But there is one tech segment that is growing quickly, has room for several major players and, most importantly, thus far has no huge competitor on the horizon. And that is the fast growing world of payment processors. I believe Worldpay Group (LSE: WPG) has the staying power to remain a force throughout this century.

I bet RBS wishes it had kept this company

The firm is expanding rapidly by serving businesses of all sizes to process card payments online and offline. This strategy is paying off, as we saw in 2016 when a sterling history of double-digit growth persisted as it notched up a 12% year-on-year rise in transaction value to £451bn and a 15% rise in revenue to £1.1bn. There’s little reason to expect this growth to slow as more consumers turn away from cash and use cards instead.

Furthermore, as the company matures it is seeing lower capital expenditure needs and benefitting hugely from economies of scale, which is dramatically improving margins and cash flow. In 2016 free cash flow rose from £32.4m to £170.9m.

For now, considerable cash from operations is still being directed to paying down debt related to its former private equity owners. It moved in 2016 from £1.4bn in net debt to £1.3bn. But as this debt load shrinks, Worldpay is going to be in a great position to pay shareholders very large dividends.

The 21^st century will be dominated by non-traditional methods of payment and Worldpay Group is well placed to benefit from this trend thanks to a huge first mover advantage, global scale and well-run operations. With the company’s shares trading at just 22 times forward earnings, I believe investors with a long time horizon may find now a great time to act.

One to bet on?

For the more risk-hungry investor, another option in the same industry is Paysafe (LSE: PAYS), which focuses on serving the global gambling industry. The group ran into trouble last year when a short selling outfit issued a scathing analysis of the risks involved in the Chinese gambling market. But the company’s shares have since rebounded strongly.

And in response to the short seller, the company has reviewed its operations, improved corporate governance standards and expanded into the much safer US market through acquisitions.

These efforts are improving the bottom line as well. In 2016 total revenue rose 63% year-on-year to £1bn, organic sales grew 21% and adjusted EBITDA nearly doubled to £300m. All the while net debt was brought down to £279m thanks to impressive cash generation.

Although the company has done well to diversify away from simply processing payments for online gambling, this segment still accounts for a full 46% of sales and is always subject to possible regulatory action. Paysafe seems to have turned a new leaf and is growing strongly. This, combined with a low 11.7 forward PE ratio may tempt many investors. But with a history of disappointing shareholders the company remains a much riskier option than Worldpay.

The post Why this tech stock is primed to own the 21st century appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Apple and Facebook. The Motley Fool UK has recommended Worldpay. 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.

1,193% rise

The Bury-based FTSE 250 firm now expects headline profits (before tax and exceptional items) to beat previous consensus estimates of £200m by up to 15% for the financial year just ended 31 January. However, preliminary results for the full financial year won’t be announced publicly until 11 April.

The group’s share price has rocketed in recent years, rising from lows of just 30p in 2012 to last month’s record highs of 357.9p. A £10,000 investment in June 2012 is now worth a staggering £119,300. So what next for JD’s investors? Could it be time to bank those paper profits and convert them into cold hard cash, or should they continue to be greedy and hold on for further gains?

Further to run

Well, consensus estimates compiled by our friends in The City seem to agree with JD’s management with regards to pre-tax profits. They suggest a £96m improvement from last year’s £131.63m to £227.84m, with total sales revenue smashing the £2bn barrier at £2,216m. With further growth in both sales and earnings predicted for the next two years, the P/E ratio drops to a reasonable 17 by January 2019.

That being said, long-term shareholders sitting on huge gains will probably want to sell at this stage, and I can’t blame them for wondering if a severe market correction is just around the corner, especially in these uncertain times. At the same time I certainly wouldn’t deter growth investors from buying the shares as I believe they still have further to run.

$1bn milestone

Another FTSE 250 firm whose shares have rocketed in recent years is online payments company Paysafe Group (LSE: PAYS). The Isle of Man-based firm formerly known as Optimal Payments has enjoyed an incredible 948% share price gain over the past five years, reaching all-time highs above 470p last October.

In a recent trading update for the year to 31 December, the group reported continued strong momentum during the second-half of 2016. It continues to focus on building a portfolio of payment-related products and services to meet the evolving needs of businesses and consumers in a rapidly-changing payments industry.

Management now expects the group to exceed the $1bn revenue milestone for the year, with adjusted earnings anticipated to reach $300m for the first time. With strong growth expected to continue for the medium term, and the P/E ratio falling to just 10 this year, I would suggest growth investors take a closer look at Paysafe.

The post After 11-bagging in under 5 years, this growth stock has further to run appeared first on The Twelfth Magpie.

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Bilaal Mohamed has no position in any shares mentioned. 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.

Chris St John, who has managed the fund since 2011, knows how to pick small and mid-cap growth stocks. His equity picks over the years have helped the fund achieve these lofty gains, although there has also been a healthy dose of volatility along the way.

Still, despite the volatility, over the long-term the strategy has clearly yielded results. So, which companies is the AXA Framlington UK Mid Cap betting on right now?

Profits from plastic 

The fund’s top holding, coming in at 3.4% of the equity portfolio, is RPC Group (LSE: RPC). RPC is plastics packaging business, a relatively boring business that flies under the radar of most investors. 

RPC’s business may be boring, but the company is extremely good at it. Since 31 March 2012, the end of the company’s 2012 financial year, revenue has expanded from £1.1bn to £1.6bn. Pre-tax profit has grown by around a third over the same period and earnings per share have risen from 31p to 43.3p.

Next year RPC’s growth is expected to take off following yesterday’s news of two acquisitions, which are set to transform the business. 

First off RPC is buying ESE World B.V., for a consideration of €262m. ESE is Europe’s largest temporary waste storage solutions provider, with targeted revenues of €200m for 2016. The second acquisition is Astrapak, a leading South African manufacturer of rigid plastic packaging products and components. RPC is paying 1,370m Rand for the business (around £79m).

After these acquisitions, City analysts are now expecting RPC to report earnings per share growth of 39% for the financial year ending 31 March 2017, with earnings per share growth of 14% in the year after. Based on these figures, shares in RPC look undervalued to me. Specifically, the shares are currently trading at a forward P/E multiple of 17.5 and a PEG ratio of 0.4. A PEG ratio of less than one indicates the shares in question may offer growth at a reasonable price.

Growth at a reasonable price 

Another of the AXA’s funds top holdings is online payments processor Paysafe (LSE: PAYS). Shares in Paysafe lost more than 30% of their value at one point earlier this week, when US firm Spotlight Research issued a damning report on the company claiming the business was facilitating illegal gambling in China and faces “material risks” from regulatory action. The research outfit also claimed that up to 50% of Paysafe’s revenues were in danger. Paysafe’s management has responded to these allegations by stating that all information was “either factually inaccurate or had previously been disclosed.” Since this rebuttal, shares in the company have recovered.

That said, even after the recovery, shares in the company still look cheap to me. Paysafe is expected to report a pre-tax profit of £168m this year, up from £11.8m last year. The City is expecting the company to report earnings per share of just under 32p, which translates into a forward P/E of 11.7. Next year earnings per share growth of 14% is pencilled in. This kind of growth may be too hard for some investors to pass up. 

The post Can you afford to miss these two cheap growth stocks? appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has recommended RPC Group. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

And I reckon a bubbly full-year statement (scheduled for Wednesday, 30 November) could prompt fresh inflows into the accounting software specialist.

Sage announced in July that organic revenues jumped 6.1% during the nine months covering October-June, with organic recurring revenues leaping 10.1% in the period. This strong performance was “driven by continued momentum in Europe and North America,” Sage noted, while an improvement in its other territories during the third quarter also helped drive the top line.

The City certainly expects Sage’s compelling growth story to keep rolling, and rises of 9% and 16% are chalked in for the periods to September 2016 and 2017 respectively.

While this year’s projection results in a slightly-topping P/E rating of 21.4 times, I reckon Sage’s growing success across the globe merits such a premium.

Payment powerhouse

Investor demand for PaySafe Group (LSE: PAYS) has also sunk in recent sessions, the company also retreating from recent all-time highs despite the release of upbeat trading numbers in November.

Paysafe — which provides online payment and money transfer services — announced that it remained on track to meet its upgraded revenues guidance of $970m-$990m made during the summer. As well as benefitting from an increasingly-cashless world, shrewd acquisitions like that of Skrill in 2015 are also helping to drive business.

And Paysafe certainly appears attractively priced at current levels. The number crunchers expect earnings at the company to detonate in 2016, and another 15% rise is predicted next year.

These figures result in P/E ratios of 12.6 times and 11 times correspondingly, well below the benchmark of 15 times widely considered attractive value. I reckon Paysafe’s rising position in a fast-growing market should undergird stunning earnings growth in the years ahead.

Paper tiger

Packaging giant Smurfit Kappa Group (LSE: SKG) is another FTSE 250 star I consider to be dealing far too cheaply at current prices.

The company’s long-term growth story is expected to come under pressure in 2016, and an 8% decline is currently predicted by City brokers. But this weakness is expected to be a temporary phenomenon, and a 4% rise is forecast for 2017.

These predictions result in ultra-cheap P/E ratings of 10 times and 9.6 times. And Smurfit Kappa also provides exceptional value for income chasers — yields of 3.7% for this year and 3.9% for 2017 trump the London big-cap average of 3.5%.

And I expect Smurfitt Kappa to generate splendid shareholder returns long into the future as the firm expands its geographical footprint, a factor that helped revenues at constant currencies jump 6% during July-September. And I expect sales to keep rising as the packaging play’s strong balance sheet likely powers even more acquisitions.

The post 3 top stocks you’ve been overlooking appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. 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.

Paysafe upgraded its guidance in August and it expects revenue to be in the range of $970m-$990m for the full year. Assuming an adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) margin of 29.6%, its adjusted EBITDA is due to be anything from $287m to $293m. As well as delivering on its guidance, Paysafe is also focused on further expanding its payments business and enhancing its core technology platform. This should provide the company with further growth opportunities over the medium-to-long term.

Clearly, digital payments are becoming increasingly popular as consumers demand more convenient and accessible services. This trend looks set to continue over the coming years and while digital payments have become more prevalent across the globe in of late, there’s still considerable potential for increased take-up across both the developed and developing world.

Despite the potential of the wider industry, Paysafe continues to trade on a reasonable valuation. It’s forecast to increase its bottom line by 14% in the next financial year and yet has a price-to-earnings (P/E) ratio of only 13.6. This means that Paysafe trades on a price-to-earnings growth (PEG) ratio of less than 1, which indicates that it has at least 25% upside potential over the medium term.

And the competition?

Of course, the digital payments space is highly competitive and one company that has struggled to turn a profit given this backdrop is Monitise (LSE: MONI). For example, in the last financial year Monitise recorded a pre-tax loss of £243m. Although it’s expected to narrow its losses in the current year, Monitise’s pre-tax loss is still expected to be £16m.

Certainly, over the long term Monitise has the potential to turn its financial performance around. However, it has struggled to turn a profit even though its product has proved popular and it has been able to win blue chip clients. Therefore, sticking with an already profitable company such as Paysafe is a lower risk option.

This doesn’t mean that Paysafe offers any less of a potential reward than Monitise. In fact, Paysafe operates in over 200 countries and therefore has the potential to capitalise on faster growing economies within the emerging world. It also means that Paysafe is relatively well diversified and this improves its risk/reward ratio yet further.

As such, Paysafe seems to be a sound buy at the present time, with its business model, operating environment, valuation and near term performance indicating that a gain of 25% is well within its reach.

The post This growth stock has 25%+ upside appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Looking ahead, Purplebricks is expected to move from loss-making territory into profitability next year. This has the potential to continue to improve investor sentiment in the stock and with the company’s flat fee, use of technology, and local property experts proving popular among house sellers, its profitability could rise significantly in future years. However, with its shares trading on a forward price to earnings (P/E) ratio of 51, it may be prudent to wait for a wider margin of safety before piling in.

Increased valuation

Anglo American (LSE: AAL) shares have also been rising rapidly in recent months. The diversified miner has recorded an increase in its valuation of 94% in the last three months and a key reason has been improved investor sentiment in the resources sector. Certainly there is scope for a fall in commodity prices over the short- to medium term, but it could be argued that the worst of the declines are now behind us and that resources stocks such as Anglo American offer considerable upside due to the potential for commodity prices to rise.

With Anglo American forecast to increase its bottom line by 36% next year, investor sentiment could continue to improve.  With its shares having a price-to-earnings growth (PEG) ratio of just 0.5, they seem to offer significant upside and a wide margin of safety. Furthermore, with Anglo American making asset disposals and restructuring, it appears to be in a strong position to record further growth over the coming years.

Outperforming potential

Meanwhile, shares in Paysafe (LSE: PAYS) have soared by 35% in the last year, with the digital payments specialist having the potential to continue to outperform over a medium- to long-term period. That’s largely because digital payments are increasing in popularity among consumers and the niche seems to be a strong growth play for the long term.

Evidence of the growth potential of the sector can be seen in Paysafe’s growth forecasts. The company is expected to increase its bottom line by 16% in the next financial year and with its shares trading on a PEG ratio of just 0.8, they seem to offer a wide margin of safety as well as significant upward rerating potential. So while there is scope for a downgrade to Paysafe’s outlook, its shares could continue to beat the index and prove to be a top stock pick for the coming years.

The post Are Purplebricks Group plc, Anglo American plc and Paysafe Group plc the three best stock picks EVER? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Anglo American. 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.

Temporary power specialist Aggreko (LSE: AGK) has announced a new three-year deal to provide 200MW of power to an electricity supplier in Zimbabwe.

The deal wasn’t big enough to move the firm’s share price, which is still 55% lower than it was in 2012, thanks to a four-year run of falling profits. However, a turnaround may be in sight. Analysts expect Aggreko to announce an increase in after-tax profits in 2017.

I’m encouraged by this but still feel cautious. With the shares trading on 16 times 2016 forecast earnings, they aren’t especially cheap. Broker forecasts have edged lower over the last six months and could continue to slip.

Despite this I believe that Aggreko is nearing a turning point and could be worth a closer look. Growth investing legend Jim Slater said that the correct time to buy a turnaround stock is when profits are expected to rise in the next twelve months.  I believe we’re getting close to that buying zone with Aggreko.

Value buy or value trap?

Is it too late to put fresh money into housebuilders such as Bovis Homes Group (LSE: BVS)? Bovis shares have fallen by about 30% since last August, while other housing stocks have also fallen. In my view, the market is pricing in a cyclical peak for the housing market. The problem is that at a company-specific level, the outlook still seems very attractive.

Current broker forecasts suggest that Bovis will report a 16 per cent rise in earnings per share this year, with a 14 per cent increase expected in 2017. At 830p, Bovis shares trade on a forecast P/E of just 7.5, falling to 6.5 for 2017.

This looks cheap, but P/E ratings can be misleading for cyclical stocks. If house prices have peaked, then Bovis profits could fall sharply.  My preferred measure is the price/book ratio. Bovis shares have a book value of 712.7p per share, giving them a price/book ratio of 1.2. This is much lower than most other housebuilders, and looks quite reasonable.

With a forecast yield of 5.5%, Bovis could be good value — if you believe that the housing market has further to run.

Big profits but risky?

Last year was a year of big changes for payment processing group Paysafe Group (LSE: PAYS), thanks to its €1.1bn acquisition of US peer Skrill. Buying Skrill increased Paysafe’s revenue by 68% to $613m in 2015, while adjusted pre-tax profit rose by 60% to $108.7m. However, the full benefits of the deal are expected to shine through in 2016.

Paysafe’s sales are expected to rise by 48% to $901.8m, while adjusted earnings are expected to rise by 42% to $0.37 per share. This puts Paysafe shares on a forecast P/E of 15.

This seems reasonable, but I do have a few concerns. Based on last year’s H2 results, 54 per cent of Paysafe’s fees come from online gambling or gaming. These areas tend to carry high levels of regulatory risk. The rules can change overnight.

Paysafe also pays no dividend and had net debt of $391m at the end of last year, equating to four times 2015 profits. Overall, I think Paysafe shares look quite fully priced at the moment.

The post Are Aggreko plc, Paysafe Group Plc & Bovis Homes Group plc The FTSE’s Ultimate Growth Buys? appeared first on The Twelfth Magpie.

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That came with a 68% increase in revenue, which boosted adjusted pre-tax profit by 60%. The integration of Skrill Group (acquired in August) is apparently going well and contributing to the bottom line. These results were slightly ahead of expectations, and are expected by the City to be followed by a 37% rise in EPS this year followed by another 15% in 2017.

The result, in share price terms, has been a mammoth gain of more than 1,500% since September 2011, with the past year bringing a rise of 73% (although there was very little change on the morning of the results). After all that, the shares are on a forward P/E of 14.4 this year and a PEG of only 0.4 (that’s P/E compared to earnings growth, where anything less than around 0.7 is usually taken as good value for a growth share). And 2017 forecasts suggest a P/E dropping to 12.5 and a PEG of a still attractive 0.8. That doesn’t look stretching for a strong growth candidate and the analysts are rating it a strong buy, but it’s a highly competitive business.

Banking upstart

Virgin Money (LSE: VM) shareholders have had a rocky ride over the past 12 months, with their shares slumping to 273p on 9 February. But since then they’ve enjoyed a 38% recovery to a healthier 370p. The firm’s first full year as a listed company, ended December 2015, produced a 53% rise in underlying pre-tax profit to £160.2m, and investors snagged a modest 1.2% dividend yield.

But the year just gone is not what’s so good, it’s what forecasters think is still to come that should be exciting growth investors. A predicted 40% gain for the current year would put the shares on a P/E of under 12 which, in more bullish times, would probably be seen as very cheap for such growth prospects. And what’s more, it would give us a PEG ratio of only 0.3.

It’s not just the one year either, as a further 32% EPS rise pencilled-in for 2017 would drop the P/E to just nine and would keep the PEG at that lowly 0.3. The City’s analysts are on a pretty clear strong buy stance for Virgin Money, and I can see why.

Turnaround time?

Support services group Interserve (LSE: IRV) has suffered a 25% share price fall over the past 12 months, to 440p, though that’s up from a low of 360p on 12 February. The company, which serves hospitals, schools, government, and other sectors, has posted several years of steady growth up until 2015. But there’s a 6% dip in EPS predicted for 2016, and that will have taken some of the shine off the growth story and contributed to the poor share price performance.

But there’s a return to growth of 11% on the cards for 2017, which would drop the P/E to just 6.3 (from a still very low 7 for this year), and would hand us a PEG of 0.6. On top of that, there’s a 5.7% dividend yield expected for this year, followed by 6% next, both of which would be well covered.

So, a good low growth valuation with very tasty dividends thrown in, on such an attractive P/E — there must be something wrong, mustn’t there? I can’t see anything myself, and neither can the brokers who have Interserve as a strong buy (with no dissenting sell votes).

The post Are Paysafe Group Plc, Virgin Money Holdings (UK) PLC And Interserve plc Cracking Growth Bargains? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. 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.

Down but upbeat

Look at Redrow (LSE: RDW), whose shares have bizarrely dropped 5.6% to 398p on the day the homebuilder released upbeat first-half results. With revenue up 8% to £603m, a half-year record, earnings per share gained 15% and the interim dividend was doubled to 4p per share. This came after legal completions rose by 18%, and the firm’s gross margin perked up to 24.2%.

So what’s the growth picture? Well, before today analysts were forecasting a 13% EPS rise for the full year to June 2016, which would put the shares on a PEG ratio of 0.6 — lower is better, and growth investors typically look for 0.7 or less. But with chairman Steve Morgan telling us that “demand for new homes remains robust” and that he’s “confident this will be another strong year of growth for Redrow“, I could see that 15% first-half gain carrying on through.

That would drop the PEG a fraction and put the shares on a P/E of only 7.8 — and that’s just got to be cheap!

Top property site?

Casting a growth eye on property website operator Zoopla (LSE: ZPLA) throws up a PEG ratio of 0.7 for the year to September 2016. Although the share price was pushed up in the first half of 2015, the later loss of sentiment has brought us a 24% fall since the end of June, to today’s 205p. Although we’re looking at a prospective P/E of 19.5, which is ahead of the FTSE’s long-term average of around 14, EPS forecasts make that seem not too stretching at all.

Zoopla recorded a 29% rise in EPS in 2015, and there’s the same again currently being predicted for this year. UK interest rates will be remaining low for longer than many of us expected and we might not even see a rise until 2017 now, the UK economy is gathering strength, and the housing market remains buoyant — and I can see another couple of strong growth years for Zoopla.

Online payments

The online payments business is risky, as we’ve seen with the sad decline of Monitise in the past couple of years. But things are looking very different for Paysafe (LSE: PAYS), formerly known as Optimal Payments, whose shares are up 61% over the past 12 months, to 342p. The recent FTSE retreat has pushed the price down, mind, and we’ve seen a 14% fall since 4 February. So does that give us a cheaper growth opportunity?

A fourth quarter update told us that revenue and earnings will be ahead of market expectations — and the markets had a 29% EPS rise penciled in. There’s a further 40% lift to EPS forecast for 2016, and that would put the shares on a distinctively average P/E of 14.5 and a PEG of just 0.4.

And if that doesn’t look like a decent growth opportunity, then I don’t know what does.

The post 3 Great Growth Picks For 2016: Redrow plc, Zoopla Property Group PLC, Paysafe Group Plc? appeared first on The Twelfth Magpie.

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• How much is needed in an ISA to unlock £1,220 of passive income a year?
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.