While, on an underlying basis, revenue rose by 4.4% to £311m and EBIT gained 5.3% to £42.7m, adjusted EPS actually dipped by 0.9% to 64.5p. On a statutory basis, pre-tax profit fell by 21% to £17.3m, but the underlying figure showed a 7.3% rise.

Consort, which bills itself as a “leading, global, single source drug and delivery device company,” had been growing its earnings per share strongly in the preceding few years, and the share price has been following nicely — up 77% over five years to 1,218p.

Though this year’s flattening of earnings might look disappointing, analysts are predicting growth of 9% per year for 2019 and 2020. And the dividend is growing progressively too — while yields are still under 2%, the annual cash handout is appreciating nicely ahead of inflation.

Solid core business.

What I like about Consort is the nature of its business. It manufactures drugs and premium drug-delivery devices, so it can provide the whole package in one go — and provides support to drug development companies for making an end-user product.

That makes Consort something of a picks-and-shovels company, the kind that can do well regardless of who’s winning at the actual development end of the market. A number of its key customers seem to be doing very well with their pipelines too, and I can see good long-term prospects here.

On a valuation front, the shares are on a forecast P/E of 17 for 2019, dropping to 15.6 in 2020. Obviously, forecasts can go wrong, but that looks like an attractive valuation for a stock with what I believe to be strong growth potential.

Short-term growth dip?

Whenever I spot a soaring growth share chart, I’m always wary of what I see as a common happening. Often, investors can see no wrong, and as long as the company keeps meeting or even exceeding its challenging expectations, the shares keep on going up. But as soon as the first underperformance comes in, bang — desertion and a big share price drop.

That happened to Proactis Holdings (LSE: PHD) in April, when the company reported higher than expected customer losses — though profits at the interim stage were up nicely. The business management software company reckoned there will be an impact on the second half — and on the day, the share price was slashed by 40%, from 190p to just 111p.

Analysts soon cut back their 2018 expectations to an EPS rise of just 4%, but the most recent forecasts suggest strong growth in 2019 with EPS putting on 23%. And with the firm’s order book looking good, up to £47.8m at interim time, I see that as realistic.

Growth screen

I was alerted by the share price weakness bringing Proactis within the range of my growth share screen.

The shares are on a PEG multiple for 2019 of just 0.5 now, and anything below 0.7 can suggest strong growth prospects. And we’re looking at a low forward P/E of just 11, significantly below the FTSE 100‘s long-term average.

Net debt of £29.8m at 31 January came after the acquisition of Perfect Commerce LLC for £94.3m, and with 2019 revenue forecast at more than £60m, I don’t see that as a problem.

Looks like a future cash cow to me.

The post 2 super growth stocks I’d buy and hold until retirement appeared first on The Twelfth Magpie.

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Alan Oscroft 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.

However, the figures look good. Revenue rose 31% compared to a year ago and adjusted earnings per share put on a decent-looking 25%. The directors pushed up the final dividend by almost 8%, suggesting optimism about the immediate outlook.

Organic and acquisitive growth

The firm creates, sells and maintains software that enables organisations to streamline, control and monitor their non-payroll internal and external expenditure. In today’s world of often cut-throat pricing and little fat in the cash flow to absorb inefficiencies, a strong grip on costs seems essential. So I’d expect the sector to grow and, indeed, Proactis has grown its earnings robustly over the last few years, delighting shareholders with a more than 760% rise in the stock since 2013.

Today’s figures show underlying organic growth in revenue of 9%, but the company has also been busy on the acquisition trail. During August, Perfect Commerce Group LLC joined the stable making Proactis “the sixth largest global ePurchasing pure-player by revenue,” according to the directors. The purchase comes on the heels of the acquisition of Millstream Associates Limited, which the firm signed off during November 2016.

Successful integration

Chairman Alan Aubrey tells us the acquisition of Millstream was the fifth over the last three years and “given the encouraging post-acquisition performance, the Group has, once again, demonstrated its ability to implement optimal integration strategies.” The firm is now focusing on repeating its integration success with Perfect, and Mr Aubrey confirms that the acquisition programme “remains a fundamental part of the Group’s growth strategy with a pipeline of opportunities under review.” The directors are ambitious and so far, investors have had little to complain about, judging by the stock’s performance.

At 165p, the forward price-to-earnings ratio runs just below 15 for the current year to July 2018. City analysts following the firm expect earnings to grow 26% this year, so at first glance, the valuation seems modest for the growth on offer. But I think the firm is worth researching and seems more attractive than the outsourcing specialist Capita (LSE: CPI), for example.

No growth, big dividend

Capita’s market capitalisation of just over £3.7bn dwarfs the £153m of Proactis. However, size alone doesn’t make Capita less attractive to me. The problem is the lack of growth. City analysts expect earnings to decline 12% this year and to only bounce back by 4% next year. Compared to the double-digit growth rates we’re used to with Proactis, Capita’s performance is underwhelming and I think it shows that the outsourcing business shapes up as a tough way to make a living.

In fairness, Capita has one redeeming feature as a stock in its dividend yield. At today’s share price of 561p, the forward yield for 2018 runs at 5.6%. But I think there are safer yields out there, and given the choice between these two, I’d rather take my chances on the growth that Proactis has to offer.

The post 1 growth stock I’d buy ahead of Capita plc appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

Premier Technical Services (LSE: PTSG) is a small company that’s grown rapidly over the past few years, and it looks as if the firm is only just getting started

The company is the UK’s leading provider of façade access and fall arrest equipment services as well as high-level cleaning and training solutions. The group operates in niche markets which require a high level of skill and specialised equipment. Rising demand for the company’s services, as well as its leading position in the market, means that over the past three years, earnings per share have doubled and analysts are expecting further growth of 14% this year. 

Rapid earnings growth 

For 2014, Premier reported sales of £18m. For 2017, City analysts are projecting sales of £47m rising to £59m next year. Off the back of this growth, the company’s earnings per share are set to hit 9.3p for 2018, up from 3.8p for 2014. 

Considering the specialised nature of its business, it looks as if this growth can continue for the long term. As well as organic growth, management is hunting out bolt-on acquisitions to boost overall performance. These additions are helping to improve not only the top line, but also the bottom line as operational efficiencies help widen margins. 

The firm acquired peer BEST early in July 2017 to enhance Premier’s number one market position in the lightning protection market following the buyout of Nimbus Lightning Protection in January 2017. 

Unfortunately, shares in the equipment provider aren’t cheap. They trade at a forward P/E of 19.2, but this multiple seems appropriate considering its past growth and opportunity to consolidate further, build on its existing client base and improve margins. 

Proven management and company 

Proactis (LSE: PHD) is another company that flies under the radar of most investors but has enormous potential. The company offers spending and procurement solutions to help organisations better control expenditure on all goods and services. 

Since 2013, demand for these offerings has exploded. Pre-tax profit should come in at £5.3m for the fiscal year ended 31 July 2017, up from just £300,000 for fiscal 2013. Analysts are expecting earnings per share growth of 17% off the back of this performance. 

And even though shares in Proactis currently look expensive as they trade at a forward P/E of 20.9, considering the growth potential, this is a premium worth paying. For the financial year ending 31 July 2018, analysts are expecting earnings per share growth of 38%, giving a PEG ratio of 0.4. However, I wouldn’t be surprised if the company surpassed these forecasts as management recently completed the “transformational” acquisition of Perfect Commerce LLC, which is already generating additional revenue for the group and has offered opportunities for significant synergies. Overall, the combined groups are targeting £5m of synergies, a significant figure considering the pre-tax profit of £5.3m expected for the year just ended. 

As Proactis reaps the benefits of this deal and looks for other acquisitions, I believe the company can grow significantly, producing attractive returns for investors in the process. 

The post 2 small-caps that could be monsters in the making appeared first on The Twelfth Magpie.

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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.

Impressive performance

Reporting on Thursday was IT services and solutions company Microgen (LSE: MCGN). The company’s share price gained over 15% due to the strong progress made in the first half of the year. Its financial performance is ahead of the Board’s original expectations for the period, while margins have been maintained in line with those from the prior year.

The company’s two business lines are executing on their strategies, with Aptitude Software delivering organic growth and Microgen Financial Services continuing its transition towards being focused on the Trust & Fund Administration market.

Looking ahead, the company is confident that the strong performance from the first half of the year will continue throughout the remainder of the year. Therefore, it has raised guidance for the current year. It is expected to report a rise in earnings of 13% in the next financial year, which puts it on a price-to-earnings growth (PEG) ratio of just 1.6. This suggests that further share price growth could be ahead even after today’s sharp rise.

Beyond next year, the potential for high demand for the company’s Aptitude Software division’s products and services could lead to a purple patch for the business. Therefore, while still a relatively small entity with above-average risks, now could be the right time to buy it for the long term.

Improving outlook

Also offering upside potential in the long run is spend control and e-procurement solution provider, Proactis (LSE: PHD). The company has delivered double-digit earnings growth in each of the last four years. This shows that it has a sound strategy which has ultimately proven to be highly successful.

Its outlook is also positive, with the company forecast to post a rise in its bottom line of 13% in the current year. It is expected to follow this with growth of 23% next year, which suggests that investor sentiment could improve over the medium term. Despite its positive outlook, Proactis trades on a PEG ratio of just 0.7 at the present time. This indicates that it has a wide margin of safety and could therefore deliver a rising share price even if its outlook is downgraded to some degree.

While the stock only yields 0.8% right now, dividend growth of 10% is forecast for next year. This shows that the company’s management team is upbeat about its future performance, and this could be reflected in improving financial performance as well as more positive investor sentiment.

The post Two hot small-cap stocks I’d buy today appeared first on The Twelfth Magpie.

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• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

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.

Over the past six years, the company’s revenue has grown steadily from £6.2m in 2011 to £19.4m for fiscal 2016, a compound annual growth rate of 25.4%. Over the same period, reported earnings per share have grown from a loss of 1.8p to a gain of 5.9p. City analysts have pencilled-in further growth this year.

EPS growth of 13% is projected for the financial year ending 31 July 2017 on revenue of £25.4m. And for the year ending 31 July, 2018 analysts are expecting yet more growth with earnings per share set to grow by 23% to 10.2p on revenue of £29.6m.

Lucrative business

Proactis is involved in the sale of business software. The company offers software to help businesses streamline invoices and manage their supply networks. Other programs help with capturing data and managing IT networks. This business is extremely lucrative and provides a steady stream of recurring revenues for Proactis.

Selective bolt-on acquisitions have also helped drive growth, and the company has plenty of cash to invest in further growth initiatives. At the end of the fiscal first half, the company reported total debt of £7.6m and cash of £4.9m.

Historically, cash generation has been weighted to the second half, and the company spent £15.7m during the first half of fiscal 2017 on acquisitions. During the second half of the financial year ending 31 July 2016, the company generated £5.2m in cash from operations.

Expensive growth

The one downside about shares in Proactis is their valuation. The shares currently trade at a forward P/E of 21.5, falling to 17.8 for the year after. However, after taking into account the company’s explosive growth over the past five years and projected future growth during the next two years, it looks as if it’s certainly worth paying a premium to get your hands on a stake in this company.

Under the radar

Just like Proactis, ULS Technology (LSE: ULS) is a market tiddler with a total value of only £78.3m, but that shouldn’t detract from the company’s success over the years. Indeed, since 2012 the company has grown revenue at a compound annual growth rate of 25.4% and net profit rose at a rate of 30%. Between 2012 and 2016, earnings per share expanded from 1.3p to 3.5p and analysts are projecting earnings per share of 5p for the year that ended on 31 March.

Unfortunately, shares in ULS don’t come cheap, but this is easy to explain considering the company’s explosive growth rate. Shares in ULS currently trade at a forward P/E of 21.2 and support a dividend yield of 2.1%. After factoring in earnings growth, the shares trade at a PEG ratio of 0.6, which signals that they offer growth as a reasonable price for adventurous investors.

The post After growth of 25% p.a. for six years these stocks could help you retire early appeared first on The Twelfth Magpie.

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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.

Proactis Holdings

Shares in software company Proactis rose by as much as 8% to 102p today, after a strong set of results and news of a new deal with Screwfix.

Proactis, which has a market cap of around £35m, provides software to help control corporate spending by managing purchasing, invoicing and supplier relationships.

Last year’s sales were boosted by acquisitions, and revenue rose by 69% to £17.2m, while underlying organic sales growth was 12%.

Unlike many small-cap tech stocks, Proactis is profitable and even pays a dividend. Adjusted earnings per share rose by 126% to 6.1p last year, while the firm’s final dividend has risen by 9% to 1.2p, giving a yield of around 1.2%.

I was impressed to see that £14.3m (83%) of the firm’s revenue is now recurring. This suggests that most of the firm’s customers are on rolling subscriptions, which I like. A reported operating margin of 9.3% is also encouraging, while the firm’s cash and debt levels remain reasonable, with net cash of £1.5m.

Small companies like this can be expensive to buy and sell, due to the big spread between bid and offer prices. However, for long-term investors, I believe Proactis could be worth a closer look.

Jubilee Platinum

Shares in Jubilee have doubled over the last three months thanks to the sale of the firm’s Middelburg platinum smelter and power operations.

On 9 October, Jubilee received £5.4m cash for the sale of the Middelburg operations. This, along with cash from a placing and some new debt, should enable Jubilee to fund the development of its two platinum surface mining projects.

As things stand, recent shareholders are sitting on a decent profit, but I’m not sure the shares are still a buy.

Jubilee says that the firm’s surface mining and tailings projects offer “significant earnings potential”. But there are no broker forecasts for the firm. A presentation published in February suggesting that the two sites could generate operating cash flow of $14m per year was based on a platinum price of $1,250 per ounce. That’s 27% higher than today’s price of $980 per ounce.

In my view, it might be wise to wait for more detail on the economics and funding of the projects before deciding whether to invest.

Optimal Payments

Online payment processing company Optimal made waves in March when it agreed a $1.2bn deal to acquire Skrill, another, larger, digital payment firm.

The Skrill acquisition completed in August and Optimal shares have risen by 40% since July. The group’s first-half results showed that sales rose by 40% to $223m, before any contribution from Skrill.

Brokers are forecasting full-year sales, including a contribution from Skrill, of $582m, with a net profit of $93m. This puts the shares on a 2015 forecast P/E of 20, falling to about 15 in 2016, when net profit is expected to rise to $97.5m.

In my view, Optimal’s current valuation already reflects a fair amount of growth. I’m not sure now is the best time to buy — it might be worth waiting until we have a little more information about the combined firm’s trading.

The post Is Now The Time To Buy Optimal Payments Plc, Jubilee Platinum PLC And Proactis Holdings Plc? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Roland Head 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.