Personally, I’ve been buying shares recently. In my view, last year’s market drop has left a number of companies trading at attractive prices. My purchases have been split between international stocks I expect to be Brexit-proof and UK businesses I hope will recover after Brexit.

Today I want to look at one stock from each camp. One is a share I already own and the other is one I’d be happy to buy.

A Brexit-proof buy?

My first pick today is Anglo-Asian banking giant HSBC Holdings (LSE: HSBA). This £128bn firm makes about 90% of its profits in Asia. According to the most recent figures available, about 65% of the bank’s accounts are in the UK or Hong Kong. Of the remainder, only 7.5% are in other European countries.

From what I can see, leaving the EU is unlikely to cause serious problems for HSBC.

A rock-solid 6% income

The HSBC share price has fallen about 18% over the last year, but the bank’s performance has continued to improve. Return on average shareholders’ equity — a key measure of profitability — rose from 8.2% to 9% during the first nine months of the year.

The balance sheet appears strong too. The bank’s regulatory Common Equity Tier 1 (CET1) ratio was 14.3% at the end of September, well above the 9.5% minimum required by regulators.

The stock’s fall over the last year has improved the value available to new buyers. The shares currently trade in line with their last reported book value of $8.10 (c.633p) and offer a well-covered dividend yield of 6%.

In my view, the shares are an excellent buy for income. If the global economy remains stable, I think there’s a good chance HSBC will outperform the FTSE 100 in 2019.

Dividend + growth

HSBC may get bigger. But its size means that it’s unlikely to be a standout growth stock. Fortunately there are some excellent smaller financial firms on the UK market which I believe have good growth potential.

One of my top picks, which I own myself, is small-cap fund manager Miton Group (LSE: MGR). The firm’s fund management is overseen by well-known small-cap specialist Gervais Williams, who also has an 8.9% shareholding in the firm.

The Miton share price has fallen by nearly 30% over the last six months as investors priced in a weaker performance due to market falls. Figure released by the company today show that the value of its assets has fallen, with net inflows of £1,019m in 2018 partially offset by £466m of investment losses.

However, Miton’s investment style is mainly long term, so I don’t think these short-term falls should be a concern. We’ve already seen the market start to bounce back in 2019. Looking ahead, I think the group’s £25m cash balance and solid track record should pave the way for further growth.

Miton shares currently trade on 12 times 2018 forecast earnings, with a 3.4% yield. That seems good value to me, given that the group’s cash balance covers nearly 30% of the share price. I’d be happy to buy more.

The post Have £1k to invest? I think the HSBC share price could crush the FTSE 100 this year appeared first on The Twelfth Magpie.

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Roland Head owns shares of Miton Group. The Motley Fool UK has recommended HSBC Holdings. 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.

At times like these, it’s worth remembering that severely punished stocks can be the ones to stage the biggest comebacks when markets regain their composure.

Here are three quality businesses I’m considering buying if sentiment continues to weaken.

Losing its fizz

Thanks to the consistently high returns on capital it invests (ROCE) and a penchant for hiking dividends by double-digits, I’m a big fan of soft drinks maker Nichols (LSE: NICL). The only problem is that the stock has usually been expensive to buy. 

Following the recent market sell-off, however, the owner of the much-loved Vimto brand has seen its share price fall 13% in October alone. It’s now down 37% since peaking in value in April 2017.

Despite its small size when compared to industry peers like AG Barr and Britvic, Nichols is very much a global company with a presence in 85 countries. It won’t shoot the lights out in terms of revenue and profit growth, but this is compensated for by the stability offered by its portfolio of ‘sticky’ brands that consumers find hard to move away from.  

Trading on 18 times earnings for the current financial year, Nichols is still far from being screamingly cheap but most quality stocks rarely get to bargain bin levels. Should it continue falling, I’ll be all of out excuses not to buy.

Assets up

I became bullish on £107m cap investment manager Miton Group (LSE: MGR) this time last year. Unfortunately, I neglected to purchase its stock. By the beginning of October, the shares had almost doubled in value and now change hands on 15 times earnings.

When you take into account recent results, this shouldn’t come as a surprise. At the close of play on 30 September, Miton had a little under £4.87bn in assets under management, representing a rise of 38% on that held at the same time in 2017. Total net inflows soared almost 200% in the first nine months of 2018 to £927m. Given that index funds continue to gain support at the expense of active funds, that’s really rather impressive. 

With many investment managers seeing their shares hit, I’m prepared to continue sitting on my hands for a while longer in order to see whether ongoing weakness provides a cheaper entry point. 

Going cheap

My final pick is both the smallest company and biggest faller in recent months. 

Since reaching a high of 86p in July, shares in £62m cap freight manager Xpediator (LSE: XPD) have almost halved in value. I’m struggling to identify any specific reason for this. Perhaps early holders are merely banking some profit on the back of general market jitters.

Boosted by acquisitions, Xpediator’s revenue jumped 60.7% in the first half of 2018 with adjusted operating profit 44.2% higher at £2.1m. Margins are low, but it’s worth highlighting that, like Nichols, the Braintree-based firm generates very decent returns on the money it invests.

Xpediator’s stock now trades at a little over 10 times forecast earnings for the current year. There’s a 3.4% yield on offer at the current price, a fair return while owners await a recovery. 

The post 3 small-cap growth stocks I’m considering buying after the latest market crash 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 recommended Nichols. 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.

Legendary billionaire investor Warren Buffett is also a fan of this approach. He once said that “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Today, I want to look at two UK stocks which I think have the potential to deliver above-average profits over long periods.

A success story

The share price of small-cap asset manager Miton Group (LSE: MGR) rose by 6% this morning, after reporting a 52% rise in pre-tax profit for the six months to 30 June.

Assets under management rose by 35% to £4,539m during the half-year. Adjusted pre-tax profit was £4.4m, up 52% from £2.9m during the same period last year. The group ended the period with net cash of £21m.

This AIM-listed fund manager built its reputation as a small-cap specialist under the direction of fund manager Gervais Williams. Miton is now starting to diversify, but the group’s investment performance remains strong.

The company has now recorded seven consecutive quarters of net inflows of new client cash. And 91% of its funds have been in the top 50% of rivals since they were launched, or since the current fund manager took charge.

Too late to buy?

One risk for shareholders is that fee income could fall sharply in a market correction. Another is that the firm’s small-cap focus may be hard to scale.

However, I rate Miton as one of the best firms in this sector. I’m also reassured by the net cash balance, which provides about six years’ cover for the dividend.

The stock now trades on 17 times forecast earnings with a 2.5% yield. That’s no longer cheap, but I’m happy to continue holding.

This dip could be a buying opportunity

Another financial stock I rate highly is FTSE 250 online trading firm IG Group Holdings (LSE: IGG). The IG share price dropped 10% last week after the firm revealed a 5% drop in revenue during the three months to 31 August.

This fall was caused by new European regulations, which limit the amount of leverage the firm can offer to retail traders. IG shares have now fallen by nearly 20% from their July peak. But in reality, last week’s update didn’t contain any surprises. The group simply confirmed its expectation that annual revenue could fall by up to 10% as a result of the new rules.

A profit margin of nearly 50%

It’s too soon to be certain of the impact that the new EU rules will have on IG’s profits. But more than 50% of the group’s UK and EU revenue is now generated by clients classified as professional, who are exempt from the new rules.

The group generated an operating margin of 47% last year and has a long track record of high profit margins and strong cash generation. In my view, this year’s expected 15% fall in earnings is now reflected in the share price.

At about 765p, IG stock trades on a forward price/earnings ratio of 15, with a prospective yield of 5.4%. Profits are expected to return to growth in 2019. I rate the shares as a buy at this level and have added the stock to my watch list.

The post 2 dividend + growth stocks that could beat the FTSE 100 and help you retire early appeared first on The Twelfth Magpie.

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Roland Head owns shares of Miton 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.

Over the past two years, Miton shares have crushed the FTSE 250, surging 171% compared to the index’s return of just 24%. And I believe there could be plenty more to come over the next few years as the company builds on its success of the past few years. 

Asset growth 

Miton provides fund management services with an array of funds invested in a range of asset classes. These products have struck a chord with investors — that’s not just my personal view as the numbers speak for themselves. 

Today Miton reported asset under management jumped 35% year-on-year for the half year ended 30 June, to £4.5bn across the group. Investors committed a total of £616m in the period, up 216% year-on-year. 

At a time when the rest of the active fund management industry is losing assets to passive investments such as low-cost ETFs and market tracker funds, Miton seems to be winning assets due to what CEO David Barron calls the group’s “genuinely active strategies,” which are beating the rest of the pack. Indeed, during the first half of 2018, two of the group’s funds were even shortlisted for being the best in their sectors. 

City analysts believe Miton’s improving reputation will help the group achieve earnings growth of 12.7% this year, followed by growth of 17.8% next year, putting the stock on a forward P/E of 15.5. This multiple looks pricey at first, but Miton has approximately 12p per share of cash on the balance sheet. After stripping out cash, the shares trade at a much more attractive cash-adjusted P/E of 13. And as well as earnings growth, the firm’s dividend payout has tripled over the past six years, a performance that I believe it’s possible to replicate over the next six years, with payout cover of 2.4, and double-digit earnings growth expected for the next two years. 

Put simply, it is my view that Miton’s growth is only just getting started and it’s well worth considering this stock for your portfolio. 

Cash machine 

Another momentum and dividend stock I believe is worth your research time is Amino Technologies (LSE: AMO). 

Amino is a cash cow and momentum champion. Over the past five years, the shares have produced a total return (including dividends) for investors of 22% per annum. Over the past 10 years, the total annual return is 16%. At this rate of return, it means investors have doubled their money every 4.5 years!

Personally, I believe that it’s not going to take much effort for Amino to continue this performance. The company’s latest trading update reported that the group’s order backlog was up 40% year-on-year for the first half of 2018. City analysts are expecting the firm’s earnings per share to expand 5% for the full-year, which is disappointing, but it’s Amino’s dividend potential that really excites me. 

Analysts believe Amino has scope to increase its dividend 10% for 2018, and 10% for 2019, taking the payout to 8.1p per share, or a dividend yield of 4%. With £13m of net cash on the balance sheet (just under 10% of Amino’s market-cap), it certainly looks to me as if it can afford the higher distribution. 

These two momentum dividend stocks are not the only investments I’m considering right now.

The post This top dividend and momentum stock is crushing the FTSE 250 appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares in Miton 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.

The group reported net inflows of $4.8bn to its funds during the first quarter, taking assets under management to $112.7bn.

This figure would have been higher if it hadn’t been for a “negative investment movement” of $1.8bn. What this means is that Man’s trading strategies generated a loss for investors during the first three months of the year.

Of course, three months is a short period, during which the wider market has also fallen. The FTSE 250 fell by more than 5% during the quarter, whereas I estimate that Man’s investment loss equates to a fall of less than 1.5% in the value of its assets under management. So the group’s investments appear to have beaten the market so far this year.

The right time to buy?

The group reported surplus capital of $460m at the end of last year and has repurchased $100m of its own shares since October. A further $100m share buyback was announced today, and chief executive Luke Ellis says that the company will “continue to review further potential acquisition opportunities”.

The group’s hunt for acquisitions highlights one of the problems for investors — profits from this hedge fund group can be inconsistent. To some extent, they depend heavily on stock market movements.

Analysts expect the group’s adjusted earnings to fall from $0.20 to $0.18 per share this year. This leaves the shares trading on 14.9 times forecast earnings with a prospective yield of 4.5%. Although I think this is a well-run business, I believe there are better choices elsewhere for investors.

One stock I prefer

One company I’d choose ahead of Man is specialist small-cap fund manager Miton Group (LSE: MGR).

To some extent, the same comments apply to Miton as to Man. The group’s funds will generally do better in rising markets.

But Miton only has £3.8bn of assets under management, compared to $112.7bn at Man. I believe that this ‘small’ size means that the chance of a market-beating performance is greater.

The firm’s performance metrics seem to support this view — 87% of its funds have been in the top 50% of performers in their sector since their current managers took charge.

Another attraction is that two of the company’s senior fund managers, Martin Turner and Gervais Williams, own more than 12% of Miton’s stock between them. So it’s probably fair to assume that they encourage a culture of sustainable, long-term investing.

I’d buy again

I’ve owned Miton stock before and regret having sold the shares. But the group’s valuation remains reasonably modest and I’d consider buying again.

The board has allowed almost £20m of net cash to build up on the balance sheet, so about one quarter of the current share price is backed by surplus cash. This should provide support for the dividend if profit growth does slow at any time.

At present there’s no sign of this. Analysts expect earnings to rise by around 10% to 3.8p per share this year. That leaves the stock on 11.2 times forecast earnings with a well-covered dividend yield of 4%. I believe this is a quality business and rate the shares as a buy.

The post This FTSE 250 dividend-growth stock isn’t the first stock I’d buy after today’s news 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.

OK, so four of those five steps are as easy as pie. The second — picking which companies to invest in — requires a bit of research and thought. To get you on your way, here’s one company I’d have no qualms about adding to my portfolio at the current time and one I’d probably steer clear of.

Mighty good dividends

Small-cap stocks won’t be for everyone but I think asset manager Miton Group (LSE: MGR) is definitely worthy of attention from those with a fairly high tolerance for volatility and capital risk. 

But what about those dividends? Well, as a result of recent performance and confidence in the future, management saw fit to hike the total dividend by a huge 40% last week to 1.4p per share. This equates to a yield of 3.2% based on the current share price.

Tempted? You’ll need to be quick. The ex-dividend date is 29 March — three days from now.

With a forecast yield of around 4% for the new financial year and shares trading at just 11 times predicted earnings, the investment case for Miton looks compelling.

Big spender

If Miton is a stock I’d strongly consider buying, environmental infrastructure firm Pennon Group (LSE: PNN) is one I’m avoiding for now. That’s despite today’s trading update stating that the company’s performance for the year to the end of March had been in line with management expectations.

South West Water — owned by the £2.5bn cap — continued to do well over the last year and the company believes it is“well-positioned to respond” to new price limits from regulator Ofwat. Elsewhere, the FTSE 250 constituent’s Energy Recovery Facilities (ERFs) have been performing “above base case expectations” and demand for these is expected to exceed capacity “into the long term“.  

On the downside, Pennon revealed that the construction of its ERF in Glasgow is likely to cost £95m more than the £155m originally targeted due to the termination of its contract with Interserve. As a result of changes to China’s import regulations, it also expects a drop in H2 earnings from its recycling operations (although not enough to significantly impact on performance).

Trading at just 12 times predicted earnings following a near 40% drop in its share price since last May, Pennon’s valuation is undeniably attractive, as is the tasty 6.6% yield on offer. That said, the extent to which payouts are likely to be covered by profits continues to look rather low. While I’m sensitive to the argument that the resilient nature of its business negates such a concern, I’m content to sit on the sidelines until the company’s level of capital expenditure drops (due next year) and free cash flow starts to look healthier.

The post One bargain dividend stock I’d buy for my ISA today (and one I’d avoid) 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 recommended Pennon 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.

Rising markets are proving to be an excellent tailwind for AIM-listed investment manager Brooks Macdonald (LSE: BRK). 

According to the company’s half-year trading update published this morning, for the six months to the end of December, funds under management expanded 12.3% during this period. Net organic growth over the period was 7.7%, with rates of growth remaining strong in UK Investment Management. 

For the three months to the end of December, assets under management expanded 6.8%. The growth was a combination of several factors, including performance (£319m) and net new business (£431m). 

Unfortunately, even though Brooks seems to be attracting new business, management warned today that due to lower yields across the market, performance had deteriorated and this is weighing on margins. Still, a tight grip on costs, management believes, should help offset this pressure. Today’s update said: “Our strong FUM trajectory, combined with a disciplined approach to costs, means we are well placed to mitigate external pressures on revenue yield.“

Improving dividend outlook 

For the full-year to June 2018, City analysts are expecting Brooks to report flat earnings. But next year, growth is expected to return with an expansion of 22% pencilled in, giving a 140p per share estimate of forward earnings. On this basis, the shares do look slightly expensive, trading at a forward P/E of 14.3. However, it’s the company’s dividend potential that interests me. 

Analysts are expecting the firm to pay out 50p per share to investors for 2018, and 60p for 2019 giving a dividend yield of 3.1%. This payout is going to cost around £6m, easily covered by the estimated pre-tax profit of £23m and backstopped by £32m of cash on the balance sheet as of the end of fiscal 2017. 

So not only does it look as if Brooks’ dividend is safe, but it also seems as if management has plenty of room to grow it further in the years ahead. 

Market-beating managers 

Miton Group (LSE: MGR) is another asset manager with a bright dividend future. At the time of writing, the shares support a dividend yield of 3.2%, which is just below the market average. However, over the past four years, the dividend has doubled as earnings per share have risen 100%, and City analysts are expecting growth of 28% for 2017 followed by 14% for 2018.

 This earnings expansion should, according to the City, enable the firm to increase its payout 40% during the next two years. Backing up the distribution is a net cash balance of nearly £20m. 

A trading statement issued by Miton last week confirmed that the company is on track to hit City growth targets for the full year. For the 12 months ended 31 December, assets under management were £3.8bn, up 32% year-on-year. A strong performance by the group’s funds during the period helped convince investors to come on board. 13 out of 15 of Miton’s funds were ranked as “first or second quartile performers since manager tenure.” Also, the group’s top fund manager, Gervais Williams has a significant stake in the firm. 

As long as its fund managers can keep up this rate of outperformance, Miton should continue to throw off cash and fund further dividend increases. 

The post 2 monster growth and income stocks I’d buy for 2018 appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns shares in Miton 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.

This is the second time this year that Miton has forced City analysts to upgrade their estimates. The business is often overlooked by private investors due to its modest £65m market cap, but in my view it’s potentially a better buy than some larger rivals.

Still looks cheap to me

At the end of October, the group had £3,635m of assets under management. It said that it has seen net inflows of new investor cash over the second half of the year and this suggests rising demand for the group’s investment expertise, much of which is focused on small-cap stocks.

Another attraction is that the group’s top fund manager, Gervais Williams, has a 6.88% stake in the firm. Mr Williams also has a seat on the board, so I think it’s fair to say that the company is unlikely to take short-term risks that could sacrifice long-term growth. Although he could unsettle the market if he ever chose to leave, this seems unlikely at present. On balance, I believe management interests are well aligned with those of shareholders.

Miton shares have risen by 28% over the last year, and by 69% over the last five years. Despite these gains, the stock currently trades on a forecast P/E of around 14, falling to a P/E of about 12 for 2018.

The dividend payout has grown at an average of 20% per year since 2011. A payout of 1.1p per share is expected this year, giving a forecast yield of around 3.1%. I believe further growth is likely in 2018, given the group’s debt-free balance sheet and strong cash generation.

In my view, Miton certainly rates as a potential buy after today’s news.

Follow the expert money

Miton’s strength is its expert team of specialist fund managers. For investors with an interest in small-cap mining stocks, that kind of expertise is often hard to find. Companies can appear credible but later prove disappointing.

One way to select potential winners is to follow the investments of larger mining firms. For example, the Cascabel project owned by gold and copper miner SolGold (LSE: SOLG) looked an uncertain bet for many years, until autumn 2016, when the group secured financial backing from A$18bn firm Newcrest Mining Limited.

Newcrest has since invested $63m in SolGold in exchange for a 14.54% holding in the company. Based on information in the latest presentation, I estimate that the average share price paid by Newcrest so far is about 30p.

However, SolGold shares currently trade at about 27p, giving us the opportunity to invest at roughly the same price Newcrest has been happy to pay.

SolGold believes that Cascabel could be a world-class discovery, with as much as 10bn tonnes of ore potentially containing 60m tonnes each of gold and copper. The company is now well funded for now, with a supportive industry investor.

Although this is only a small investment for Newcrest, which reported a profit of A$408m last year, I believe SolGold shares could be a good long-term buy at current levels as part of a diversified portfolio.

The post 2 high-growth stocks you might regret not buying 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.

The fund manager announced that assets under management clocked in at £3.35bn as of June, exploding from £2.54m at the same point in 2016. And net revenues grew 7.3% year-on-year during January-June, to £10.3m.

However, Miton advised that adjusted pre-tax profit fell to £2.9m in the six months, from £3.1m in the corresponding period last year. The bottom line slip was caused by “a write-back to share-based payments… arising from the forfeiture of awards,” which totalled £430,000.

Chief executive David Barron commented: “The group continues to deliver strong investment performance and net inflows. We have continued to streamline the business and have demonstrated the scalability of our operating platform.”

And in a further reassuring step Miton advised that “trading for the full year is expected to be at least in line with current market expectations,” citing Peel Hunt forecasts predicting adjusted profit of £4.6m.

On the up

With demand for its financial products continuing to grow at a healthy rate, City consensus is suggestive of a modest 4% earnings rise in 2017. And Miton’s bottom line is predicted to pick up the pace from next year, and a 20% rise is currently predicted for 2018.

A consequent forward P/E ratio 16.2 times may not be too much to excited to get about, but I believe the AIM stock’s dividend outlook certainly is.

Last year’s 1p per share reward is expected to rise to 1.1p in the present period. And this is predicted to rise again in 2018 to 1.4p. As a consequence, yields ring in at 2.7% and 3.5% for this year and next, and I expect dividends to keep detonating as business accelerates.

Blue-chip beauty

I am convinced RSA Insurance Group (LSE: RSA) is another terrific stock selection for those seeking splendid earning and dividend expansion. And my faith is underpinned by bright broker forecasts.

The FTSE 100 star is expected to keep its recent run of double-digit earnings rises rolling with a 12% improvement in 2017. And an extra 18% rise is predicted for next year. This does not come as a surprise given that demand for RSA’s products continues to detonate — the company saw net written premiums expand 11% between January-June thanks to new business, improving client retention, as well as higher pricing and foreign exchange gains.

Current projections also make RSA terrific value on paper, the insurer’s forward P/E ratio of 14.2 times falling below the Footsie corresponding value of 15 times. And investors can bank on the firm’s progressive dividend policy to keep churning out brilliant yields too.

A payout of 21.6p per share is forecast for this year, resulting in a chunky 3.5% yield. And this leaps to 4.8% for 2018 thanks to a predicted 29.9p reward. With restructuring measures finally complete and underwriting performance picking up momentum, I reckon now is a great time for investors to pile into the financial giant.

The post 2 stunning stocks for growth and dividend-chasers appeared first on The Twelfth Magpie.

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Royston Wild 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.

On a roll

£127m cap Accrol (LSE: ACRL) is unlikely to get your pulse racing. It makes toilet rolls, kitchen rolls and facial tissues. Stay awake now.

As an investment, things are more interesting. Since coming to the market last year, the shares have climbed a very respectable 25%.

Full year results (released in July) revealed a 14.2% increase in revenue and 57.3% increase in adjusted profit after tax to £11m. Those with an aversion to debt should also note how Accrol’s ability to generate bundles of cash allowed it to reduce the amount on its books from just under £61m to £19m over the previous 12 months.

During its first year as a listed business, Accrol opened a new 168,000 sq. ft. manufacturing facility and unveiled a plan to make its supply chain more efficient through the creation of a centralised finished goods hub in Skelmersdale, Lancashire. Both developments should allow the company to continue growing its market share, which now stands at over 50% of the Discount Sector following recent contract wins.

The fact that Accrol produces a dull but essential product means that its earnings — and share price — should remain fairly resilient in the event of any general economic wobbles. Indeed, as CEO Steve Crossley recently stated, the recent rise in inflation should “drive shoppers to seek value” in discount stores, even if the full impact of price increases is still to be felt.

Trading on a forecast price-to-earnings (P/E) ratio of just 11 for the current year (based on predicted earnings per share growth of 27%) and offering a 5.4% yield, Accrol looks a solid buy.

More growth ahead

With a market cap of just £68m, minnow Miton Group (LSE: MGR) might not be the first investment manager that springs to mind but recent results suggest that highly-rated Gervais Williams and co are doing a great job of attracting clients.

The company’s trading update for the first half of 2017 reflected on a “strong start to the year” with total assets under management (equity funds, multi-asset funds and investment trusts) increasing 15% to £3.35bn from £2.91bn back in January. 

While the popularity of investment management companies is heavily correlated with the twists and turns of markets, CEO David Barron stated he was “optimistic” that the kind of performance achieved over H1 would continue into the second half of the year.

Analysts are equally optimistic, having predicted a 14% increase in earnings per share in 2017 with an even bigger 20% rise expected in 2018. Based on today’s share price, that would leave the stock trading on price-to-earnings (P/E) ratios of 16 and 13 respectively. That sounds very reasonable, especially as Miton also boasts a significant net cash position — £21m at the end of its last financial year. And while its easily-covered-by-profits 2.8% dividend yield may not be the biggest payout available on the market, there are already suggestions that this will be hiked by no less than 27% in the 2018/19 financial year.

Miton next reports to the market towards the end of September. Assuming recent momentum has been sustained, I can see the shares moving higher.

The post 2 ‘under the radar’ growth and income stocks appeared first on The Twelfth Magpie.

More reading

• 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?
• 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?

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.