According to a trading update issued by the firm today, it looks as if this continues to be the case, although the outlook is not as bright as it once was. Specifically, in today’s update, the company said: “The board expects to report continued growth with results ahead of last year but marginally below market expectations.“

Management is blaming this performance on “later than expected rollout of a significant contract” as well as higher costs “associated with the recent changes in senior management.” The company recently lost its Managing Director of Park Retail Limited, Gary Woods after 38 years of service only a few months after Finance Director Martin Stewart announced that he would be stepping down in August.

Underlying growth 

Despite this management turmoil, it seems Park’s underlying business continues to recover. Today’s update notes that over the crucial Christmas trading period, customer orders at the group’s consumer business rose 4% year-on-year. Meanwhile, the number of corporate clients using Park’s business-focused offering is also growing steadily.

And as long as there are no further surprises to earnings throughout the rest of the financial year, it looks as if shares in the business are a steal at current levels. 

Based on current analyst estimates (earnings per share growth of 7.6% for fiscal 2018), the stock is trading at a forward P/E of 14.3. Now we know the company is going to come in slightly below target for the full year, earnings estimates will be revised lower over the next few months, but even after factoring in this decline, a forward P/E of around 14.3 looks to me to be too cheap for a steadily growing retail business.

Dividend danger? 

Another turnaround play that I believe could generate impressive returns for investors is Talktalk (LSE: TALK). 

Over the past two years, earnings per share have been cut in half, from 10.2p to 4.8p. However, analysts believe that the company will start to recover in 2019. Earnings growth of 45% has been pencilled in for 2019. Even though the stock still looks expensive based on this projection (forward P/E of 17.9), it’s the long-term growth that interests me. 

Assuming the telecoms business can return to its earnings high water mark 0f 10.2p, the shares are trading at a multiple of only 12 times forward earnings, a discount of around 20% to the broader telecoms sector. What’s more, Talktalk has a history of giving investors market-beating dividend yields, a trait I expect the group to reclaim when its recovery is fully underway. My Foolish colleague Peter Stephens is also optimistic about the company’s outlook and believes the group could become a takeover target in the near future.

That being said, not everyone is optimistic about Talktalk’s outlook. Another Fool, G A Chester, has put Talktalk on his “dividend danger” list, due to the company’s rising indebtedness. 

The post Could these turnaround stocks make you rich? appeared first on The Twelfth Magpie.

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• 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
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Rupert Hargreaves owns no share 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.

Park Group (LSE: PKG) is one of the market’s more complex businesses. The company is the UK’s leading multi-retailer, gift voucher and prepaid gift card business focused on the corporate and consumer markets. As you would imagine, such a business is highly seasonal, which means that a long term horizon is required to invest in the company. 

Seasonal weakness 

The bulk of Park’s revenues are generated during the second half of its financial year (six months to the end of March) with losses usually reported for the first half. Indeed, today the company published its figures for the six months to the end of September showing a “seasonal operating loss of £2.2m“, up from last year’s number of £1.6m. 

Management is attributing this higher loss to “the larger scale of the business“, as total billings for the period rose 7.3% year-on-year to £105.5m. 

Looking forward, it would appear that Park is set for a great second half. According to today’s release, order books are already running well ahead of the comparable period last year. City analysts are expecting the company to report total earnings per share growth of 8% for the year ending 31 March 2018, and then a further increase of 7% for the following fiscal period. 

Hidden value 

Park’s seasonal business hides the company’s actual value. For example, even though management is expecting a bumper Christmas period, shares in the company are trading down this morning as investors focus on the firm’s higher loss for the period offering investors with a long-term outlook a chance to buy into the growth story. After today’s declines, shares in the company trade at a forward P/E of 15.8 and yield 3.3% — the payout is set to grow substantially in the years ahead. 

Park’s investment case is similar to that of Sirius Minerals (LSE: SXX). 

Its value is hidden in the company’s asset, or its flagship potash mine in Yorkshire. Various estimates predict that this asset could be worth several billion pounds, compared to the company’s current market value of £1.1bn. However, building the mine is a long-term project and investors will have to wait several years before they can profit from the opportunity. 

Caution warranted 

Investor caution here is understandable as plenty could go wrong between now and initial production. But I believe that, to a certain extent, this project is de-risked because of its size and possible impact on the surrounding area. If Sirius fails to get its mine into production, another entity will likely step in to take over. 

As an investment, the risk/reward from investing in Sirus is highly attractive. As I’ve covered before, assuming everything goes to plan, when production is in full swing, the company’s market value could rise to as much as $10.8bn, or £8.3bn, 650% above current levels. 

What’s more, if the company hits production targets (and it decides to payout just 10% of profit), investors could be set to receive a dividend yield of around 16% based on today’s prices. 

The post A ‘secret’ growth stock I’d buy alongside Sirius Minerals plc 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 owns no share 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 are two companies which appear to offer upbeat income prospects. As such, they could be worth a closer look for investors who are seeking to stay ahead of inflation in 2017 and beyond.

Dividend growth potential

Reporting on Tuesday was prepaid gift, reward and savings specialist Park Group (LSE: PKG). The company delivered a rise in operating profit during the most recent financial year, with profit before tax up 4.2% to £12.4m. This growth was due in part to a focus on technology, with over 90% of the company’s total orders taken online versus only 10% nine years ago. Further progress is set to be made in this space, with the company’s positive trading performance from the second half of the year expected to continue into next year.

The company’s rising profitability allowed dividends for the full year to rise by 5.5%. This puts the business on a dividend yield of 3.6%, which is 70 basis points higher than the current rate of inflation. However, dividend growth over the next two years means this gap should increase. Park Group is expected to record a rise in shareholder payouts of 5.7% per annum in the next two financial years. Even after a strong rate of growth in dividends, shareholder payouts are due to be covered 1.9 times by profit, which suggests more growth could lie ahead over the medium term.

Dirt-cheap income opportunity

While Park Group’s dividend yield could rise over the medium term, financial services company International Personal Finance (LSE: IPF) offers a high yield right now. The consumer finance product specialist has a dividend yield of 8.2%, which is 2.8 times higher than the current rate of inflation and more than twice the dividend yield offered by the FTSE 100 at the present time.

Despite having such a high yield, it does not appear to be a yield trap. Evidence of this can be seen in the affordability of shareholder payouts, with them being covered 2.3 times by profit. This suggests that dividends could grow at a faster pace than profit over the medium term without hurting the company’s reinvestment potential.

As well as a high dividend yield, IPF also offers excellent value for money. The company trades on a price-to-earnings growth (PEG) ratio of only 0.4, which indicates share price growth potential is high. This mix of income, value and growth potential could lead to a rapidly-rising share price which not only exceeds inflation, but beats the FTSE 100 too.

The post 2 super dividend stocks I’d buy right now 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.

However, Tesco’s strategy could be enough to deliver exceptional share price gains. In other words, even though the external operating environment is likely to be tough, Tesco’s strategy of cutting costs, making asset disposals, improving efficiencies and delivering higher levels of customer service could cause its profitability to rise. And following rising profitability, investor sentiment could gain a boost and push the company’s share price considerably higher.

In fact, Tesco is forecast to increase its bottom line by 39% next year and with its shares trading on a price-to-earnings growth (PEG) ratio of just 0.5, they seem to offer 20%+ upside potential. Certainly, there may be challenges ahead and there’s scope for a downgrade to Tesco’s forecasts, but with a wide margin of safety the company’s risk/reward ratio has huge appeal.

Rising shareholder payouts?

Also offering upbeat share price prospects is voucher and gift card business Park Group (LSE: PKG). Its shares may have disappointed in the past and have fallen by 9% since the turn of the year, but they continue to offer upbeat growth forecasts. For example, in the current year Park Group is expected to record a rise in its bottom line of 8%, with growth of 4% being pencilled-in for next year.

With Park Group trading on a price-to-earnings (P/E) ratio of just 11.7, it seems to offer good value for money. However, in terms of a potential catalyst, the company’s income prospects could entice income-seeking investors to bid up the company’s share price. That’s because Park Group has a yield of 4% and with dividends being covered 2.1 times by profit, there’s scope for shareholder payouts to rise at a faster pace than earnings over the medium-to-long term.

Confident outlook

Meanwhile, cloud computing specialist Redcentric (LSE:RCN) also has a very bright future and could record a share price rise of over 20%. Its bottom line is expected to increase by 15% in the current year and by a further 10% next year as more businesses seek to shift away from traditional IT infrastructure and towards cloud or hybrid systems. As such, Redcentric seems to have a sound long-term growth profile, with it likely to benefit from increasing demand for its services in the coming years.

With Redcentric trading on a PEG ratio of only 1.5, it seems to offer at least 20% upside. And with it expected to increase dividends per share by over 10% next year to give a forward yield of 2.8%, Redcentric’s management team seems to be confident in its long-term outlook.

The post Will Tesco plc, Park Group plc and Redcentric plc rise or fall by 20%? appeared first on The Twelfth Magpie.

More reading

• Here’s what a surging Tesco share price has done to £10,000 invested 5 years ago
• Are Tesco shares losing their momentum?
• Tesco’s share price drops 2% on Q1 trading miss. What’s gone wrong?
• As Tesco shares dip on Q1 results, is this a brilliant time to buy?
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Peter Stephens owns shares of Tesco. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.