With the FTSE 100 having fallen in recent months, shares such as Tesco (LSE: TSCO) may now offer good value for money. The retailer continues to make changes to its business model, while a rising dividend suggests management is upbeat about its outlook.

Therefore, alongside another growth share which released trading news on Wednesday, now could be the right time to buy Tesco for the long term, in my opinion.

Growth potential

The other company in question is international waste-to-product specialist Renewi (LSE: RWI). Its third quarter update showed it has traded in line with expectations. Its merger integration projects have made good progress, on track to deliver €30m of cost synergies for the 2019 financial year. It then expects to record cost synergies of €40m for the 2020 financial year.

Looking ahead, the company is forecast to post a rise in earnings of 35% in the current year, followed by further growth of 21% next year. This suggests its strategy is working well, with M&A activity and a rationalisation of its asset base set to create a stronger business with improved growth potential.

Despite its bright financial outlook, Renewi trades on a price-to-earnings growth (PEG) ratio of just 0.4. This indicates it offers a wide margin of safety and may be able to generate high shareholder returns over the long run.

Improving business

Although retail shares such as Tesco have struggled to meet changing consumer tastes and adapt to intense levels of competition, the company has improving financial prospects. For example, it’s expected to post a rise in net profit of 19% this year, followed by further growth of 20% next year. Reasons for its improving outlook include a major efficiency strategy which is still ongoing. The company recently announced a headcount reduction, while it continues to focus on core operations as it aims to generate a rising operating margin over the medium term.

Although there are clear risks to the UK economy from weak consumer confidence and Brexit, Tesco’s PEG ratio of 1 suggests those risks may be factored in by investors. Budget retailers such as Aldi and Lidl are likely to pose a continued threat given their ambitious expansion projects. But with Tesco expected to post an improving financial performance, enjoying strong sales as well as operating efficiencies, it appears to offer a sound growth outlook.

As well as this, the company is due to increase dividends over the next two years so it has a yield of 3.4% next year. With dividends due to be covered 2.2 times by profit, its total return could be impressive and may help you to overcome fears surrounding the State Pension.

The post Why I think buying Tesco could help put your State Pension fears behind you appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Tesco. The Motley Fool UK has recommended Tesco. 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.

In times of constrained consumer spending power like these, this strive to deliver exceptional value cannot be underestimated, as traditional retailers like Tesco and Sainsbury’s will attest to. And I’m backing this groundshift in our shopping habits to keep driving profits at B&M European Value Retail (LSE: BME) higher.

The FTSE 250 retailer’s most recent trading release outlined its rising popularity with Britain’s shoppers. It said that it had made a “strong start to the new financial year” as its “disruptive value model continues to prove highly attractive to customers.” Group revenues boomed 21.6% between April 1 and June 30, with UK sales rising 8.3% in the period, or by 1.6% on a like-for-like basis.

B&M isn’t just making terrific progress at home, either. At its Jawoll stores in Germany, revenues rose 7% in the past quarter.

Dear but delightful

What’s more, like Lidl and Aldi, B&M is committed to expanding its store network in the UK and overseas to create strong earnings growth over a long-term time horizon. The business opened four new domestic B&M-branded outlets in the last quarter, as well as four of its Heron Foods convenience stores, putting it well on course to attain its goal of 50 new B&M shops in the current year alone.

City analysts believe the retailer has the recipe to cook up earnings growth of 13% in the year to March 2019, and a 14% rise is predicted for next year as well. And who would bet against profits growing by double-digit percentages long beyond fiscal 2020?

B&M is slightly expensive on paper, with its forward P/E ratio of 19 times sitting just outside the accepted value territory of 15 times, or below. Given the company’s strong growth profile, I consider this slight premium to be more than fair, though.

Good for the environment, good your stocks portfolio!

I would also consider Renewi (LSE: RWI) to be an exceptional selection for growth hunters today.

Following its merger with Dutch business van Gansewinkel Groep a couple of years back, the FTSE 250 firm now has significant revenues opportunities across the continent. More specifically, the move gives it a major presence in the Benelux region (comprising Belgium, the Netherlands and Luxembourg), a part of Europe that Renewi describes as “one of the most advanced recycling markets in the world.”

Rising costs have been problematic of late, but the company is increasingly taking the sting out of this problem with volumes and prices both on the rise. As a consequence, City brokers feel that group earnings will jump 34% in the 12 months to March 2019, and an additional 22% advance is forecast for next year.

At current share prices, Renewi carries a cheap forward P/E multiple of 9.5 times, a figure that I consider seriously undervalues its excellent earnings outlook through the coming years. Throw a prospective dividend yield of 5.1% into the equation too, and I reckon the firm’s a pretty compelling share to pick up today.

The post Have £1,000 to invest? 2 FTSE 250 dividend growth stocks for 2018, 2019… and the next few decades 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 recommended Tesco. 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.

Out of favour

Transforming waste to energy might not be an exciting business, but for Renewi (LSE: RWI), it’s a profitable enterprise. The international firm, formed last year when UK-based Shanks group merged with a large European peer, reported “encouraging volume growth” back in July when management updated the market on trading for the second quarter.

That said, integrating two of the largest waste companies in Europe has hardly been pain-free. For the financial year to the end of March, the enlarged group reported a loss of £48m (going forward, the company will report earnings in euros).

Still, despite the shaky start, I reckon the long-term outlook for Renewi is bright. Integration savings are on track to hit €30m for the year ending 31 March 2019, which should help stabilise the business. Today, management announced the sale of its 50% stake in the anaerobic digestion facility in Cumbernauld as part of the streamlining. 

When integration is complete, Renewi can concentrate on growth. As demand for recycling services only grow, Renewi should have no problem expanding sales. 

City analysts believe the company can produce a net profit of £54m for fiscal 2019, rising to £63m for 2020. These numbers translate into earnings per share (EPS) figures of 6.5p and 7.9p, respectively, giving a forward P/E of 8 for 2020.

Such a low valuation for a company that dominates a large, specialist and expanding market like recycling is attractive in my view. And on top of the discount valuation, shares in Renewi also support a dividend yield of 4.9%, which analysts believe will grow to 5.4% by 2020.

Passport battles

Usually, banknote printer De La Rue (LSE: DLAR) operates in the background. However, the company found itself in the headlines earlier this year when it was refused a £260m contract to manufacture blue passports for the Home Office when Britain leaves the European Union.

This spate of publicity was highly unusual for a company obsessed with security. Indeed, De La Rue’s banknote and passport production facilities are reportedly some of the most secure premises in the country — as one of the world’s largest banknote producers, it’s no surprise why.

Unfortunately, the loss of the blue passport contract hasn’t been the only piece of bad news for De La Rue’s shareholders. In March, the stock cratered when management warned that operating profits would be “in the low to mid £60m range,” as much as 17% below City expectations.

The good news is, after these declines, the stock looks too cheap to pass up. Right now, De La Rue is trading at a forward P/E of just 10.7, and yields 5.3%. For one of the world’s most prominent security document and banknote producers, this seems far too cheap.

In a world where personal security, both on and offline, is only becoming more critical, De La Rue stands out. With this being the case, I reckon over the long term it is well-placed to succeed.

The post 2 stocks I’m considering with 5%+ dividend yields 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.

The FTSE 250 business has fallen out of favour with share pickers more recently, its market value shrinking by a third over the past three months which leaves it languishing around 26-month lows. I reckon this is a serious buying opportunity.

The waste management and recycling giant’s integration plan following the 2017 merger of Shanks Group and The Netherlands’ Van Gansewinkel Groep continues to progress to plan, and the brilliant revenues opportunities afforded by the tie-up are reflected in bubbly broker estimates.

The City is expecting Renewi to follow a predicted 27% earnings rise for the year ending March 2018 with rises of 39% and 19% in fiscal 2019 and 2020 respectively. It is not difficult to see why strong and sustained profits growth is anticipated, given the company’s significant geographic exposure to growing European economies and the environmental legislation on the continent that is driving demand for recycling specialists.

What’s more, these bright profits prospects, allied with the company’s impressive cash generation, feed into expectations of above-average dividends being forked out in the near term and beyond. Underlying free cash flow jumped to £52.7m in the first half of the last fiscal year.

For the last year a 3.1p per share reward is currently being touted, and this is expected to shift to 3.2p in fiscal 2019 and 3.5p in the following year. As a consequence dividend yields stand at a colossal 4.3% and 4.7% for this year and next.

With Renewi also sporting a dirt-cheap forward P/E ratio of 11.3 times I reckon it’s a great buy right now.

Yields rise above 6%

Hastings Group (LSE: HSTG) is another top FTSE 250 income share with a strong record of dividend growth that can be picked up for next to nothing today.

With analysts expecting an 11% earnings rise in 2018 the car insurance colossus changes hands on a forward P/E multiple of just 11.3 times. A further 11% profits improvement is forecast for next year.

These perky profits predictions fuel expectations of strong dividend growth as well. For this year a 14.7p per share reward is forecast, up from 12.6p last year and yielding an impressive 5.2%. And for 2019 an 18.9p dividend is being anticipated, a figure that nudges the yield to 6.7%.

Hastings’ share price moved lower in March after it warned of “intense” competition, the insurer adding that it has witnessed “slower premium inflation since the end of the third quarter than that experienced in the first half of 2017 following the proposed Ogden rate review.”

Still, the pace at which the business is adding customers (its share of the market swelled to 7.3% in 2017 from 6.5% a year earlier) in an environment of rising premiums means that Hastings remains in great shape to keep delivering brilliant profits growth. As such, I reckon it is well worth buying today, and particularly given its low forward P/E ratio of 11.5 times.

The post 2 FTSE 250 dividend stocks yielding 4%+ that I’d buy with £2,000 today 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.

Renewi was created in 2017 following the €510m merger of UK-based Shanks Group plc and European Van Gansewinkel Groep B.V. With over 8,000 staff operating in nine countries, Renewi is a European leader in the collection and processing of waste. And the company is at the forefront of the recycling industry. Even its name was conceived to showcase its “position at the centre of the circular economy” referring to its reuse of products.

Rising demand 

As the world becomes increasingly aware of the impact rubbish is having on the environment, and looks for new ways to reduce and reuse waste, demand for Renewi’s services should only grow. Unfortunately, in the near term, its potential will be obscured by the integration of Shanks and EVG, which is still taking place. 

City analysts are expecting the enlarged company’s overall earnings per share to fall by 14.2% for fiscal 2018 as integration costs offset growth. Management stated in a trading update published today that “the group’s overall performance for the year ended 31 March 2018 is anticipated to be in line with the board’s expectations.“

Nevertheless, as the initial integration costs drop off, analysts believe Renewi’s earnings per share will jump 41% in 2019 to 6.9p as the extraction of synergies worth an estimated €40m per annum yields results.

Based on these projections, shares in the company are currently trading at a forward (2019) P/E of just 11.5 and support a dividend yield of 4%.

Debt concerns 

Shares in Biffa also look undervalued compared to the company’s growth potential. Specifically, at the time of writing the shares are trading at a forward P/E of 10.7 and support a dividend yield of 3.3%.

As my Foolish colleague Roland Head noted at the end of last year, one of the reasons why investors seem to be placing a low valuation on shares in Biffa is the firm’s high level of debt. Biffa reported net debt of £272.2m at the end of the first half. This represents a multiple of 1.9 times the group’s underlying earnings before interest, tax, depreciation and amortisation (EBITDA). A ratio of two times EBITDA or more is usually a reason for concern.

Still, in my opinion, Biffa’s cash flow is robust enough to support this high level of borrowing. For the half year to the end of September 2017, the company generated £55m in cash from operations, forked out £19.4m for capital spending and paid off £19.9m in debt. For the period, free cash flow was £35.1m, or £70.2m annualised, compared to net debt of £305m. In my view, these figures show that the debt pile is under control, and does not represent a risk to its long-term viability in the immediate future.

So overall, if you’re looking for cheap growth stocks that support dividend yields of 4% or more, Biffa and Renewi look highly attractive.

The post 2 defensive growth and income stocks trading at deep-value prices 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.

This is a repeat performance of when I last covered the share back in August.

Today Georgia Healthcare declared that gross revenues boomed 75.1% during 2017, to 747.8m Georgian Lari (or GEL), a result that powered pre-tax profit 15.3% higher to GEL46.3m.

While sales at its Healthcare business again impressed, rising 7.8% last year to GEL265.4m, it was once again the Pharmaceuticals unit that stole the show — turnover here jumped 238.6% to GEL450.3m. This outstanding result was down to the acquisition of its Pharmadepot and GPC pharmacy chains last year.

The integrated healthcare provider’s Medical Insurance business was the only fly in the ointment. Revenues here dropped 12.7% in the 12 months to December, to GEL53.7m.

Medical marvel

The emerging markets of Eastern Europe can be played in a variety of ways, and Georgia Healthcare is arguably one of the best as strong economic growth in the country boosts healthcare demand. And the company is riding this train by investing heavily across its operations.

At its Healthcare division, Georgia Healthcare has embarked on a number of hospital redevelopment and modernisation programmes, which included the completion of two hospitals in the last year in the capital, Tbilisi. It has been splashing the cash over at its Pharmaceuticals arm too, with plans to raise the number of pharmacies to 300 from 250 presently, while it also has a raft of other plans to expand its market share (which currently stands at around 30%).

Reflecting its favourable earnings picture, City analysts expect the bottom line to explode 169% in 2018, and by an additional 29% last year. Consequently the London-headquartered firm can be considered a bona-fide bargain (provided investors look past a forward P/E ratio of 20.5 times and instead consider its corresponding sub-1 PEG readout of 0.1).

But these great growth forecasts and low valuation are not Georgia Healthcare’s only good points. A maiden dividend of 0.5p per share is currently predicted for 2018, and this is expected to sprint to 1.8p next year. Subsequent yields of 0.2% and 0.5% may not be impressive, but those seeking hot growth dividend shares may still want to give the company serious consideration.

Major merger

Renewi (LSE: RWI) is another cut-price growth share that has been updating investors in recent days.

On Monday the FTSE 250 firm advised: “We have continued to make good operational progress and overall trading across the group during the seasonally quieter second half has been in line with our expectations.”

Renewi added that, following the merger with Dutch competitor Van Gansewinkel a year ago, that its synergy and integration plans “continue to progress well” and that it remains “on track with the target synergies and delivering significant value accretion from the merger.”

It isn’t difficult to see earnings growth impressing at Renewi as strong economic growth in Europe boosts business, and the benefits of the aforementioned merger come to fruition. And my optimistic take is shared by the Square Mile, which is predicting profits expansion of 28% and 41% in the years to March 2018 and 2019 respectively.

A forward P/E ratio 19.8 times may not inspire, although a corresponding PEG reading of 0.7 certainly should. I reckon the Milton Keynes firm is another brilliant growth bargain to check out today.

The post 2 top value growth stocks I’d buy right now 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.

Mike Ashley bets on esports

To complement its popular Insomnia live gaming event, Game Digital has been rolling out an in-store gaming arena format, branded BELONG. The pace of this rollout has been cautious so far, with just 19 arenas in the UK out of nearly 300 UK stores.

That’s about to change. Sports Direct — which has a 25.75% shareholding in the business — is going to provide up to £55m of debt funding for an accelerated rollout of BELONG in Game stores and Sports Direct locations.

Alongside this, Sports Direct has paid £3.2m to acquire a 50% share in the BELONG brand and a 50% share of future profits from this business.

A changing business

Game Digital shares have lost around 75% of their value since the group re-joined the stock exchange in 2014. The group’s core retail business is only marginally profitable.

But value investors — including me — have recently been drawn to the stock’s big cash pile and flexible, short-leased store estate. Net cash reached a seasonal peak of £67m at the end of December, almost matching the current market cap of £70m.

The combination of net cash and minimal lease liabilities has given management the opportunity to shift focus towards esports. Early signs seem encouraging. Revenue from esports and related activities rose by 116% to £13.2m last year. Although losses rose to £6m due to investment, the company says that results have been good enough to support further investment. Sports Direct appears to share this view.

Buy, sell or hold?

At face value, Sports Direct seems to have acquired its 50% share in BELONG quite cheaply. But this deal will mean that gaming arenas can be rolled out much more quickly than expected. If successful, this could give Game a head start over rivals in a growing market.

I think there’s scope for the group to transform itself into a successful esports business with a profitable retail sideline. I plan to continue holding.

One transformation I won’t buy

FTSE 250 waste recycling group Renewi (LSE: RWI) is another work-in-progress. Formerly known as Shanks Group, the company changed its name last year after an ambitious merger with a Belgian firm.

The main attraction of this deal appears to be economies of scale. Management expects to report €12m of committed savings for the year ending 31 March. A total of €40m of synergies are expected by 2019/20.

Will it work?

Although trading has been strong so far this year, I believe these cost savings are much needed. Looking back at previous years’ financials, this doesn’t seem to be a very profitable business. The group’s underlying operating margin was only 4.6% last year, while underlying return on capital employed was only 2.8%.

Another area of concern is debt. Adjusted net debt was £435.9m at the end of September. This represents more than nine times next year’s forecast net profit, which seems uncomfortably high to me.

Renewi shares trade on a 2018/19 forecast P/E of 15. I don’t think that’s cheap enough to be attractive. This is one corporate transformation I’ll be avoiding for now.

The post Should I buy more of Game Digital plc, up 10% today? appeared first on The Twelfth Magpie.

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Roland Head owns shares of Game Digital. 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.

I believe that Hochschild Mining (LSE: HOC) is a share that could be capable of delivering knockout shareholder returns.

The mining ace, which digs for precious metals across The Americas, announced this week that it chucked out record amounts of metal between July and September, with silver output clocking in at 5.3m ounces of attributable metal and gold production hitting 67,234 attributable ounces.

The company lauded a “strong performance” from its Inmaculada asset in Peru, and highlighted progress at its Pallancata site in the country which is “continuing to deliver tonnage and grades above expectations.” Group silver production in the year to date stands at an all-time peak of 28.2m ounces.

Celebrating the results, chief executive Ignacio Bustamante said: “We are firmly on track to hit our 37 million silver equivalent ounce target for the year. Costs remain under control and we can look forward to our financial position improving in the near future with good cashflow generation and a planned debt refinancing in the first quarter of next year.”

Expensive but exciting

And in other developments the FTSE 250 digger announced: “The Pablo permitting process continues as expected with no major issues encountered so far.” The environmental permit expected to be received by the close of the month, it said.

Keeping the good news rolling, Hochschild added that it is now in the middle of its brownfield exploration campaign and has seen “some encouraging results from Arcata, San Jose and also at Inmaculada.” This will come as reassuring news to investors, the company’s share price having slumped in recent months on the back of worrying exploration updates.

Those expecting booming production levels at Hochschild to translate into magnificent earnings growth right away will no doubt end up very disappointed. The company is anticipated to report a 26% earnings drop in 2017 by City brokers due to the impact of heavy exploration costs.

However, the London-based miner is expected to bounce back with an 81% bottom-line improvement in 2018. And as production levels boom, operating costs come down, and a turbulent political and economic outlook likely keeps silver investment on the boil, I reckon Hochschild could prove a very savvy buy, despite its elevated forward P/E ratio of 37.6 times.

Waste not want not

Renewi (LSE: RWI) is another FTSE 250 share I am tipping to overcome some near-term obstacles to deliver robust earnings growth in the years ahead.

In the 12 months ending March 2018, the waste-to-product specialist is expected to print a 2% bottom-line decline, although it is predicted to get firing again from next year (a 73% year-on-year earnings improvement is currently forecast for fiscal 2019).

And it is not difficult to see these numbers being upgraded in the months to come as trading conditions improve in both the UK and The Netherlands. Last month Renewi advised that “overall trading for the first half is ahead of our expectations” as improving economic growth boosted waste volumes. And it again extolled the benefits brought about by the merger of Shanks and Van Gansewinkel which completed in February.

I reckon Renewi is also worth serious attention right now even given its high forward earnings multiple of 27.5 times.

The post Forget short term pain: 2 great growth stocks that could deliver brilliant long-term gain 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.

Shares in Renewi (LSE: RWI) trekked higher in Thursday trade following a positive reception to first-quarter financials, the waste-to-product specialist trading 4% higher on the day.

The firm — known as Shanks Group prior to February’s merger with the Netherlands’ Van Gansewinkel — said it “has started the new financial year strongly and is trading ahead of our expectations,” with synergies from the tie-up currently “progressing well.”

It said its Commercial Division continued to “perform strongly” during April-June, particularly in the Netherlands, and that volumes and profits continued to grow. It added that stronger recyclate prices and higher market volumes are helping it to expand margins, while the pricing of core contract renewals is also improving thanks to reduced market capacity in a number of waste disposal segments.

Elsewhere, Renewi said that its Hazardous Waste Division had started the year well, while its Monostreams Division had traded in line with expectations.

Upgrades in store?

The City was already upbeat on the Milton Keynes firm’s earnings prospects prior to this week’s release. Forecasts suggested a 10% uptick in the current period. And the bottom line was expected to really tear higher in fiscal 2019 — a 65% rise was anticipated by the number crunchers.

But these figures are likely to receive meaty earnings upgrades should, as I fully expect, Renewi’s top line momentum continues and synergies run ahead of plan.

So while a current forward P/E ratio of 20.7 times may appear a little toppy, this isn’t so bad when one considers the likelihood of positive analyst revisions. And this reading slips to an appetising 12.6 times for next year.

Goes down well

Pub operator JD Wetherspoon (LSE: JDW) is another stock the calculator bashers expect to keep earnings on an upward trajectory.

The Watford-based business continues to defy those predicting a slump in takings as the British economy cools. Just yesterday it announced that like-for-like sales rose 5.3% during the 11 weeks to July 9, accelerating from the 3.3% increase punched in the first six months of the year.

With the tills continuing to ring, City brokers are predicting a 23% increase in the year to July 2017. And like Renewi, I reckon Wetherspoons could be in line for upgraded profits forecasts sooner rather than later, boosting the marginal earnings increase currently predicted for fiscal 2018.

Besides, current forecasts already leave the company dealing on undemanding P/E ratios of 17.1 times and 17 times for 2017 and 2018 respectively.

Wetherspoons has repeated its assertion that it requires like-for-like revenues growth of 3% and 4% next year to keep profits at this year’s expected levels. And I believe such sales expansion is quite possible despite the probability that the UK economy could remain under the cosh. Wetherspoons’ position at the ‘value’ end of the market protecting it from the worst of Britons’ falling spending power.

In addition to this, I reckon the huge amounts Wetherspoons has invested in its pub estate — the company has invested £65m in the current year alone on improving staff rooms, kitchen, gardens and IT systems — should also help it to continue outperforming the broader market.

The post 2 terrific stocks for savvy growth hunters 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. 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.

Young & Cos Brewery (LSE: YNGA) has been recording steady growth in recent years, with earnings per share soaring from 42.8p in 2014 to 58.4p just two years later.

And results to April 2017 have shown more of the same, with adjusted EPS up a further 13.7% to 66.43p. That came from a 9.4% rise in revenue leading to a 13.5% jump in adjusted pre-tax profit, and enabled the company to lift its dividend by 6% to 18.5p per share. On a share price of 1,344p, that’s a yield of only 1.4%, but it’s nicely progressive and is outstripping inflation.

Chief executive Patrick Dardis spoke of “our consistent strategy of running high quality, differentiated, individual and well invested pubs” and told us that the company’s plan is to “grow our estate through carefully selected acquisitions and developments.“

Modest outlook

Analysts are forecasting a couple more modest periods this year and next, most likely due to the UK’s toughening economic outlook, but I’m seeing a good value company here and I wouldn’t be at all surprised if those predictions are upgraded over the course of the year.

We’re looking at a forward P/E of around 20, which might seem a bit on the high side. But the company, which runs the Young’s, Geronimo and Ram Pub Company chains, reported net assets per share of 1,010p. Stripping that out from the share price, it values the business itself at only around 334p per share.

There might be other pub companies out there with more attractive-looking headline P/E valuations, but with Young & Co’s asset situation and its relatively low debt of £63.5m, I’m liking the look of what I see.

Future star?

Unlike Young & Co, waste management firm Renewi (LSE: RWI) has suffered a few years of falling earnings, but this year is expected to mark a turnaround with more than 40% EPS growth pencilled-in for each of the years to March 2018 and 2019.

The period to March 2017 was described by chief executive Peter Dilnot as “a transformational year with the successful completion of the merger with Van Gansewinkel Groep and the rebranding of the new combined group as Renewi” — the firm having previously been known as Shanks Group.

With such large-scale restructuring and with a rights issue, this year’s fundamentals perhaps don’t really tell us a lot. A 27% rise in revenue is pleasing, but underlying EPS dropped by 12% (including the effect of the rights issue). The dividend dropped a little to 3.05p per share, for a yield of 3.2%, which is middling.

Year-end debt stood at £424m, which was a bit better than expected, but with a net debt-to-EBITDA ratio of 2.8 times, I’d want to see that coming down significantly in the next few years.

Return to growth

It’s all about what the future will bring, and the company reckons that’s going to be “sustainable growth, enhanced margins and attractive returns.”

If forecasts turn out accurate, we’ll be seeing a P/E multiple dropping to 14 by 2019, after two years of very attractive PEG ratings of 0.5 and 0.4 respectively. At the same time, the dividend is expected to grow to a yield of 3.6% in two years time.

The coming year is going to be a crucial one, but if the firm pulls off the integration of its legacy business with its acquisition, I see it as the start of a successful growth path.

The post 2 attractive growth stars I’d buy today 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. 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.