One of the best dividend growth companies in the FTSE 100, in my opinion, is Intertek (LSE: ITRK). Its business of quality assurance testing might not be the most exciting, but it’s an essential one, and it’s one where reputation counts for everything.

Essential testing

Companies are willing to pay for quality as long as they know they’re going to get the best results. It’s just not worth skimping on price for a lower quality test only for the product to then break when it gets to the consumer.

Through a combination of organic growth and bolt-on acquisitions, Intertek’s sales and earnings have grown at a compound annual rate of 5.1% and 10% per annum, respectively, since 2013. This growth has allowed the company to pursue an effective progressive dividend policy.

The payout has risen at a compound annual rate of 16% since 2013 and today, the stock supports a dividend yield of 2%. That might not seem like much, but the distribution is covered twice by earnings per share. As Intertek’s bottom line continues to expand, I see no reason why the payout cannot continue to grow at a double-digit growth every year for the foreseeable future. 

Booming growth

Another defensive dividend stock I think is worth your research time is private healthcare provider NMC Health (LSE: NMC). Once again, with a dividend yield of only 1% at the time of writing, this stock is hardly going to win any awards for yield. However, it’s the company’s dividend growth that I’m interested in.

As net profit has jumped four-fold over the past six years, NMC’s distribution to investors has grown from $0.04 per annum to $0.29 (projected for 2019). That’s a compound annual growth rate of 33%.

City analysts are forecasting earnings growth of more than 25% for the next two years, which should give the company plenty of financial flexibility for further dividend increases in the years ahead.

On top of this, the payout is covered more than five times by earnings per share. This implies earnings could drop by more than 50% and NMC would still have enough money coming in to afford its dividend — that’s what I call a secure income stream. 

You dirty rat

If NMC’s earnings are rising off the back of increasing demand for healthcare, FTSE 100 business Rentokil (LSE: RTO) is benefiting from the world’s growing rodent population. 

Urbanisation and rising global temperatures have led to an explosion in rodent infestations, and Rentokil is the first company many people call when they have a problem. 

OK, that’s not strictly true, as the company operates under a range of different brands, so customers don’t call Rentokil directly, they call their local branch. This approach has worked well for the business. By buying up local operators, it has been able to grow swiftly and maintain the goodwill these firms have built with their customers over the years. 

As the company has consolidated the global market for pest control, investors have reaped the rewards. Rentokil’s dividend per share has increased by 14% per annum, on average, since 2013. I see no reason why this trend cannot continue. The payout is covered nearly three times by earnings per share, leaving plenty of headroom for growth in the years ahead.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended NMC Health. The Motley Fool UK has recommended Intertek. 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.

For existing holders, these declines are disappointing. But for buyers, the fall is fantastic news as the stock is now 20% cheaper than it was just a few weeks ago.

On sale?

It seems the main reason why the market has soured on the company over the past two months is because the City has downgraded its growth expectations. 

At the beginning of August, analysts were expecting the company to report earnings per share (EPS) of $1.47 for 2018. Two months on, and this target has been revised lower to $1.41.

Earnings downgrades are always disappointing, but in this case, it seems as if the market has overreacted. The full-year target might have been revised lower by approximately 5%, but year-on-year growth is still expected to come in at 47%, giving a P/E of 29.7.

Beyond 2018, the growth outlook for the company is equally impressive. Analysts are expecting EPS growth of just under 30% in 2019 and, in the years after, I’m confident that the group can continue to print double-digit growth rates.

Base for growth 

NMC has built itself a strong base in its UAE home market, and the company can use this to expand around the globe. As demand for healthcare services is only set to grow, NMC shouldn’t have any trouble expanding its presence, in my view.

With this being the case, NMC’s rapid near-term expansion, the potential for long-term growth, and resilience through the economic cycle all lead me to rate the stock a ‘buy.’

I’m not so positive on the outlook for NMC’s peer Mediclinic International (LSE: MDC). As NMC has prospered, Mediclinic has struggled to produce positive returns for investors. After peaking at 1,100 towards the end of 2016, the stock has since lost more than 60% of its value.

A profit warning from the firm today has wiped another 15% off the value of the company. In sharp contrast to NMC’s rapid expansion, FTSE 250-listed Mediclinic’s revenue dipped 1% in the first half of the financial year. Adjusted earnings before interest, taxes, depreciation and amortisation, on a reported basis, were down by 8%.

This performance doesn’t inspire confidence. It’s just the latest in a string of disappointing growth updates from the group, which has seen EPS slide from 40p in 2013, to an expected 30p for 2019.

With no improvement in the company’s fortunes in sight, I’m in no rush to buy the shares. A valuation of 15.7 times forward earnings seems too rich, especially for a business that has consistently disappointed investors. NMC is the stock for me.

The post Why I think it’s time to buy this FTSE 100 stock, down 25% in two months appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Market-beating return

Over the past few decades, the FTSE 100 has turned out a steady average annual return of around 8%. Private hospital provider NMC Health (LSE: NMC) has smashed this record by a wide margin. 

Over the past five years, the shares have produced an average annual total return of just under 64%. At this rate, if you’d invested £1,000 in the company back in 2013, today your investment would be worth approximately £12,000.

The question is, can investors expect a similar rate of return over the next five years? I believe there’s a good chance that they can.

Bigger and better

Since 2013, NMC’s management has achieved an outstanding record of earnings growth. Earnings per share (EPS) have risen by approximately 160% in five years (to the end of 2017). Analysts expect this trend to continue. EPS growth of 47% is projected for 2018, followed by an increase of 30% in 2019. 

And if the company meets these forecasts, EPS will be up just under 400% in seven years. For a PLC with a market capitalisation of £7.6bn, this rate of growth is nothing short of outstanding.

Unfortunately, NMC’s potential is well known, and the market is placing a significant premium on the shares. They currently trade at a historical earnings multiple of 49.7. However, on a forward-looking basis, the shares are trading at a 2019 P/E of 26. That’s not too demanding, but plenty could go wrong over the next two years.

Still, I’m confident that this private healthcare provider is well placed to continue to snowball, not just for the next two years but for the next several decades. The group operates healthcare facilities around the globe although its assets are primarily concentrated in the United Arab Emirates, the wealthiest country in the world on a per capita basis. 

As demand for healthcare is only going to grow, NMC is unlikely to struggle long term. So if you are looking to add to your retirement portfolio, in my opinion NMC is indeed worthy of further research.

Unlocking value 

Another business that looks as if it has attractive long-term prospects is children’s services provider Cambian (LSE: CMBN). Today, this company announced that it had achieved a 7% increase in revenues for the first half of 2018, along with a 40% jump in adjusted earnings before interest, tax, depreciation and amortization reflecting revenue growth and a reduction in overheads. 

Net cash on the balance sheet increased to £75m following the payment of a special dividend at the beginning of 2018.

These results are likely to be the company’s last as an independent business. CareTech Holdings is buying the firm for 100p in cash and 0.267 of a CareTech share, for a total consideration of 190p. The deal is expected to generate approximately £6m in cost savings. Considering the strengths of the Cambian business, I believe this could be an excellent combination. 

Cambian shareholders will end up owning approximately 34% of the enlarged business allowing them to benefit from further growth in the years ahead. City analysts believe that as one, Cambian/CareTech will see earnings growth of nearly 10% in 2019.

The post Have £1,000 to invest? An expensive (but market-beating) FTSE 100 champion could help you to retire early appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share 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.

Today, I’m analysing one of the lesser-known FTSE 100 healthcare stocks: NMC Health (LSE: NMC). Let’s take a closer look at the company and compare it to its larger healthcare rivals.

Prolific growth

NMC Health is the United Arab Emirates’ largest healthcare provider. The company owns and manages over 135 healthcare facilities that include hospitals, medical centres, long-term care facilities, day surgery centres and fertility centres, and has a team of over 2,000 doctors and 18,000 paramedical and support personnel. Every year, over 8.5m people across countries such as United Arab Emirates, Saudi Arabia, Kuwait are treated by NMC doctors.

The healthcare provider’s growth has been quite prolific in recent years. Indeed, between 2011 and 2016, its top line surged from $444m to $1,221m, with net profit in that time climbing from $43m to $151m. Unsurprisingly, its share price trajectory has also been upwards, with the stock rising almost 50% since I last covered it 10 months ago.

Can NMC’s share price continue to surge higher going forward? Let’s look at today’s FY2017 full-year results for a clue.

FY2017 results

Today’s numbers suggest the company still has plenty of momentum. For the year ended 31 December, revenue climbed 31.3%, including organic growth of 15.6%, with net profit climbing 38.2% to $209.2m. Adjusted earnings per share rose 32.7% to $1.036.

Chief Executive Prasanth Manghat was upbeat about NMC’s future prospects, commenting: “We see 2017 as setting the stage for many more years of growth for the Company and we begin 2018 with confidence. Sustained ramp-up of utilization at facilities we opened in recent years, integration of acquired assets and continued discipline in organic and inorganic expansions should all translate into a very promising 2018 and beyond.”

Worth buying?

It’s clear to me that NMC Health has strong momentum at present. The stock has been the best performing healthcare stock in the FTSE 100 over the last year by a country mile. Yet the shares are down around 4% in early trade and they have now fallen around 8% since late February. So, is now the time to buy?

City analysts currently forecast an earnings figure of $1.47 for this year. That means that at the current share price, the stock is trading on a forward-looking P/E of 30.2. That’s quite a pricey valuation, especially in contract to healthcare rivals GlaxoSmithKline and AstraZeneca, which trade on multiples of 12.3 and 19.3 respectively. NMC also offers a much lower yield than these two rivals, currently sporting a yield of 0.4%, compared to 6.1% for Glaxo and 4.1% for Astra.

Having said that, you can’t deny that NMC is generating impressive growth at present. Its shares have risen around 80% over the last year, compared to a fall of 20% for GSK and an underwhelming rise of 0.4% for AZN. Therefore, to my mind, the stock warrants a premium valuation. I believe it’s worth keeping a close eye on NMC, with a view to buying on further price weakness.

The post Is NMC Health plc the best healthcare stock in the Footsie? appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in GlaxoSmithKline. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. 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.

NMC Health (LSE: NMC) is a fantastic play on this theme. The company is a private healthcare services provider in the United Arab Emirates (UAE) and is one of the richest companies in the world with a GDP per capita of $67,700, compared to the UK’s $42,500.

Rising demand for the company’s services, coupled with both organic and inorganic growth has helped revenue more than double and pre-tax profit rise more than 150% over the past five years. Moreover, City analysts expect the company to report earnings per share growth of 29% this year, and 28% for 2018. If these targets are met, NMC will have achieved earnings growth of 250% in seven years.

However, it now looks as if the company is set to surpass these expectations. Figures released today for the six months ended 30 June show revenue growth of 34% year-on-year and adjusted net profit growth of 56%.

Further growth ahead? 

NMC’s existing presence in the UAE gives it a huge, stable base to expand from. Indeed, the company is growing into Saudi Arabia and Oman as well as opening fertility clinics around the world. 

Put simply, there’s no doubt that NMC has a long runway for growth ahead of it as expansion continues and more people use its facilities. These traits make the company the perfect stock to buy, forget and watch your profits grow. While the valuation of 29.9 times forward earnings might put some investors off, and the dividend yield of 0.6% leaves much to be desired, if the company’s growth carries on at its current rate, earnings per share could reach 200p by 2021. Based on this estimate, the shares look attractive at current levels.

Cash cow? 

Vedanta Resources (LSE: VED) might not be investors’ first choice when it comes to picking growth stocks, but the company does have a bright future ahead of it if City forecasts are to be believed. 

Analysts have pencilled in earnings per share growth of 7,616% for the financial year ending 31 March 2018, as the firm rebounds from several terrible years between fiscal 2015 and 2017. For the year ending 31 March 2019, further earnings growth of 98% is expected. Based on these estimates shares in the company trade at a 2019 P/E of six and currently yield 5.4%.

Today the company revealed that it is on track to hit City forecasts in the years ahead. For the quarter to the end of June, earnings before interest tax depreciation and amortisation rose 48% while overall revenues grew 32%. Higher prices boosted revenues while actions over the past few years to reduce costs help the bottom line.

A strong operating performance helped Vedanta reduce overall gross debt by $1.3bn during the quarter, and according to the press release today, a further debt reduction of $385m has occurred since the end of June. With total cash and liquid investments of $7.4bn compared to gross debt of $16.8bn, the company is well capitalised, and further actions to reduce debt will only improve the financial situation. The stronger balance sheet will help secure the dividend and support further growth. 

With Vedanta’s outlook improving, the group’s low valuation looks unwarranted. 

The post 2 FTSE 250 growth stocks to help you achieve financial independence appeared first on The Twelfth Magpie.

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Rupert 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

NMC Health

Shares in FTSE 250-listed NMC Health (LSE: NMC) have trended up strongly over the last few years, rewarding long-term shareholders handsomely. Indeed, in the last year alone, the stock has risen from 1,033p to 2,106p, a gain of over 100%.

It’s not hard to see why when looking at the NMC’s financials. Revenue at the United Arab Emirates-based private healthcare services provider has surged from $551m to $1,221m over the last three years, a compound annual growth rate (CAGR) of 30%, and earnings during this period have climbed from 37 cents to 74 cents, a CAGR of 26%. FY2016 results released in March impressed the market, with revenue climbing 39% and basic earnings per share rising 61%.

Can the share price continue to rise from here? In my opinion, yes. NMC’s momentum looks set to continue this year with City analysts forecasting FY2017 revenue of $1,553m and earnings per share of 97 cents, growth of 27% and 31% respectively. Furthermore, mandatory healthcare insurance requirements in the Emirate of Dubai should boost patient volumes, and other regulatory changes such as the removal of IVF-related restrictions should provide tailwinds to the healthcare sector.

The stock trades on a forward-looking P/E of 28, which I wouldn’t classify as a bargain, however CEO BR Shetty stated in March that “we expect continued strong performance” this year, and as a result, I believe NMC’s share price momentum could continue from here.

Micro Focus International

Trading at a less demanding valuation is software specialist Micro Focus International (LSE: MCRO). Like NMC Health, Micro Focus has exhibited significant momentum in both its share price and its financials in recent years.

Revenue has climbed from $412m in FY2013 to $1,245m last year, a CAGR of 45% and the stock has registered a capital gain of 192% over the last three years, along with rising dividend payouts of 47 cents, 50 cents and 67 cents as well.

One risk to its momentum is the merger with Hewlett Packard Enterprise (HPE). Indeed, shares in Micro Focus plunged 11% last week, after HPE’s board said that preliminary indications were that revenue was down around 10% on a reported basis year-on-year in the quarter to 30 April. The decline was largely down to performance in the licence and professional services division and follows an 8% decline in the preceding quarter. This is clearly an issue to monitor closely. 

However with analysts forecasting group earnings of $1.76 per share for FY2017, a gain of 15% on last year, I reckon the shares have potential to keep rising in coming years. A forward looking P/E ratio of 18.1 seems reasonable for a tech stock, especially given the company’s successful acquisition history and the fact it has been one of the best performing stocks in the FTSE 100 over the last decade. As such, I believe Micro Focus offers an attractive risk/reward skew at present. 

The post Two momentum growth stocks that could help you retire early appeared first on The Twelfth Magpie.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Micro Focus. 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.

Georgia Healthcare (LSE: GHG) and NMC Health (LSE: NMC) are two fantastic plays on this trend. Both companies operate healthcare facilities in rapidly growing emerging economies. NMC Health is a private health services provider in the United Arab Emirates while Georgia Healthcare provides services such as medical facilities and health insurance in the Georgian market.

Explosive growth

Over the past few years, demand for these companies’ services has surged and so have profits. Even though Georgia Healthcare has only been an independent public company for a little more than a year, this year the City expects the company to report a pre-tax profit of £25m, up 400% from 2014’s reported figure of £5m. Over the same period sales have grown from £67m to £253m and earnings per share have exploded by 463% from 2.7p to 15.2p.

It looks as if this growth is set to continue. Today Georgia Healthcare released its first quarter results with an increase of profitability of 8.4% year-on-year to £4.3m. Group revenue exploded 157% year-on-year thanks to growth at the firm’s pharmaceutical business after the consolidation of Pharmadepot. While the shares haven’t moved much on this news, today’s results show that it is on track to hit City forecasts for growth this year. Analysts have pencilled-in earnings per share growth of 27% for 2017 and 41% for 2018.

Even though shares in the company are currently trading at a relatively expensive forward P/E of 23, this valuation seems appropriate considering the group’s projected growth. If earnings hit City targets the next two years, shares in Georgia Healthcare are trading at a 2018 P/E of 15.9 and PEG ratio of 0.4.

Middle East exposure

NMC has reported similar growth. This year City analysts expect the company to report revenues of £1.24bn, up from around £330m for 2012. Pre-tax profit is expected to hit £181m, up from £60m five years ago. Earnings per share have risen 240% over this period.

Considering this explosive earnings growth, it’s no surprise shares in Georgia Healthcare, and NMC have risen by 87% and 105% respectively over the past 12 months.

Undervalued growth

Just like Georgia, shares in NMC also look cheap compared to the company’s projected growth rate. City analysts believe the firm can grow earnings per share at 28% per annum for the next two years. The shares are currently trading at a forward P/E of 25.6 and a 2018 P/E of 19.9.

So overall, with City analysts expecting high double-digit earnings growth for these two healthcare providers, it looks as if the shares still have plenty of upside ahead of them and now could be the time for investors to buy in before it’s too late. 

The post After rising 100% in a year, I see more upside ahead for these 2 uncovered growth shares 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?

Rupert Hargreaves 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.