The first is FTSE 100 private healthcare group NMC Health (LSE: NMC). It’s the leading operator in the Gulf Cooperation Council region, whose member states are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The second is MP Evans (LSE: MPE), a well-established producer of palm oil in Indonesia.

Price pain but profitable

In its annual results, released today, MP Evans reported a 32% increase in crops to 573,000 tonnes, and record production of crude palm oil — up 25% to 192,500 tonnes. Meanwhile, costs were down by 14% to $320 per tonne of palm product.

However, one thing outside the company’s control is the price of palm oil. Record production and reduced costs could not outweigh a year of significantly lower palm-oil prices in 2018. The company remained profitable, but profit from continuing operations fell to $7.2m from $27m in 2017.

The share price was down as much as 10% to 620p in early trading, but has recovered to 652p (down 5%), as I’m writing. This represents a whopping 86 times today’s reported earnings per share (EPS) of 9.9 cents (7.6p at current exchange rates). However, the outlook for 2019 and beyond is much brighter. And this gave the board confidence to maintain the 2018 dividend at 17.75p (running yield 2.7%).

Rising earnings ahead

The palm oil price has recovered from a low point of $440 per tonne in the middle of November to $520 per tonne at the end of March, and the futures market is anticipating significant further price increases to come.

Ahead of today’s results, forecast EPS for 2019 stood at 42 cents (32p), rising to 54 cents (41p) for 2020. So on a forward basis, we’re looking at 20.4 times EPS, falling to 15.9 times. This is a well-managed business, with many years of increasing production ahead, and I rate the stock a ‘buy’ at the current price.

Multi-year growth story

There was no annus horribilis for NMC Health in 2018. The company delivered another year of record revenues and profits. EPS growth to 133 cents (102p) was in line with its four-year annual average of around 30%. Strong growth is set to continue, with EPS of 177 cents (135p) forecast for 2019, followed by 219 cents (167p) for 2020.

A current share price of 2,420p represents 17.9 times forecast 2019 EPS and 14.5 times 2020’s. Meanwhile, a running yield of 0.75% on a dividend of 18.1p is set rise strongly in the coming years, with the payout tracking the rapid growth in EPS.

NMC is another well-run business, and management has a record of under-promising and over-delivering on guidance. The company’s unmatched geographic reach within its target markets, and significant lead over others in the diversity and complexity of its medical services, are strong competitive advantages. I see another multi-year growth story here, and another stock I’d be happy to buy today.

The post I’d buy this Brexit-proof FTSE 100 stock for my ISA today appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended NMC Health. 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.

Underlying progress

On the face of it, today’s first-half numbers were underwhelming. Revenue from continuing operations was down 6.5% to $53.8m, and operating profit dropped 39% to $10.7m. However, this was due to external factors. Revenue was hurt by a 10% fall in the commodity price of crude palm oil (to $663 per tonne from $735), while the decline in profit mostly reflected a $4.1m unrealised exchange rate loss, as the Indonesian rupiah weakened against the US dollar.

Fluctuations in the palm oil price and currency swings can boost, or hold back, the company’s performance from year to year. However, the underlying progress of the business is the important thing and this continues to be strong. Crops were 27% higher than in the same period last year, with the group increasing its hectarage, and its young plantings maturing. Meanwhile, production costs were reduced by 8% to $350 per tonne, from $380. As an efficient low-cost operator, MP Evans is well-positioned to remain profitable through periods of soft prices (as at present) and to make bumper returns when prices are firm.

Further upside for investors

In late 2016, the company’s shares were trading at around 425p but soared on a 640p offer from £5bn Malaysian conglomerate Kuala Lumpur Kepong Berhad (KLK). This, and a subsequently improved offer of 740p, were rejected by the board and major shareholders on their view that it “very substantially” undervalued the company.

The shares are trading at 768p, as I’m writing (up 1.6% on today’s results), and the company’s market capitalisation is £420m. I continue to rate the stock a ‘buy’, as there are three reasons why I believe there’s further upside for investors. First, the company has made good progress on its growth strategy since the 2016 KLK offer. Second, based on an independent market valuation per planted hectare, the directors estimated group equity value at the last financial year-end of 1,096p a share. And third, KLK hasn’t walked off into the sunset and is still very much on the scene.

Value will out

Very soon after being knocked back by MP Evans’ board and shareholders, KLK began acquiring shares in the company. It crossed the disclosable thresholds of 3% and 10% in January 2017 and has continued to increase its stake. The last notification was as recently as 16 August when it crossed the 15% threshold. KLK clearly sees value in the stock at the current level.

Now, the Malaysian conglomerate may be content to participate in the upside potential of MP Evans as a minority shareholder. Or it may be brewing up for another offer, which would surely have to be at a decent premium to the current share price to win shareholders over. Either way, I believe sooner or later the intrinsic value of MP Evans will be reflected in its share price. In the meantime, a 2.3% dividend yield is not to be sniffed at while waiting.

The post 1 top value stock I’d buy in September appeared first on The Twelfth Magpie.

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G A Chester 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 company in question released its annual results this morning. It reported a record year of production and profit, with operating profit increasing 72%. The shares are trading modestly higher but I reckon the valuation remains compelling.

A different kind of oil company

MP Evans(LSE: MPE) is a producer of palm oil through the ownership, management and development of sustainable oil-palm estates in Indonesia. It also manages and develops smallholder areas attached to some of the estates.

The company reported a 9% increase in group crops for 2017 and a 23% increase in palm oil production. Revenue from continuing operations increased 39% to $116.5m and fed down to an 83% rise in earnings per share (EPS) to $0.407 (28.7p at current exchange rates), compared with City expectations of $0.31 when I last wrote about the company in November.

Highly attractive valuation

At a current share price of 760p, the trailing price-to-earnings (P/E) ratio is 26.5. Analysts are forecasting a 39% increase in EPS for 2018, which brings the forward P/E down to 19 and gives a highly attractive price-to-earnings growth (PEG) ratio of 0.5. Furthermore, earnings are forecast to continue powering higher beyond this year. This is because the group’s plantings are relatively immature, “underpinning an upward trend in crop that is expected to last until the end of the next decade.”

The future looks bright, with the company’s strong balance sheet also enabling it to invest in further acreage, as well as paying dividends. Ordinary dividends totalling 17.75p for 2017 (up 18% on the prior year) give a running yield of 2.3% and payouts look set to continue rising strongly in the coming years.

Finally, turning from earnings and dividends to assets, I find a similarly attractive picture. Based on an independent valuation of the group’s properties, the directors estimate a group equity value of 1,096p a share, putting the shares at a discount of over 30%.

Long growth runway

Online fast fashion retailer Boohoo has fallen out of fashion with investors. I put the hefty decline in its share price down to three things: general market weakness, concerns about UK consumer spending and, probably most importantly, a less scintillating profit outlook than the market was previously anticipating.

We’re looking at somewhat lower profit margins ahead, with the company intending to keep prices down and spend more on promotions and marketing. I believe this is the right strategy as Boohoo continues to reel in new customers not only in the UK but also increasingly in the US, Europe and the rest of the world.

The City expects EPS of 2.8p (an increase of 27%) when the company reports results for its financial year ended 28 February later this month. At a current share price of 150p, the P/E is over 50. However, Boohoo has a long growth runway and with annual EPS growth forecast to continue at a high-20s percentage for as far as the eye can see, I believe the premium P/E is worth paying.

The post Why I’d buy this growth stock as well as Boohoo.com plc appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo.com. 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.

Gold-star prospect

Highland’s first-half production of 131,784 ounces, revenue of £147m and average gold price realised of $1,238 per ounce were all slightly ahead of the same period last year. EBITDA was 8% lower (as expected), mainly due to a stronger rouble, higher production costs and utilisation of low-grade ore at its Belaya Gora operation.

Despite the lower EBITDA margin — 50% from 54% — it remains within range of the most efficient gold miners. And total cash costs, which increased 15% to $509 per ounce, are still well below the industry median. Period-end net debt of $204m is reasonable for a company with a market cap of £520m ($670m) and a running net debt-to-EBITDA ratio of 1.3.

Highland’s operating efficiency and affordable borrowing costs mean there’s plenty of cash flow for both investment (it said today it’s seeing “substantial progress in each of the projects targeted for the company’s future growth”) and dividends for shareholders.

The City’s earnings-per-share (EPS) consensus for the current year is for a rise from last year’s 14.5 cents to 18.5 cents (14.3p), giving an undemanding price-to-earnings (P/E) ratio of 11.2 and a price-to-earnings growth (PEG) ratio of 0.4, which is deeply on the value side of the PEG fair-value marker of one. With the company also forecast to pay a dividend of 11.5 cents (8.9p), giving a gold-star 5.6% yield, I rate the stock a ‘buy’.

Substantially undervalued

The board of oil-palm plantations group MP Evans (LSE: MPE) rejected a 640p-a-share offer from Malaysian conglomerate Kuala Lumpur Kepong Berhad last October. And with the “immediate and unequivocal support” of major shareholders, also unanimously rejected an improved offer of 740p. The board said it “continues to believe that the revised offer very substantially undervalues the company, its unique position and its future growth potential.”

The shares are currently trading at 735p, giving a market cap of £405m ($522m). Like the board, I believe this very substantially undervalues the company. It commissioned an independent valuation of its assets at the time of the takeover bid, which gave a valuation of $665m, implying an equity value of 1,082p a share.

In addition to a still-cheap asset valuation, the earnings-growth rating of MP Evans is also attractive. The City’s EPS consensus for the current year is 29 cents (22.5p), rising to 42 cents (32.5p) next year, giving a P/E of 32.7, falling to 22.6, and a great-value PEG of 0.5. The board intends to pay an ordinary dividend of at least 15 cents (11.6p) for the current year, giving a yield of 1.6%. And while this could be bumped up by a special dividend, it’s the company’s cheap asset valuation and PEG rating that leads me to rate the stock a ‘buy’.

The post 2 stunning growth stocks that could make you brilliantly rich appeared first on The Twelfth Magpie.

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G A Chester 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.

Low valuation

Reporting on Tuesday was palm oil and rubber producer Anglo-Eastern Plantations (LSE: AEP). It released a statement to coincide with its AGM. In the first five months of the year, the company’s own production of fresh fruit bunches (FFB) was 19% higher than in the same period of the prior year. FFB bought in was 105% higher when compared to the same period of the previous year, with the production of FFB and external crop purchases higher as the effects of drought and haze on the palm trees subsided.

The company’s new planting for the first part of the year was 809 hectares. New plantings remain behind schedule due to delays in finalising settlement of land compensation. The biogas plant in the Kalimantan mill has been completed. At the present time, the trapped biogas is flared while waiting for the final electrical works to be completed for the power generation.

Looking ahead, Anglo-Eastern Plantations is forecast to increase its earnings by 124% in the current financial year. This puts it on a forward price-to-earnings (P/E) ratio of just 5.5, which suggests that it trades on a wide margin of safety. Certainly, there is scope for its outlook to be downgraded. However, in the long run it could prove to be a worthwhile investment.

Growth potential

Also offering upside potential is fellow palm oil and rubber plantation operator MP Evans (LSE: MPE). Unlike Anglo-Eastern, it trades on a relatively high rating. For example, it has a P/E ratio of 27.4, which suggests that there may be limited upside ahead. After all, within the same sector it is possible to buy much lower-rated alternatives.

However, the P/E ratio does not take into account a company’s growth rate. In the case of MP Evans, it is forecast to report a rise in net profit of 52% in the current year, followed by additional growth of 26% next year. Both of these rates of growth are well ahead of the wider index. This could help to improve investor sentiment over the medium term.

Furthermore, when combined with the company’s P/E ratio, it puts the stock on a price-to-earnings growth (PEG) ratio of only 0.7. This suggests that there could be more upside ahead after the company’s 83% share price rise over the last year. Certainly, the production of any commodity can lead to high volatility and uncertainty in terms of the price received. But with a wide margin of safety, MP Evans seems to be a shrewd long-term investment.

The post 2 value stocks trading at deep discounts 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.