The following two saw their share prices climb more than two thirds last year, and they could have further to go this year.

Polypipe Group

Polypipe Group (LSE: PLP), which delivers sustainable water and climate management solutions for the built environment, returned almost 70% to shareholders in 2019, despite what it called tough trading conditions.

Its most recent update, from October, talked up a “resilient performance” in tough markets, but group revenue, nonetheless, rose 4.3% to £381.7m, with operating margins up 30 basis points, boosted by “margin accretive acquisitions and strong cost controls.”

This was before the general election, during a time when Brexit uncertainty squeezed domestic firms like this one, so it will be interesting to see if it benefits from any Boris bounce. The £1.1bn group has several factors in its favour, which it identifies as the “structural housing shortage, historically low interest rates, real wage growth, and near full employment.” 

If you’re bullish on the UK economy, this could be a good way to play its recovery. Despite its strong share price growth, the Polypipe share price isn’t too expensive, trading at 17.4 times future earnings.  

Growth forecasts also look positive, with 8% expected this year, and 7% in 2021. You get a forecast yield of 2.5%, although this is primarily a growth stock, and one that may repay further digging.

Avast

Cyber-security specialist Avast (LSE: AVST) also flew in 2019, as it continues to benefit from operating in a rapidly growing area, with the market forecast to be worth $170bn a year by 2022.

Unfortunately, the £4.6bn group hit a stumbling block in January, when it was forced to close down 2013 acquisition Jumpshot, which had been caught scraping browsing data from the company’s customers without full permission, and selling it to advertisers including Google, Yelp and Microsoft.

The hugely embarrassing revelation, exposed by Motherboard and PCMag, knocked the Avast share price down 25%, although it has picked up 16% in the last week. Given that Jumpshot harvested millions of dollars from clients, future revenues could take a hit, although management said Jumpshot produced just $36m of full-year adjusted 2019 revenue, against $862.8m for the group.

The closure should therefore have little impact on its full-year 2019 results, which are line with expectations. Customer trust may prove harder to rebuild, although given the minimal long-term impact that the big data scandal had on Facebook and others, investors may not be too worried.

Avast is a top-five antivirus provider with more than 400m customers worldwide, and expects full-year organic billings to be up 10.2% to $900.7m.

Analyst Peel Hunt recently said its stock may be overvalued, given that it now faces threats from Windows Defender, and the move towards cloud-based services. Avast still has massive potential, but it can’t afford further slip-ups.

The post £2K to invest? I’d check out these 2 high-flying FTSE 250 growth stocks appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Polypipe. 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.

I’ve long been a fan of online fashion giant Boohoo (LSE: BOO) and remain so now, even if the company has failed to break out of the downtrend that was in full flow last time I covered it in December.

That has seen it shed more than 35% of its value in less than six months. But despite this setback, I remain convinced in its ability to generate splendid returns for long-term investors.

Before I continue lauding Boohoo, however, I would like to bring your attention to a hot growth stock making headlines in Tuesday business: Polypipe Group (LSE: PLP).

Strong outlook

Polypipe, which is one of the continent’s leading manufacturers of pipes and plumbing apparatus, announced today that revenues jumped to a record £411.7m in 2017, up 6.3% year-on-year. This propelled underlying pre-tax profit 7.9% higher to £65.7m.

Despite a difficult time for the UK construction industry amid huge economic and political uncertainty, the FTSE 250 firm still managed to deliver an 8.1% sales improvement in its home marketplace (Polypipe sources almost 90% of revenues domestically).

Driven by strong demand from the housebuilding segment, sales at its Residential Systems division jumped 10.3% from 2016 levels, growing ahead of the broader market and offsetting difficulties in the repair, maintenance and improvement (RMI) market.

And Polypipe believes the outlook remains good, commenting: “Fundamentals in Residential Systems segment continue to be strong, driven by the new housebuild sector, but UK RMI [is] likely to remain challenging.” Furthermore, it added: “[Our] commercial and Infrastructure project pipeline remains encouraging, although project delays [are] impacting short-term performance.”

Bet the house on it

Polypipe has a long history of earnings growth thanks to the strength of the British homebuilding sector, and stable conditions here are likely to keep the bottom line swelling, so say City analysts.

A 6% rise is forecast for 2018, and another 7% advance is forecast for next year. Yet despite its robust outlook, Polypipe can be picked up on an ultra-low forward P/E ratio of 13.7 times.

What’s more, the pipebuilder’s strong profit prospects and improving balance sheet are expected to keep dividends improving at quite a lick (it hiked the full-year payout 9.9% in 2017 to 11.1p). Rewards of 11.8p and 12.7p are forecast for 2018 and 2019, respectively, resulting in chubby yields of 3% and 3.2%.

Fashion fave

Now for Boohoo. It may not be a dividend carrier, unlike Polypipe, nor does it pack the same sort of value either, with the company dealing on a forward P/E ratio of 47.1 times. However, the chances of it continuing to deliver knockout earnings growth still makes it worthy of serious attention, in my opinion.

Indeed, City analysts are expecting it to continue its record of double digit percentage improvements with rises of 25% and 27% in the years to February 2019 and 2020.

Demand for Boohoo’s fashion offer continues to rip higher across the world and, as a result of total revenues booming 93% at constant currencies in the four months to December to £228.2m, the online business revised upwards its sales forecasts for the second time in four months. And I expect plenty more sales joy to come as the company invests heavily to harness the global e-commerce boom.

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Royston Wild 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.

Polypipe Group

Polypipe Group (LSE: PLP) is a UK-based manufacturer of plastic piping and energy-efficient ventilation systems for the residential, commercial, civil and infrastructure sectors. Shares in the £748m market-cap group have enjoyed a strong run over the last year, rising from 285p to 399p today, a gain of 40%. Does that rule out further gains in future? I don’t believe so.

Over the last three years, Polypipe has demonstrated impressive momentum. Revenues have increased from £301m to £437m, while adjusted earnings per share have climbed from 10p to 25p. This year, City analysts expect a top-line figure of £466m and earnings of 27p.

A trading update released this morning revealed that the group is on track to achieve management expectations for the full year. Revenue for the 10 months to the end of October was up 8.2% (7.1% on a like-for-like basis) on last year. The group said that it saw “strong organic growth” in its UK residential and mainland Europe segments, which were both assisted by “relatively buoyant” new house building activity. Performance of the mainland Europe commercial and infrastructure systems segment was particularly impressive, with revenue growth of 19.9%. Chief executive Martin Payne commented: “The Group continues to deliver strong organic growth ahead of the overall UK construction market, demonstrating the resilience of its balanced exposure to the different sectors within that market.”

While the threat of a property slowdown in the UK adds an element of risk here, on a forward looking P/E of 14.8, with a prospective dividend yield of 2.7%, the investment case remains attractive, in my view.

FDM Group (Holdings)

Another amazing performer over the last 12 months has been FDM Group (LSE: FDM), which provides IT consultants to its clients, that assist with business analysis, data and operations services and cyber security.

I last covered the stock in late July, when the group had released strong half-year results that sent its share price surging 10%. At the time, I said: “I’m going to keep a close eye on FDM Group shares in the hope that a pull-back creates a more attractive entry point.” Unfortunately, the shares have kept rising. Indeed, they’re now up over 70% in a year. That means £1,000 invested a year ago would have generated a profit of £700. 

Like Polypipe, this is a company with strong momentum. City analysts expect a 22% increase in revenue this year, and forecast a 13% rise in earnings per share to 29.2p. However, after a 70% one-year gain, is there any value left in the stock at the current price? 

FDM currently trades on a punchy forward looking P/E ratio of 32.9. While I don’t think that valuation is entirely unreasonable given the company’s growth prospects and exposure to the tech sector, I’m going to continue to keep the stock on my watchlist for now in the hope of a meaningful correction.

The post 2 FTSE 250 growth stocks making their investors wealthy appeared first on The Twelfth Magpie.

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Edward Sheldon 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.

The technology giant declared that group revenues increased 12.7% between January and June, to £27.4m, with sales at its Technology Products arm rising 20.9% to £16.8m.  The result propelled adjusted pre-tax profit 13.6% higher, to £1.8m.

Revenues from Technology Products now equate to 61% of the group total versus 57% last year, and a record order book suggests that Stadium should continue enjoying blistering revenues growth. This had grown 19% from the end of last year to £30.8m.

On the march

Today’s results prompted a cheery response from chairman Nick Brayshaw, who noted that “we are very pleased with our performance in the first half of the year and the progress that we’ve made in establishing our position as a successful design-led technology business.”

He added: “We believe that our operating model, focused around strategically located regional design centres, manufacturing centres of excellence and regional fulfilment centres, will allow us to deliver further accelerated growth going forward.” And he said the continued positive momentum seen in the first half is further underpinned by its record order book and strengthening pipeline of new design wins which makes it confident for the full year outlook and beyond.

City brokers agree that the earnings picture over at Stadium is looking  pretty rosy, and have pencilled in bottom-line rises of 17% and 21% for 2017 and 2018 respectively.

And these projections make the Reading business brilliant value for money, at least on paper. A forward P/E ratio of 11 times falls below the widely-considered value benchmark of 15 times, while a PEG rating comes in at a bargain-basement 0.6.

Those seeking chunky dividend growth should also give Stadium more than a cursory glance. The company is expected to lift last year’s 2.9p per share dividend to 3.1p this year, and again to 3.3p in 2018. As a consequence, investors can lock onto yields of 2.6% and 2.8%

I reckon dip buyers should take a serious look at Stadium right now, and particularly after today’s share price decline.

Pipe dreams

Polypipe Group (LSE: PLP) is another London-quoted stock expected to deliver handsome earnings and dividend growth in the medium term.

In 2017 the number crunchers have pencilled in profits growth of 8%, and a similar rise is anticipated in the following 12-month period. And these forecasts make the piping and ventilation specialist a decent value bet, Polypipe sporting a prospective P/E ratio of just 14.9 times.

Meanwhile on the income front, the Doncaster business is predicted to lift last year’s 10.1p per share reward to 10.8p in 2017 and to 11.7p in 2018. As a result, share pickers can enjoy yields of 2.6% and 2.8% for 2017 and 2018.

Polypipe continues to outperform the broader market, and saw revenues in the UK soar 6.8% between January and June. And with infrastructure investment predicted to improve in the months ahead, and the domestic new-build market also remaining pretty robust, I expect earnings at the business to keep on booming.

The post 2 value stocks for growth and dividend chasers to seek out 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.

If you buy quality businesses at sensible valuations, history suggests that they will often continue to deliver rising profits and attractive returns.

Still climbing

Back in March, I chose plastic piping firm Polypipe Group (LSE: PLP) as my top stock for the month. The shares have since risen by 18%. Polypipe published its half-year results this morning, giving me a chance to review the firm’s progress.

First impressions are fairly good. Sales rose by 8.4% to £242m during the six months to 30 June, while operating profit rose by 2.8% to £34.9m. Obviously it’s good news that sales and profits are rising. But because sales rose by more than profits, we can see that the group’s profit margins were lower than during the same period last year.

Crunching the numbers tells me that Polypipe’s operating margin fell from 15.2% to 14.4% during the first half. That’s still an impressive figure, but why has it fallen?

The problem seems to be that raw material costs have risen. The company is passing these increases on to customers through higher price, but this is taking some time. This is a common problem for manufacturers. I’m not too concerned, as the issue seems to be well under control.

The board expects trading to improve during the second half of the year and is confident of hitting full-year expectations. Based on the latest broker consensus forecasts, this puts the stock on a forecast P/E of 15, with a prospective yield of 2.7%.

That seems a fair valuation, but Polypipe’s disciplined management and track record of growth suggest to me that further gains may be likely. I’d be happy to buy or hold at current levels.

This newcomer has done well

If you’re nervous about investing in housebuilders but would like some exposure to the UK housing market, one option might be Ibstock (LSE: IBST). This £1bn company makes bricks and other concrete building products.

Ibstock shares have risen by 25% since the firm’s flotation in October 2015. This puts it ahead of the FTSE 250, which has risen by 15% over the same period.

I’m attracted by this company’s high profit margins. Ibstock generated a return on capital employed (ROCE) of 19% last year. That’s quite high and suggests to me that the group has the potential to generate a lot of surplus cash to fund growth and dividends.

Ibstock is due to report its half-year results on 10 August. Analysts are expecting another strong performance. Earnings per share are expected to rise by 15% to 18.7p in 2017, putting the stock on a forecast P/E of 13. The dividend payout is expected to rise by 9%, giving a potential yield of 3.4%.

This business appears to be firing on all cylinders and is growing steadily. But producing bricks is a cyclical business. Any reduction in housebuilding activity could leave the firm with surplus capacity, or force it to cut prices. In either case, profits would slump.

Despite this risk, the outlook seems strong at the moment. I’d continue to hold.

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Roland Head 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.

Polypipe Group  

Polypipe Group (LSE: PLP) is a UK-based manufacturer of plastic piping systems and energy-efficient ventilation systems for the residential, commercial, civil and infrastructure sectors. With operations in the UK, Europe and the Middle East, Polypipe is diversified geographically and the company enjoys a strong reputation in a market that has high barriers to entry.
 
The piping specialist has been an outstanding performer in recent years, with revenue growing from £301m in FY2013 to £437m last year, a compound annual growth rate (CAGR) of 13.2%. Net profit in this time has increased from £20m to £44m and the company increased its dividend by a huge 30% last year to 10.1p per share, a signal of confidence from management. City analysts believe Polypipe’s rise will continue this year, with revenue and earnings growth of 6% and 8% estimated. A dividend payout of 10.7p is also forecast, which would take the company’s forward-looking yield to a robust 2.6%.
 
A trading update in late May was upbeat, with Chief Executive David Hall stating that the general economic environment “appears to be improving” and that Polypipe is “on track to achieve management expectations for the full year.”
 
The stock has no doubt enjoyed a strong run over the last year, rising from 220p amid the Brexit panic to around 410p today.  However on a forward P/E of 15.2, the stock doesn’t look overly expensive in my view, given the growth generated in recent years.

Ibstock

Also exhibiting strong share price momentum at present is clay bricks and concrete manufacturer Ibstock (LSE: IBST), its shares rising over 100% since the Brexit turbulence last June.  
 
The company has been another fantastic performer in recent years, with revenue increasing from £317m in FY2013 to £435m last year (11.1% CAGR) and net profit surging from £10m to £90m in that time. Analysts following the company have pencilled-in revenue of £466m for FY2017, and earnings per share of 18.8p, meaning that at the current share price of 250p, Ibstock trades on an undemanding P/E ratio of just 13.3.
 
Furthermore, not only does the valuation look attractive here, but Ibstock also looks to have appeal from a dividend perspective. Indeed, this year’s consensus dividend payout estimate of 8.4p points to a forward yield of a healthy 3.4%, and the payout is expected to grow at a decent rate in the next few years. 
 
The company stated in May that “market fundamentals in UK remain robust with the demand for new housing in particular continuing to underpin activity levels in both our clay and concrete businesses.” As a result, despite the strong share price performance over the last year, I believe shares in Ibstock still offer value at the current share price.

The post Could these under-the-radar FTSE 250 companies 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 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 stock has gained 16% in value during the past six weeks alone, including a 5% advance in Tuesday business. And I reckon the defence play has what it takes to surge past current 18-month peaks.

Today’s fresh spurt was prompted by news that revenues rose 22% during October-March, or 7% at constant currencies, to £81.1m. And this helped underlying pre-tax profit explode 22% to £10.7m.

And a healthy order book suggests that sales should continue ticking higher. Orders received chugged to £90.7m during the six months to March, up 24% or 9% at constant exchange rates.

Strength in depth

And Avon cheerily reported stunning demand growth across the business. At its core Protection & Defence division, revenues sailed 22% higher to £55.9m. While sales of its M50 respirator to the Department of Defense (DoD) fell to 93,000 units from 107,000 a year earlier, the 131,000-mask order chalked up in the half provides terrific sales visibility looking into 2018.

And despite the recent DoD sales drop, Avon noted that “sales to foreign military, law enforcement and first responder customers increased year-on-year as the portfolio continues to grow.” On top of this, it noted that it expects to receive orders from Middle Eastern customers during the year.

But perky demand for the company’s headgear isn’t the only cause for celebration. Indeed, sales at Avon’s Dairy division also soared 22% between October and March, to £25.2m, as improving milk prices have boosted demand for its InterPuls and Milkrite products.

While the City expects Avon to endure a rare 13% earnings dip in the full year ending September, the business is expected to rebound immediately with an 8% rise in fiscal 2018. I would consider a consequent forward P/E ratio of 17 times to be great value given that demand for Avon’s dairy and defence products is growing across the globe.  

A smoking pipe play

Construction play Polypipe Group (LSE:PLP) has also seen its share price click through the gears in recent weeks.

Indeed, a blockbuster full-year report in late March has since sent Polypipe’s stock value soaring almost 20% to current record peaks. Investors piled-in after news that revenues soared 24% in 2016, to £436.9m, a result that shoved pre-tax profit 31% higher to £54.4m.

Share pickers took heart from Polypipe’s view that “[the] underlying fundamentals and growth prospects in the overall UK construction market remain positive,” a point underlined by latest trading numbers. Indeed, like-for-like sales at home rose 10.5% during the year, suggesting a healthy sales uptick more recently as underlying sales growth during January-October came out at 8%.

For 2017 City brokers expect Polypipe to enjoy a 7% earnings bounce, and to follow this up with a 9% advance next year. Given that market conditions remain strong, and Polypipe has a proven record of outperforming the broader market, I reckon a prospective P/E ratio of 15.6 times represents terrific value.

The post 2 momentum stocks you simply must check out appeared first on The Twelfth Magpie.

More reading

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• Is there any value left in Lloyds shares now they’re over £1?
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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. 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.