But does that mean investors should rush to buy Premier Oil stock in hopes of further significant gains in its share price?

Well, bullish investors have a few points to make in their favour. One is that Premier’s production levels are ramping up significantly thanks to the Catcher field in the UK. In 2016, the company produced 71.4k barrels per day but is now guiding for 80k-85k for this year. And with operating costs per barrel down to $17/$18, the company is kicking off positive cash flow with oil prices where they are today.

The bad news is that this increased cash flow will be flowing directly to creditors instead of shareholders since net debt at the end of June was still a whopping $2.65bn. Management is confident that it will be able to bring net debt down to 2.5 times EBITDA by the end of March 2019, when its recently-amended covenants require a net debt to EBITDA ratio of under 3x.

However, this deleveraging is contingent on oil prices staying where they are right now, which is far from certain. Also, while Premier is making progress, its forward P/E ratio of 10.5 is no screaming bargain considering its balance sheet woes and lack of dividend. With oil prices unlikely to rise by 50% or more in the near future, as they have in the past year, I see no great catalyst for Premier’s share price to rise as rapidly as it has over the past year.

A roll-up growth story 

I see much more growth potential in stock for business support services provider Restore (LSE: RST). The company has grown rapidly in recent years by rolling up a series of smaller businesses to create a UK-wide leader in an array of unsexy but necessary services such as document shredding, physical and online document storage, and relocation assistance.

Last year alone, the group’s revenue increased by a full 36% to £176.2m while operating profits grew by a similar amount to £33.7m. And the first half of 2018 appears to be going just as well as management’s update disclosed trading was in line with expectations. A big boost will have come from businesses scrambling to shred or safely store customer data ahead of GDPR implementation, a trend which will hopefully persist as businesses become more aware of the financial pitfalls from misplacing customer data.

Looking forward, the group still has room to expand its core divisions as well as branch out into offering related services. With net debt at a little under 2x EBITDA it certainly has the financial firepower to continue making further acquisitions or focus on organic growth.

At its current valuation of 19 times forward earnings, I reckon Restore is a compelling buy-and-hold stock thanks to its attractive business model, rising dividends, and management’s proven ability to buy smaller rivals at good prices and successfully integrate them into the larger group.

The post Is Premier Oil the best growth stock you can buy right now with oil above $70? appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Ian Pierce 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.

RWS Holdings (LSE: RWS) may not be the flavour of the month with investors right now, the business closing at its lowest for almost a year recently thanks to a disappointing trading update. However, I believe this represents a decent opportunity for long-term investors to dip in and grab a bargain.

The language and translation services provider advised last week that, due to the impact of adverse currency movements since the start of the fiscal year — namely the rampant strengthening of the pound — profits have taken a whack. It added that full-year profits may miss expectations should these exchange rate issues persist during the remainder of the period.

I see this as no reason to panic and sell up, though. Firstly, the sterling strength witnessed more recently may be difficult to sustain given that economic deterioration in the UK has shown signs of accelerating more recently, as illustrated by disappointing first-quarter GDP data last Friday.

Irrespective of these near-term currency-related problems, I am convinced that RWS, which has seen sales and profits shoot higher every year for well over a decade, remains in great shape to deliver brilliant earnings expansion. Demand for its products continues to boom and revenues leapt to £139.6m during October-March from £76.6m a year earlier.

Translation titan

Indeed, despite its latest trading statement, the City is still expecting earnings at RWS to keep surging at double-digit percentages and a 25% rise is forecast for the year to September 2018. An extra 11% advance is forecast for fiscal 2019.

And this leads means that the AIM-quoted business can be picked up on a dirt-cheap forward PEG reading of 0.8, comfortably below the accepted value territory of 1 or below.

An added bonus is that RWS’s bright growth prospects, exceptional cash generation and solid balance sheet with net debt coming in at a better-than-expected £84m as of March, mean dividends are expected to continue improving at quite a pace too.

The Square Mile predicts that last year’s total reward of 6.5p per share will jump to 7.3p in the present period, and again to 8.2p in fiscal 2019. These figures yield 2% and 2.2% respectively. I reckon RWS is a brilliant buy today.

A proven growth hero

Like RWS, Restore (LSE: RST) also has a great track record of delivering eye-popping earnings and dividend growth. The bottom line has more than doubled during the past five years and City brokers expect a lot more where that came from.

A 15% advance is forecast for 2018, and an extra 12% rise is predicted for next year. While a consequent prospective PEG reading of 1.5 may sit above that of the languages specialist, this is still great value in my opinion given the rate at which the office services provider continues to win business.

Revenues at AIM-quoted Restore jumped 36% year-on-year during 2017, to £176.2m, the impact of recent acquisition activity helping to swell the top line. And with the company showing no signs of letting up in the hunt for M&A — it splashed out £88m in March to buy TNT Business Solutions to boost its position in the record management segment — I fully expect profits to keep swelling at a terrific rate.

The post 2 ultra-cheap growth stocks you can buy right now appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

Quixant

£250m market cap Quixant (LSE: QXT) has been a wealth generating machine for investors since it floated back in 2013, with the stock rising from its IPO price of 46p to 380p today. In other words, if you had invested just £1,000 in the IPO less than five years ago, your stake would be worth over £8,000 now. That’s the kind of prolific return I was talking about.

Quixant designs and manufactures advanced hardware and software solutions for the global gaming industry. Both revenues and profits have exploded higher in recent years, and this morning’s full-year FY2017 results revealed that the company has strong momentum at present.

Indeed, for the year ended 31 December, revenue climbed 21% to $109.2m, with pre-tax profit rising 29% to $15m. Adjusted fully diluted earnings per share surged 38% to 22.9 cents. CEO Jon Jayal commented: “We have started 2018 with robust trading performance and are well positioned to deliver full-year growth ahead of our previous expectations. The new prospects we are working on give us confidence in our longer-term growth prospects.”

After trading above 450p in January, the shares have pulled back a tad recently, although they are up strongly today. At the current price of 405p, the forward-looking P/E ratio is a reasonable 22.8. As such, I believe now could be a good time to consider the stock for your ISA.

Restore

Another small-cap stock that has delivered stunning shareholder returns is Restore (LSE: RST). Over the last five years, the shares have flown from 120p to 500p, turning £1,000 into £4,200.

Restore specialises in document storage, document shredding and workplace relocation. This is obviously not the most exciting business model in the world, yet it appears to be a profitable one for the £570m market cap company.

Like Quixant, revenue and profits have trended upwards over the last few years, and full-year results released last week showed further progress with revenue and earnings per share climbing 36% (7% organic) and 25% respectively. The group hiked its dividend by an impressive 25%.

I’ve had my eye on this company for a while as it’s a favourite of fund manager Mark Slater – one of the top small-cap stock pickers in the UK. The shares have pulled back in recent months, and as a result, with the forward P/E at just 18.4, I think now could be a good time to get involved.

The post Two high-growth stocks to consider for your ISA appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

Judging by the firm’s year-end trading update released this morning, these index-walloping returns could be set to continue for a long time to come. This is because the company continues to build on its market-leading position in document management while also consolidating the fragmented markets for related professional services such as document shredding, IT asset disposal and toner recycling.

The trading update provided no firm figures but disclosed the business was continuing to make good progress and that sales, profits and earnings per share would all be significantly ahead of last year. This is no surprise when considering the company’s H1 results, in which organic growth and acquisitions led to revenue rising 57% to £86.9m and EBITDA increasing 59% to £19.5m.

Looking forward, I wouldn’t be surprised if this level of top line growth slowed significantly in 2018 as Restore’s management focuses on integrating a slew of recent acquisitions and works to lower net debt levels of around 2x EBITDA. But with plenty of scope to improve margins and cash flow, and also plenty of acquisition targets out there in a fragmented industry, I believe now could be an interesting point to begin a stake in Restore at a sane valuation of 22 times forward earnings.

Growth has never tasted so sweet

Another high-growth stock I’ve got my eye on is speciality ingredients manufacturer Treatt (LSE: TET), whose share price has risen 420% over the past decade. This growth has been driven by management repositioning the business as an innovation-led developed of flavours and scents used in everything from tea to soap and haircare products.

And within this overarching category of speciality ingredients, Treatt has benefitted immensely from its expertise in all natural citrus flavours. Sales of these ingredients have been rocketing in recent years as consumers have shifted towards preferring all natural ingredients in their drinks as well as less sugar, another area in which Treatt has expertise.

Management has built the company’s expertise in these areas into a major selling point for winning new contracts with global fast moving consumer goods firms. This is clear in the group’s results for the year to September, with revenue up 24.5% to £109.6m, and operating profits up 44.6% to £13.8m as margins rose significantly.

There’s good reason to believe this level of growth is entirely sustainable as Treatt moves deeper into the massive US market. The group already has a manufacturing facility there but a recent £21.6m fund-raising with institutional investors will provide the capital to expand and modernise facilities in the US and UK to support accelerating sales growth.

Treatt’s impressive record of success, double-digit margin improvements and growth opportunities mean its shares aren’t traditionally cheap at 24.7 times forward earnings. But with plenty of room to further exploit its niche positions, no debt and rising dividends, I think Treatt could continue to richly reward shareholders.

The post 2 high-growth stocks I’d buy for 2018 and beyond appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Ian Pierce 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.

Investing in small-cap stocks can be very profitable if you go for high-quality, well-managed companies. Today I’m looking at two such companies that have strong growth prospects for the year ahead.

The Gym Group

There are no prizes for guessing what The Gym Group (LSE: GYM) does. The £290m market cap group is the owner of 128 budget gyms across the UK and is rapidly rolling out new gyms at a rate of around 15-20 per year. It now has an estimated 22% share of the low-cost gym market and has captured around two-thirds of the market’s growth since March last year. Does the company have investment potential? I believe so.

A trading update released this morning for the year ended 31 December looks solid. For 2017, total year-end memberships rose by 36% to 607,000, with revenue climbing 24%. Management sounded upbeat about the future, with CEO John Treharne stating: “Looking ahead, we have a very strong foundation and a proven rollout model from which to build the business and increase its profitability further.”

Are the shares attractively priced? With analysts forecasting earnings per share of 9.1p for FY2018, The Gym Group currently trades on a forward-looking P/E of 25. While that’s clearly not a bargain valuation, I don’t believe it’s an unreasonable one either, given the company’s growth. If GYM can execute on its growth plans, I see no reason why the shares can’t keep trending upwards.  

Restore

Another small-cap company with strong growth prospects for 2018 is Restore (LSE: RST). The £640m market cap company provides services such as document storage, document shredding and workplace relocation. The stock is a favourite of UK small-cap specialist Mark Slater,- one of the best stock pickers in the business.

Restore doesn’t have the most exciting business model in the world, yet sometimes, boring investments can be highly successful. In Restore’s case, a £2,000 investment five years ago would now be worth around £10,000, a gain of almost 400%. Are there more gains to come? For long-term investors, I think there could be.

The company stated in September that the second half of 2017 had started well and that the Board expected to deliver a full-year performance “slightly ahead of previous expectations.” Analysts expect the momentum to continue in 2018, with revenue and net profit growth of 6% and 15% forecast respectively. A dividend hike of approximately 24% is also currently anticipated.

What about the valuation? The shares currently trade on a forward-looking P/E of 22.1, which, like The Gym Group’s valuation is not a bargain. However, at the same time, I don’t think that price metric looks excessive either, given Restore’s growth track record and future prospects. A glance at the chart reveals that the share price has been trending upwards slowly for around eight years now. If the company can keep growing its profits, there’s no reason this upwards trend can’t continue.

The post 2 small-cap stocks poised for strong growth in 2018 appeared first on The Twelfth Magpie.

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• 2 stocks to consider buying to tap into a booming £279bn market

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.

Strong growth

The AIM-listed group continued its strong growth in turnover with revenues 57% higher than the previous year at £86.9m and adjusted pre-tax profits up 59% to £15.3m, compared to £9.6m for the same period a year earlier. However, much of the strength of these figures was due the impact of the acquisition of PHS Data Solutions in August 2016. Nevertheless, organic growth across the business was 7% over the period. The positive results sent the shares 4% higher by mid-afternoon.

Restore provides document management and relocation services to offices and workplaces in both the public and private sectors. The Document Management division comprises document storage (both physical and cloud storage), shredding, and scanning businesses, while the Relocation division is dominated by Harrow Green, the UK market leader in office relocation. Both divisions share a very similar customer base.

Further acquisitions

Restore’s strategy is to grow both organically and through further acquisitions, and has so far acquired seven small businesses since the start of 2017. The group has now acquired more than 30 companies of all sizes since 2010, taking it from a market capitalisation of just £8m to £597m.

The business’s success doesn’t come cheap, however. After a near-50% share price gain over the past 12 months Restore is now trading on a P/E rating of 24. However, this drops to 21 next year, and in my view still offers good value given the attractive growth prospects.

Build-to-rent

Meanwhile, another AIM-listed business that I believe has exciting growth prospects is Telford Homes (LSE: TEF). The London-focused residential property developer announced record full-year revenues earlier this year thanks to robust demand, with pre-tax profits of £34.1m exceeding market expectations.

Since then the Hertfordshire-based group has achieved further momentum in the build-to-rent sector and is assessing a number of new development opportunities to add to its £1.5bn development pipeline. According to management, the business also remains on track to exceed £40m in pre-tax profits for the current year to March 2018, and £50m the following year, having already secured over 80% of the anticipated gross profit for 2018 and over 60% for 2019.

Telford’s shares have performed well of late, rising in value by more than a quarter over the past year, but are still trading far too cheaply at just eight times forward earnings. Dividend payouts have also been rising rapidly in recent years, with a prospective yield of 4.3% enough to attract the attention of income investors as well as those looking for capital growth.

The post Two small-cap growth stocks that could make you brilliantly rich appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Bilaal Mohamed 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.

Morses Club (LSE: MCL) continued its recent breakneck ascent in Thursday trading following a frenzied reception to latest trading details.

The stock was last dealing 12% higher from the prior close at fresh record highs. In total the financial giant has gained close to 40% in value during the past three weeks alone, and I do not expect investor appetite to run out of steam any time soon.

Morses Club – the country’s second-biggest home collected money lender – advised today that it issued £82.2m worth of credit during the 26 weeks to August 26, up 25% year-on-year and thanks to recent territorial expansion. By comparison, credit demand had risen 16% in the same 2016 period, to £66m.

The company is making terrific progress in expanding its territorial footprint, and advised that “the territory builds in-progress to date are performing ahead of management’s expectations set at the beginning of the year, and it is anticipated that this increased level of investment will not have an adverse impact on earnings expectations [in fiscal 2018].”

The company chiselled out a new loan facility last month to keep its expansion programme rolling, and it has eyed up 400 new agent territory builds in the current fiscal period alone.

In other news, the Leicestershire firm saw the number of customers on its books swell by 12% in the period, to 233,000, while its gross loan book also improved 12% year-on-year.

Morses Club has made a concerted effort to improve the quality of credit on its books and, as a result, it saw the proportion of loans attributable to its highest-tier borrowers rise 7% from a year earlier.

Jaw-dropping value

The lending leviathan is clearly making brilliant progress and so, unsurprisingly, the City expects the rate of earnings growth to steadily improve. For the year to February 2018, Morses Club is predicted to record a 7% earnings improvement, and to follow this with an 11% advance in fiscal 2019.

And current predictions make the business brilliant value for money — the company sports a P/E ratio of just 12.5 times, well under the widely-considered value benchmark of 15 times or below.

Furthermore, there is plenty for dividend investors to get stuck into as well. A predicted 7p per share reward for this year would mark a meaty upgrade from last year’s 4.3p payout. This figure also yields a stunning 4.8%. And the yield marches to 5.2% for next year thanks to expectations of a 7.6p dividend.

Record breaker

Restore (LSE: RST) is another possible growth hero I reckon investors need to consider right now.

In 2017 the records and documents management provider is predicted to deliver an 18% earnings improvement. And an additional 13% climb is predicted for next year.

A consequent forward P/E ratio of 23.3 times is clearly quite high on paper, but I reckon Restore is worthy of such a premium given that demand for its storage services continues to boom, and that this has much more room to grow. It advised last month that, at its Document Management arm, its core records management division “traded robustly” in the first half, while its Datashred and Scan divisions are also performing well.

The post Two growth stars that could make you brilliantly rich appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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.

I actually identified IQE as a stock to watch back in mid-January, in my article 2 cheap technology small-caps for 2017. The company had released a strong trading statement in December, and on a P/E ratio of under 14, the valuation looked appealing. I commented that “the company still looks attractively valued at the current price and it would not surprise me to see the share price run further this year.“

Strong momentum 

Well the share price certainly has run further this year, for several reasons. The company released strong final results in March, followed by an upbeat trading statement on 20 July in which it stated that “overall wafer sales are expected to grow by c.16% against H1 2016″ and that “the Group has multiple high growth opportunities ahead.”

Moreover, rumours that IQE technology will be featured in the soon to be released Apple iPhone 8 have clearly boosted demand for the stock. A deal with Apple could be a game changer for the company, however, no formal announcement has been made yet. 

So with this fast-growing technology stock ‘triple-bagging’ this year, is it too late to buy now?

While IQE no doubt looks like an exciting company, personally, I’d be a little hesitant about jumping on board the stock now. A look at the three-year chart shows that the share price has risen in an exponential fashion in recent months, and with City analysts forecasting earnings of 3.27p per share for FY2017, the stock is trading on a lofty forward looking P/E ratio of 40 at present.

While high-quality small-caps do often trade at higher valuations than their slower-moving larger peers, a valuation of that magnitude leaves little margin for error. In other words, if the company misses analysts’ expectations, investors can get their fingers burnt.

So I’m going to continue to watch IQE from the sidelines for now. The company looks very interesting, however, the valuation is a little too high for my liking at the moment.

A more reasonable valuation 

One small-cap that does look attractively valued, in my opinion, is Restore (LSE: RST). The £550m market cap company provides services to offices and workplaces in the private and public sectors, specialising in document storage, document shredding, and workplace and IT relocation.

Restore has grown quickly in recent years, through both organic expansion and acquisitions, and revenues have climbed from £54m in FY2013 to £129m last year. Analysts forecast revenue of £169m this year and earnings of 21.1p per share, which at the current share price, places the stock on a more reasonable forward P/E ratio of 23.5.

Restore has paid out an increasing dividend for the last five years, and while the yield isn’t high at just 0.8%, dividend growth of 300% over the last half decade is impressive. This is a sign that the company is profitable, generating cash, and in sufficient financial health to return excess cash to shareholders.

The stock has been a good performer this year, rising approximately 25%, however I believe there could be more upside to come over the medium-to-long term.

The post I tipped IQE plc as a stock to watch in January, but wouldn’t buy it now appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

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

Records and document manager Restore (LSE: RST) has failed to make a ripple in Monday business despite the release of reassuring trading details. Indeed, the stock was last fractionally lower from last week’s close.

But this comes as no little surprise as investors draw breath following Restore’s rapid share price ascent of late. The Redhill company has risen 11% in the past six weeks alone and touched fresh record peaks above 430p per share earlier in May.

Restore chairman Sir William Wells said today: “I am pleased to report that 2017 trading has started well across the group, with the benefits of the acquisition of PHS Data Solutions in August 2016 being delivered in line with expectations.”

The recently-purchased PHS scanning and shredding division provides Restore’s Document Management division with additional scale. Wells added that the arm — which also incorporates Restore’s core records management operations — is “trading well.”

Elsewhere, trading at Harrow Green (the heart of the Relocation division) is trading in line with expectations, Wells noted. And promisingly, the firm’s toner cartridge recycling arm ITP “is showing improvement following its poor performance in 2016,” according to the release.

Today’s update certainly gives me more belief that Restore, which already has a rich record of double-digit earnings expansion, can keep its bottom-line momentum going. And my confidence is shared by the City, which expects the storage specialist to carve out growth of 17% and 13% in 2017 and 2018 respectively.

I reckon a subsequent forward P/E ratio of 20 times is great value given the rich earnings pedigree, not to mention the terrific profits potential of recent acquisitions across the business.

Flying high

I also believe FTSE 250 star SSP Group (LSE: SSPG) has a bright future as new business blooms all over the world.

Like Restore, SSP — which provides food and other traveller comforts at airports and railway stations — is no stranger to excited investor appetite, the stock topping out at all-time highs above 480p per share. The stock has gained a quarter in value since the turn of the year alone.

And perky share picker faith was vindicated by last week’s forecast-beating half-year update. SSP advised that revenues soared 19.6% during October-March, to £1.07bn, with like-for-like sales rising 2.9% in the period.

The company advised that new business levels rose 3.4% last year, up from 2% the prior year thanks to a spate of store openings. New contract gains in North America exploded 11.1%, for example, and SSP has a number of juicy new contracts in the pipeline to keep revenues rolling.

Following last year’s return to growth, the Square Mile’s army of brokers expect SSP to keep the run going with advances of 13% in the year to September 2017, and 11% in the following 12 months.

And similar to Restore, SSP subsequently deals on a heady paper valuation, the firm sporting a forward P/E ratio of 27.3 times for the current period. But I reckon the travel titan is a similarly-appetising pick thanks to its exciting expansion strategy.

The post 2 momentum stocks expected to deliver double-digit earnings growth appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of SSP Group. 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.

Strong profit growth

£478m cap office services provider Restore (LSE: RST) has two divisions: Document Management and Relocation. As it sounds, the former is mostly concerned with providing both physical and cloud storage for important papers and evidence. The latter helps businesses of all sizes in moving IT systems while also providing data destruction and hardware disposal services. 

If what the company does has you reaching for a pillow, the performance of its shares since last May should jolt you awake. In 12 months, shares in Restore have climbed 34%. Go back even further and since the aftermath of the financial crisis, they’ve returned more than 2,100% in capital gains alone.

March’s full-year results made reference to group revenue increasing 41% to just over £129.4m with group adjusted operating profit before tax rising by the same percentage to £23m.

Broken down, performance at Document Management was particularly strong with revenue jumping 65% and adjusted operating profit up 46%. Going forward, the recent acquisition and integration of PHS Data Solutions should help generate healthy returns for the scanning and shredding elements of this division.

Although not quite as impressive, market-leading Relocation still managed to grow revenues by 6% and adjusted operating profits by 17%.

On 20 times 2017 earnings, Restore’s shares may not be cheap but I think this might be a price worth paying for such a reassuringly stable company. Although a yield of just under 1.2% is fairly negligible, it’s worth mentioning that the dividend was hiked by 25% last year — a clear sign of confidence.

With analysts predicting this year’s net profit to be over four times what it was in 2015, I think Restore still offers considerable upside.

Significant progress

Textile rental firm, Johnson Service Group (LSE: JSG) gives investors another chance to benefit from a fairly dull but profitable niche.

In 2016, Johnson’s revenue grew 36.4% to £256.7m with adjusted profits before tax coming in at £33.8m — just over 45% higher than in 2015. While some of the latter can be attributed to organic growth, the company’s bottom line also benefitted from strategic acquisitions in the hotel linen rental market which were “immediately earnings enhancing”.

Last Thursday’s AGM statement reflected that the business remains “on track” to meet management expectations for the year while reiterating that January’s disposal of its underperforming retail dry cleaning business now allows Johnson to focus on expanding its higher-margin textile rental operation. 

Given recent numbers and outlook, it’s unsurprising that shares in the £487m cap have become more popular. They’re up 43% since May last year.

Any drawbacks? Well, Johnson did have £99m of debt on its books at the end of 2016 (compared to £20.6m net profit). A yield of 2% will also be of little interest to income investors, even if dividends have been subject to consistent double-digit hikes over the last six years (including 19% last year). 

That said, at 17 times earnings for 2017 — assuming 31% growth is achieved — Johnson Service Group still looks reasonably valued and should appeal to those who, while attracted to smaller companies, still prefer those offering relatively low capital risk.

The post 2 small-cap stocks that prove boring is beautiful appeared first on The Twelfth Magpie.

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Paul Summers 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.