the UK’s leading online retailer of bathroom products and accessories had just enjoyed a successful IPO. The shares had jumped from 262p to as high as 341p. Today, the very same stock trades 44% below that peak. What’s going on?

Well, as I noted back then, the company was coming to market during a DIY and home improvement boom. Many of us had used the multiple UK lockdowns to get our properties in order and/or prepare for more home-working in the future.

Unfortunately, last week’s trading update for the year to 30 September suggested this purple patch might be coming to an end. Despite growing revenue by 29% over the financial year, news of “more subdued market conditions” as Covid restrictions were lifted didn’t impress investors. This is despite the company emphasising that margins “remained strong“ and EBITDA for FY21 would likely be “ahead of market expectations“.

Jitters over global supply chains may also have contributed. Having said this, VIC didn’t help itself here. Reflecting that it had been “proactive” on this issue but providing very little in the way of detail wasn’t really satisfactory.

Even so, the market’s treatment of Victorian Plumbing has been a little too brutal, in my view. I guess this is what happens when a highly-rated growth stock doesn’t execute to perfection.

As things stand, VIC stock trades on 21 times earnings. With global headwinds unlikely to disappear anytime soon, I’m inclined to think that the valuation may still have further to drop. As such, I’m keeping my powder dry. It definitely won’t lose its place on my watchlist though.

Luceco

If Victorian Plumbing’s valuation still appears a little too rich, lighting specialist Luceco (LSE: LUCE) is looking far more palatable. Right now, the near-£500m cap company’s stock changes hands for a little over 15 times earnings. 

Sadly, my bullish call on LUCE just over one month ago wasn’t shared by the market. Despite reporting very decent numbers and raising the interim dividend by 73%, investors have elected to abandon the stock en masse. All told, LUCE shares were down 41% before markets opened today since hitting an all-time high in early September. Then again, they’re still up 41% in the last 12 months. 

In my defence, I questioned whether the lack of buying activity on the day did suggest investors were concerned by the firm’s comments relating to significant cost inflation and supply chain setbacks. Even so, I underestimated just how great this concern was. Some director selling hasn’t helped matters.

Of course, short-term setbacks may be regarded as opportunities for long-term investors such as myself. This remains a quality business, in my opinion. Bar the odd blip, margins and returns on capital have been consistently great. The aforementioned cash returns should also be sufficient compensation while investors await a recovery. How long that recovery takes is debatable, of course. 

Far from switching off from this growth stock, I’d be comfortable starting to build a position today.

The post These growth shares have tumbled over 40%! Time to buy? appeared first on The Twelfth Magpie.

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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.

Market share gains at this growth stock

Thanks to a “generally favourable” trading environment, the mid-cap announced some very decent interim numbers today. A buoyant residential Repair, Maintenance and Improvements (RMI) market in the UK allowed the lighting manufacturer and distributor to announce a 51.8% rise in revenue over the first half of 2021. Importantly, the £108.2m logged is far higher than that achieved in 2019 (£82.7m). This backs up the company’s belief that it is gaining market share. 

All told, pre-tax profit pretty much doubled to £16.6m over the period. As impressive as this is, the thing that really caught my eye was the 42.5% return on invested capital. In 2020, this was 24.5%. In 2019, this was a little over 18% (which is still impressive). This is great to see. 

Can all this continue?

I suspect it can. New business wins coupled with more people wanting to work from home should do no harm to its chances of continuing to increase revenue and profits. The forthcoming launch of a new EV charger range is another exciting development.

Importantly, Luceco also seems to have the financial firepower to support its growth strategy. Net debt stood at just £24.3m at the end of June.

As a further sign of just how confident management is, there was a 73.3% jump in the interim dividend from 1.5p to 2.6p per share today.

Cost pressures

Given the share price gains over the last year and change, it would be easy for me to assume there’s limited downside with Luceco. However, I certainly don’t think investing here would be risk-free.

As the company itself mentioned today, the pandemic has “brought severe supply chain disruption” and generated “significant cost inflation“. So far, it looks like it’s managed to navigate these choppy waters. However, Luceco did warn that cost pressures would likely continue for a while. This, in turn, could impact margins and may help explain why the share price was flat in early trading. 

Another potential thing for me to be aware of is the possibility that those already invested may decide to bank some profit. This is to be expected. That said, the relative illiquidity of this growth stock (less than 50% is actively traded on the market) could exacerbate any moves downwards. 

Long term winner

The near 150% rise in the Luceco share price over the past year is great evidence to support my belief that snapping up stakes in great businesses for the long term can bring me rich rewards. It certainly feels a lot less stressful than buying a ‘bargain’ stock with weak fundamentals and crossing my fingers!

Speaking of valuation, I’ll need to shell out 24 times forecast earnings for the current year to buy Luceco today. That’s high but not excessive, in my opinion, especially for such a quality operator.

There’s arguably (far) more risk to investing now than last year. However, I do think there are plenty of worse options for my portfolio than this growth stock. 

The post I’d invest £1,000 in this quality UK growth stock today! appeared first on The Twelfth Magpie.

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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.

The last year or so has been decent for many London-listed companies. However, some lower down the market spectrum have absolutely shot the lights out. Here are two examples, both of which still look like great UK shares to buy now.

Growing at a fast clip

One business that’s been going great guns recently is Clipper Logistics (LSE: CLG). The self-styled ‘retail logistics expert’ and returns manager has benefitted from the explosion in e-commerce in recent years. Multiple UK lockdowns have further boosted trading (and the share price).

June’s update provided a snapshot of just how well things have been going. Revenue for the full year to the end of April is now expected to come in at £698m. That’s a 39% jump on the previous year, partly due to the company winning new contracts with Joules and JD Sports, among others.

In addition to this, CLG recently signed a three-year extension to its contract with ASOS to handle the latter’s returns on the continent.

Taking all this into account, it’s perhaps no surprise Clipper believes EBIT (earnings before tax and interest) for FY22 and FY23 will now be ahead of consensus estimates “by mid-single-digit percentages in both years.“

Right now, the stock trades on 29 times forecast earnings. That’s pretty high, especially as a rise in unemployment post-furlough could prove a setback for retailers and possibly Clipper. Margins, while improving, are also fairly low in this kind of work.

However, this valuation seems more reasonable when looking at the company’s growth strategy. In addition to building its presence in Europe, the £800m-cap plans to launch a B2B online marketplace in September. This will target buyers from the “highly fragmented” elderly care market. Should it prove successful, Clipper may consider expanding the platform into other sectors.

A rapidly reducing debt pile is another positive.

Lighting up the market

A second company whose share price has been soaring has been Luceco (LSE: LUCE). The company is a market leader in LED lighting, portable power products and wiring accessories. Brands include Luceco LED, BG Electrical and Masterplug.

Half-year results are due early next month. However, we already know from July’s update they’ll be decent. Back then, LUCE announced that demand for its products had been “stronger and broader than expected.“

As a result, it now expects to hit revenue of £108m for the first six months of 2021. Adjusted operating profit is likely to come in at £19m. Both numbers are slight improvements on previous guidance.

To round things off, Luceco said figures for the whole of 2021 would now be ahead of what analysts had been predicting. Indeed, CEO John Hornby expects “another year of record results.” No wonder the shares have been in such great form.

But how much is this in the price? Personally, I don’t think the valuation of 20 times earnings is excessive. As such, I’d feel comfortable adding Luceco to my list of UK shares to buy.

This isn’t to say it’ll be plain-sailing. Despite managing to protect margins so far, “industry-wide” cost inflation looks like being a headwind for a while. The home improvement boom will surely moderate at some point too.

Still, there’s a very secure dividend to compensate for any turbulence.

The post 2 ‘unstoppable’ UK shares to buy now appeared first on The Twelfth Magpie.

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• 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 ASOS, Clipper Logistics, and Joules 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.

However, this now means the stock could offer good value for money. In fact, investors may now have priced in many of the risks it faces. This could make it worth buying alongside another cheap share that released results on Tuesday. Within a diversified portfolio, they could both help investors to overcome what may prove to be an inadequate State Pension in retirement.

Margin of safety

The other stock releasing results on Tuesday was manufacturer and distributor of LED lighting products Luceco (LSE: LUCE). Its 2018 results showed its second half performance improved after a challenging first half. It was able to shift its focus towards higher margin sales, while making changes to its pricing and reductions in its overheads. It remains confident it will be able to return to previous levels of margins over the long run.

Net debt was also reduced during the period by 13.4%. It expects to make further progress in this regard in the current year, providing it with a more solid platform for future growth.

In the current year, Luceco is forecast to post a rise in earnings of 25%. Despite this forecast return to growth, it trades on a price-to-earnings growth (PEG) ratio of just 0.4. This suggests it offers a wide margin of safety and could generate improving returns in the long run.

Low valuation

As mentioned, SSE is making significant changes to its business model at present. The company is seeking to offload its energy supply division, which could be a sound move due to the political and regulatory risks it faces. It would also leave the company as a more focused renewable energy business. This sector could enjoy strong growth in the long run, with there being a general political consensus towards a greener future for the UK economy.

Having experienced a challenging year that has seen its share price fall by around 12%, SSE now trades on a price-to-earnings (P/E) ratio of around 9.6 As well as a low valuation, it has an ambitious dividend growth plan over the next five years that could mean shareholder payouts increasing by more than inflation. Since it already yields 7.3%, this could make it an enticing income share over the next few years.

Certainly, there are more popular shares in the FTSE 100 at the present time. But from an income and value investing perspective, SSE appears to be attractive. It could therefore help to boost the continued low payments from the State Pension in retirement when part of a diversified portfolio of shares.

The post Thinking of relying on the State Pension in retirement? I’d rather buy the SSE share price appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of SSE. 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 want to take a closer look at one of these companies, together with another small-cap growth stock that’s just released an interesting set of results.

A top Woodford pick?

Woodford’s heavy exposure to the UK housing market is definitely a bold move, as my colleague Harvey Jones explains here.

But Woodford Funds’ 9.2% stake in Strix Group (LSE: KETL) seems far less risky to me. Indeed, I believe this stock could be a star performer over the years ahead. Strix makes temperature controls for kettles. These components are subject to tough regulatory testing in most western markets, because of the safety risks if they malfunction.

New competitors find it hard to break into this market because Strix’s large market share and protective patents form a barrier to entry.

A long-term buy

Last year’s accounts show an operating margin of 29% on sales of £91.3m. Such a high profit margin suggests to me that the firm’s components don’t face too much price competition.

Management is now looking for new growth markets. In my view, the most exciting of these so far is a recent deal with a major US consumer goods company. This unnamed firm plans to use Strix’s technology in a new range of single-serve coffee machines.

I’m sure you don’t need me to tell you that if Strix can achieve a decent market share in coffee machines, its sales could rise significantly above current levels.

Analysts expect the group’s earnings to rise by around 4% this year, to 13.7p per share. This puts the stock on a forecast P/E of 11.8, with an expected dividend yield of 4.3%. In my view, this could be a good long-term dividend-growth buy.

A turnaround opportunity?

One recent flotation that has disappointed investors is LED lighting group Luceco (LSE: LUCE). Shares in this small-cap edged lower this morning after the firm reported a half-year operating loss of £3.1m, on sales of £75.1m.

The bad news wasn’t a complete surprise. The firm had warned in July that rising costs, destocking, and weak UK consumer confidence would hit profits. The question for shareholders is what might come next?

According to today’s report, the group expects to return to profit during the second half of the year. Chief executive John Hornby says that Luceco’s third-quarter UK retail order book is 30% higher than it was at the start of Q2.

The firm is also benefiting from a fall in the price of copper and agreements for higher selling prices. Both changes should help to restore the group’s profit margins.

Buy, sell or hold?

I can see the turnaround potential here. But I do have some concerns.

The first is that LED lighting seems to be a very competitive business. Larger peer Dialight has also seen profit margins fall in recent years. I don’t know enough about this sector to know which companies, if any, have a sustainable advantage over cheaper rivals.

My second concern is that Luceco’s net debt has now risen to £41.4m. That seems high to me for a company that’s only expected to report a net profit of about £10m this year.

The shares’ forecast P/E of 10 seems about right to me, in these circumstances. I wouldn’t buy anymore just yet.

The post Why this Neil Woodford stock could help you retire early appeared first on The Twelfth Magpie.

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Roland Head 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.

With that in mind, here’s a FTSE 100 dividend stock that seems to offer high total return potential. Alongside it is a small-cap growth stock which could also outperform the UK’s main index.

Improving performance

The growth stock in question is manufacturer and distributor of LED lighting products Luceco (LSE: LUCE). It released an impressive set of 2017 results on Monday which showed a rise in revenue of 25.4%. The company was also able to deliver a 19.3% rise in operating profit to £14.2m as the business generated revenue growth across all its product categories.

Luceco has continued to invest in higher margin sales opportunities in the UK. It’s also investing capital in its international sales presence, while an expansion of its product ranges and a pipeline of new product launches could lead to stronger financial performance over the medium term.

With the stock forecast to grow its bottom line by 26% in the current year, followed by further growth of 29% next year, it seems to offer impressive growth potential. Despite this, its shares trade on a price-to-earnings growth (PEG) ratio of just 0.3, which suggests that they may offer a wide margin of safety at the present time. Therefore, with growth and value appeal, the company could be worth buying right now.

Income potential

With that FTSE 100 dividend yield of around 4% at present, it’s possible to generate a significantly higher income return. For example, insurance specialist Admiral (LSE: ADM) has a 6% dividend yield, and could offer investment potential for the long term.

Certainly, the last few years have been an uncertain period for the motor insurance industry. The change in the Ogden discount rate caused investor sentiment to come under a degree of pressure. However, with investor sentiment now more buoyant the industry appears to offer significant upside potential. And while Admiral may have a price-to-earnings (P/E) ratio of around 19, continued dividend growth could lead to improving share price performance.

With the company expected to increase dividends per share by over 13% per annum during the next two years, it could become an even more impressive income share. Although inflation is now falling, uncertainty surrounding Brexit could pick up over the next couple of years. This could make dividend stocks more appealing and lead to rising total returns for their investors.

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

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Peter Stephens owns shares of Admiral Group. 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.

Lower margin

The cause of the profit warning is a lower gross margin than expected. It has weakened during the second half of the year, and the company will now deliver a gross margin of around 33%. This will lead to a reduction in profit after tax of £3.5m to £13.2m. This compares unfavourably to market expectations of £16.7m.

The weakness in the company’s gross margin was not identified sooner due to an incorrect assessment of the value of the company’s stock. Due to this error, the company’s Financial Controller has resigned and system improvements are being put in place to ensure this issue does not recur.

The main reasons for the gross margin weakness have been the strengthening of the Chinese RMB versus the US dollar, as well as the continued weakness of sterling. The company expects to offset some of these headwinds through internal efficiency savings as well as overhead reductions. The gross margin is expected to recover to long-term expectations in the second half of 2018 as a result of company action.

Turnaround potential

As mentioned, in the short run there is scope for further falls in the Luceco share price. Investor sentiment may remain weak for some time, as investors may be waiting for evidence that the company’s gross margin is back up to normal levels. This could create an opportunity for long-term investors who can cope with higher levels of volatility, since the problems the business is facing appear to be temporary. As such, over the medium term it could present an attractive turnaround opportunity.

Difficult trading conditions

Also offering the potential for a turnaround is Debenhams (LSE: DEB). Like Luceco, it has disappointed investors with profit warnings in the recent past and it has led to a major change in strategy. The company is now seeking to capitalise on the potential for ‘social shopping’. This could help it to maximise sales per customer as well as build customer loyalty in the long run.

Following its share price fall of 42% in the last year, Debenhams now trades on a low valuation. It has a price-to-earnings (P/E) ratio of just 6.4, which suggests that it offers a wide margin of safety. Certainly, earnings are due to fall by 14% this year and it faces a tough environment. But with what seems to be a sound strategy, there could be significant upward re-rating potential ahead for the retail play.

In addition, Debenhams has a dividend yield of over 9% at the present time. With shareholder payouts being covered 1.8 times by profit, they appear to be sustainable at their current level.

The post Is Luceco a falling knife to catch after sinking 40% today? 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 owns shares in Debenhams. 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.

Every investor loves dividends, but no investor likes being on the receiving end of a dividend cut, which is usually a painful experience. 

I believe that the best way to avoid such a situation is only to buy the market’s best dividend growth stocks. Specifically, companies that already support attractive yields but with room for payout growth are, in my view, the best income buys as the chances of a dividend cut are significantly reduced. 

Residential landlord Grainger (LSE: GRI) is one such example. Over the past five years, Grainger’s dividend per share has increased from 2p to 4.9p, a compound annual growth rate of 19.6%. And there’s plenty of room for further payout growth as the dividend is currently covered 2.6 times by earnings per share. 

Dividend growth champion

Some investors might be put off by the firm’s low dividend yield of only 1.8%, which is around half of the market average. However, if the payout continues to expand at a double-digit percentage every year, it won’t take long for the yield to hit a more respectable level. 

For example, City analysts have pencilled in a prospective dividend of 5.7p per share for the fiscal year ending 30 September 2018, up 16% year-on-year giving a yield of 2.1% at today’s prices. According to my calculations, if the payout grows at this rate for the next five years, it will have risen to 12p by 2023 for a yield of 4.5% at today’s prices. 

A payout of 12p per share by 2023 is a realistic target as the firm is set to report earnings per share of 12.8p for the current financial year. Assuming management can grow earnings per share at a rate of 5% per annum for the next five years, dividend cover will remain below 1.4 times. 

Hidden dividend champion 

Luceco (LSE: LUCE) might fly under the radar of most investors, but that does not mean that you should ignore the business. 

The company manufactures and distributes  high quality and innovative LED lighting products, and business is good. For the six months ended 30 June, revenue rose 26% year-on-year and adjusted profit before tax leapt 63%. Net debt fell from £48m to £26m giving management confidence to introduce an interim dividend payment of 0.8p per share. Since these results, the firm has spent £10m to buy Kingfisher Lighting, a nationwide UK supplier of exterior lighting products. 

City analysts believe that Luceco can grow earnings per share at a rate of 20% or more per annum for the next few years. I believe that, if anything, this target is conservative. The group is highly cash generative, and the market for LED lighting is still growing. 

As earnings grow, so will the dividend. For 2017 a total payout of 2.1p is projected rising to 2.6p for 2018. And just like Grainger, while Luceco’s dividend yield of 1% today might not look that attractive, the payout has plenty of room to expand. 

For 2017, the dividend of 2.1p will be covered an estimated 5.1 times by earnings per share. If the dividend continues to grow at a rate of 25% per annum for the next five years, it will hit 8p by 2023 giving a yield of 3.6% at today’s prices.

The post 2 bargain dividend growth stocks I’d buy today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no 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.

Emerging markets

The AIM-listed group specialises in providing aesthetic dermatology solutions through collagen stimulation for facial volume loss, thread lifting for facial contouring and dermal fillers for wrinkles and lines. The company has an established sales and marketing footprint in the UK, France, Germany, Italy and Spain, as well as a rapidly-growing presence in emerging markets around the world.

For the six months to 30 June, revenues reached £20.1m, compared to £17.3m for the first half of 2016, with gross profit up 19% to £14.5m, together with a strong improvement in gross margin from 70.5% to 72.4%. Sales were bolstered by strong demand in Brazil, with the South American country becoming an increasingly important market for the group.

Facelift

In recent years, there has been growing demand for plastic surgery and other aesthetic treatments from the country’s rapidly-growing middle class population. Indeed, Sinclair’s Brazilian affiliate, created in July 2016, has already become the group’s largest direct operation in terms of sales.

I think a combination of vanity and an ageing population should help to drive growth both in Europe and worldwide long into the future. So right now, I feel that Sinclair Pharma could be the perfect stock to give your portfolio a much-needed facelift.

LED technology

Another London-listed small-cap worthy of a closer look at the moment is LED lighting specialist Luceco (LSE: LUCE). The £380m firm is a rapidly growing manufacturer and distributor of high quality and innovative LED lighting products and wiring accessories for a global customer base.

The Luceco LED lighting brand continues to benefit from the shift away from old-fashioned lighting technologies as a result of recent advancements in LED technology. The brand has continued to successfully leverage the group’s existing customer base and low-cost Chinese manufacturing facility, and remains well positioned to build on an already-impressive record of organic growth.

Meanwhile, in the electrical wiring accessories market, Luceco’s BG and Masterplug brands have continued to reinforce their market-leading positions through further new product development initiatives, expanding into new products and gaining market share.

Chinese expansion

Luceco operates a fully-integrated operating model which includes wholly-owned manufacturing and product development facilities in the UK and China that enables it to maintain strong control over its cost base and the quality of its products, while allowing it to bring products to market quickly and at low cost.

The business is also well positioned for future growth with recent investment made in the expansion of its Chinese manufacturing facility and sales network, both in the UK and internationally, to support the group’s existing and new product ranges.

Luceco’s shares have performed well since last October’s Stock Market debut, soaring from their IPO price of 130p to today’s levels around 237p, and I’ve no doubt they’ll continue to outperform. With double-digit earnings growth forecast for the next couple of years, I believe today’s valuation at 23 times forward earnings is still not too demanding given the promise of further expansion.

The post 2 ‘under the radar’ growth stocks I’d consider buying today appeared first on The Twelfth Magpie.

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Bilaal Mohamed has no position in any 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.