Numbers released today showed GDP growth in China clock in at 27-year lows, exacerbating fears of slumping activity across Robert Walters’ important Asian marketplace (a region in which it generates 42% of all net fees).

But are investors worrying a bit too much right now? Is Robert Walters looking a tad oversold? Judging by firm’s latest set of financials I certainly believe so, the business reporting another 5% rise in net fees (at constant currencies) in the second quarter.

Too cheap to miss?

I’m not going to suggest the market’s wrong to have re-rated Robert Walters’s share price. Economic conditions in its territories are worsening and investors need to protect themselves from this. Indeed, the mid-single-digit improvement in net fees last quarter marks a departure from the 10% rise three months earlier and the sustained fee explosions before this.

What I would say, though, is the company’s low forward P/E ratio around the bargain-basement benchmark of 10 times now makes it a top buy today, and particularly given its strong performances in spite of a challenging macroeconomic environment.

Sure, the UK market remains challenging and net fees reversed 8% here in Q2. But performances remained robust in Asia Pacific and Europe (up 7% and 13% from a year earlier) and are offsetting trouble on home shores. In fact, business is picking up momentum for its continental divisions, thanks in no small part to key performances in France, its biggest European market, and another titanic performance in the regional economic powerhouse of Germany.

Should you buy in?

It shouldn’t come as a shock that City analysts are expecting Robert Walters’ mighty record of earnings growth, one which has seen profits jump by 229% over the past five years, to slow a little in the medium term (a 9% rise is currently forecast for 2019).

Disappointing on one hand, sure. But on the other, it’s a testament to the company’s ability to keep improving the bottom-line even in tough times like these. And I believe its dedication to global expansion (it opened another Dutch office last quarter and opened its first in Mexico too) means shareholders can expect the bottom line to keep rising in 2019 and beyond.

One final thing. Broker expectations of further profits expansion underpins predictions that generous dividend growth will keep on rolling too. Last year’s 14.7p per share reward is tipped to rise to 16.1p in 2019 and this creates an inflation-busting 3.2% yield.

I think the market has badly oversold Robert Walters in recent weeks. It remains a compelling growth and income play for long-term investors, in my opinion. I reckon this recent share price weakness makes it one of the hottest dip buys out there.

The post This hated dividend hero’s sunk 22% in July. Is it now an irresistible bargain? appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
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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.

Its rising might in overseas territories has proved to be the fulcrum behind annual earnings rising by double-digit percentages over the past several years. It will also prove to be particularly important as economic conditions in its home territory remain challenging under the weight of Brexit.

I would even go so far as to say that Robert Walters is a share that could help you to retire rich, however our European Union withdrawal goes. The recruitment specialist generates just a quarter of group gross profits from these shores, while around 40% are created from the fast-growing regions of Asia Pacific.

Far-Eastern Promise

Indeed, Robert Walters’s growing influence in these far-flung places, where economic growth rates dwarf those of developed economies and population levels are booming, convinces me that investors can here can look forward to brilliant profits growth in the long term and even help you to retire early.

Gross profits from Asia Pacific leapt 16% (at constant currencies) in 2018 to £159.1m, a result that powered comparable profits at group level some 15% higher to £392m. The small-cap enjoyed another year of record performances in Japan, Hong Kong, Taiwan and Mainland China, in addition to accelerating growth in South-East Asia with Indonesia, Thailand and the Philippines all generating operating profit growth of more than 50%.

With trading in Europe (excluding the UK) also remaining strong — gross profits here leapt by an even-better 24% in 2018 to £100m, because of candidate shortages — it’s not a shock that City analysts are predicting more chunky profits growth through to the end of 2020, at least. This gives income chasers much to cheer about too, as dividends are expected to keep sprinting skywards. Subsequent dividends of 15.8p and 17.6p per share for this year and next are expected to yield an inflation-beating 2.6% and 2.9%, respectively.

In my opinion, Robert Walters’s long-running record of delivering healthy profits and dividends increases isn’t properly reflected by the market, judging by its ultra-low forward P/E ratio of 12.2 times. And this makes it a steal right now.

Dividends galloping higher

Now 4Imprint Group (LSE: FOUR) doesn’t boast the sort of great value as Robert Walters. Heck, its corresponding earnings multiple of 18.9 times actually sits a little way above the widely-regarded value terrain of 15 times and below.

Still, this is a small price to pay in my book given the rate at which revenues are swelling here too. In 2018, sales at the promotional product creator jumped 18% to $738.4m, putting it well on the way to break through the $1bn barrier by 2022.

4Imprint has turbocharged marketing spend to improve revenues. Further investment here, as well as moves to expand its Oshkosh distribution centre in Wisconsin, is also setting it nicely for the foreseeable future. It’s no surprise the number crunchers are expecting dividends to keep ripping higher along with earnings. The full-year payout is predicted to rise from 53.15p per share in 2018 to 59.2p in 2019, and 67.8p next year. Yields subsequently sit at a chubby 2.8% and 3.2%, respectively, and cement my view that the business is a great stock to load up on today.

The post Have £2,000 to spend? These small-cap dividend growth stocks could help you retire early 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.

Of course, it’s not the only stock that could outperform the FTSE 100. Reporting on Tuesday was a company which is performing well and that could offer a wide margin of safety when compared to a number of its FTSE All-Share peers.

Impressive performance

The company in question is recruitment specialist Robert Walters (LSE: RWA). It released third quarter results that showed a 13% rise in net fee income, with the Asia Pacific and Europe regions producing the strongest rates of growth. It has expanded its international footprint during the period, with new offices opened in Geneva and Los Angeles. Its growth has continued to be broad-based across permanent, contract, interim and recruitment process outsourcing.

Looking ahead, the company is forecast to post a rise in earnings of 9% in the next financial year. This puts its shares on a price-to-earnings growth (PEG) ratio of 1.8, which suggests it could offer a wide margin of safety.

With relatively bright prospects for the world economy, the outlook for Robert Walters seems to be improving. The company’s exposure to both emerging and established markets could provide a mix of growth and resilience in the coming years. Since it has a net cash position of £41.3m, and what appears to be a sound strategy, it could offer FTSE 100-beating performance.

Improving prospects

Also offering the opportunity to outperform the FTSE 100 is RBS. The company is forecast to post a rise in earnings of 6% in the current year, followed by further growth of 5% next year. Beyond that, it would be unsurprising for the company to deliver further growth in its bottom line. The PPI deadline could provide a financial boost, while the forecast for a rising interest rate may offer more profitable trading conditions over the medium term.

With RBS trading on a price-to-earnings (P/E) ratio of around 10, it appears to offer good value for money, given its growth outlook. Certainly, many investors may remain cautious about its investment outlook. But with an improving bottom line, it could become an increasingly strong performer over the coming years.

In terms of management’s confidence in its outlook, a rapidly-rising dividend forecast over the next couple of years suggests that they are positive about its prospects. A forward dividend yield of 5.2% for 2019 indicates that the stock may become an increasingly popular income share, which could help to boost its capital growth potential over the next few years. As such, now could be the right time to buy it, with FTSE 100-beating potential ahead.

The post Retire wealthy: why the RBS share price could smash the FTSE 100 appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Royal Bank of Scotland Group. 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.

Sure, their yields weren’t the biggest on the market, but the rate at which they’re likely to continue raising the payout still makes them great bets for income chasers.

There are plenty more dividend heroes to pick from among London-listed shares, of course. This article digs out another couple that look set to keep hiking payouts at an eye-popping rate, National Express Group (LSE: NEX) and Robert Walters (LSE: RWA).

Untroubled Walters

I’ve previously touched upon the exceptional revenues opportunities that Robert Walters’ pan-global presence is affording, a factor that was apparent in the recruiter’s latest set of financials.

The company sources almost three quarters of net fees from foreign shores, providing the sort of diversity essential for reliable earnings and thus dividend growth. And the AIM-quoted business continues to deliver brilliant growth across its territories, and particularly so in Europe where net fee income galloped 26% at constant currencies during the first half of 2018, to £48.9m.

What’s more, while conditions remain tough for many of its competitors in the UK, Robert Walters continues to go from strength to strength. In this territory, net fee income rose 9% to £52.6m between January and June, and expansion via a new office opened in Leeds underlines the company’s confidence in its home territory.

Reflecting its impressive performance, the City expects it to report earnings growth of 6% in 2018 and 9% next year, meaning that dividends are predicted to rise to 13.9p this year from 12.05p in 2017, and to 15.4p in 2019. Consequently yields stand at a handy (if unspectacular) 1.8% and 2% respectively.

Bus in stunning returns

Robert Walters deals on a forward P/E ratio of 17.1 times, sitting just above the widely-considered value territory of 15 times and below. While I believe the staffing giant demands a slightly-toppy rating, those seeking classic value may want to visit FTSE 250 share National Express instead.

Its long record of earnings growth is expected to continue with an 11% rise in 2018, meaning it deals on a prospective P/E ratio of 12.5 times. What’s more, with profits anticipated to keep rising beyond the near term — a 6% profits advance is estimated for 2019 — dividends should continue their upward movement, or at least according to the number crunchers.

A 14.9p per share reward is anticipated for 2018, up from 13.51p last year and yielding 3.7%. Next year a 16.1p payout is expected, yielding a fatty 4%. And if latest trading details are anything to go by, the stage would appear set for further chunky dividend expansion.

The coach operator punched record pre-tax profits for the January-June period of £80.1m, up 24% year-on-year. North America once again proved to be the engine room for National  Express, where revenue growth came within a whisker of hitting double-digit percentages. And I am confident its diversification into exciting growth territories, helped by ongoing acquisition activity, should keep group profits chugging higher long into the future.

The post Forget the FTSE 100! These 2 dividend growth stocks could help you retire 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.

If they tick both of these boxes, then I can progress with the rest of my research process with the ultimate aim of buying the shares. 

Recruiter Robert Walters (LSE: RWA) is one such business that I believe meets both of the above criteria. Over the past 15 years, the stock has produced a total return for investors of 16.7% per annum, turning an initial investment of £1,000 into £11,000. It also looks as if the company can continue on this trajectory. 

Global growth 

Robert Walters recruits skilled professionals in industries such as financial services and technology, sectors that are likely to see continued high demand for skilled staff, no matter how many low skilled jobs technology replaces.

With operations around the world, it is ideally positioned to capitalise on the rising demand for skilled workers. Indeed, today the company reported that group net fee income for the second quarter of 2018 leapt 18% year-on-year. 

The entire group is growing with the most substantial growth coming from Robert Walters’s ‘Other International’ operations (excluding Asia Pacific and Europe), which saw net fee income rise 29% in constant currency. With the business firing on all cylinders, I’m excited to see what the future holds for the share price. 

At the end of June, the firm’s net cash balance was £22.9m, more than enough to support the current level of dividend, which is currently costing £6.1m per annum. While the dividend yield stands at only 1.9%, analysts have pencilled in payout growth of 15% for 2018 and 11% for 2019. With revenue growth in the double-digits, it certainly looks as if the group can meet these targets. 

A forward P/E of 16.4 might look expensive, but considering historical returns, and future growth potential, I believe that it is a small price to pay for this wealth creating machine. 

Huge opportunity 

Another firm that looks as if it meets the criteria for my retirement portfolio is homebuilder MJ Gleeson (LSE: GLE). 

This company has benefited tremendously from the current housing boom with net profit up nine-fold over the past six years. Shareholders have profited handsomely as well over this period with a total average annual return of 20.6%. The big question is, whether or not the group can continue to produce outstanding returns for investors? 

City analysts believe it can, or at least it can for next two years. Earnings growth of 11% is projected for 2018, and 10% for 2019. 

And I believe that over the long term there is a tremendous opportunity for growth here. Gleeson is still a relatively small homebuilder with only 1,225 homes completed for the financial year to the end of June. In 2017, management set out to double sales to 2,000 homes per year within five years, a target underpinned by the firm’s land bank of 12,852 plots. 

So the firm has the tools to keep earnings growing and with a balance sheet stuffed full of cash, there is also plenty of scope for dividend growth. The payout has already risen five-fold since 2015, and Gleeson’s yield currently stands at 3.7%. With further growth on the horizon, in my opinion, this is one company that’s undoubtedly worth extra research.

The post 2 overlooked small-cap dividend growth stocks for retiring investors 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?

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.

Sure, its share price may have risen 50% over the course of the past 12 months. But a forward P/E ratio of 14.9 times, below the accepted benchmark of 15 times which indicates great value for money, suggests that the FTSE 250 firm remains undervalued by the market.

The specialist recruiter underlined its impressive momentum when it advised in April that net fee income jumped 17% at constant currencies between January and March, to £88.5m. While income rose 6% in the UK, rises of 11% in Asia Pacific and 32% in Europe put this respectable increase into the shade.

Robert Walters has seen earnings surge by double-digit percentages in previous years but, reflecting the stresses in its home marketplace as the economy slows, City boffins are expecting growth to cool to 4% this year before accelerating again next year — an 8% rise is predicted for 2019.

Dividends have grown by 123% over the past five years and the Square Mile expects payouts to keep expanding, albeit at a slower pace than previously. Last year’s 12.05p per share reward is predicted to step to 13.8p in the present period and again to 15.3p the following year.

These figures may be handy rather than spectacular, the projections yielding 2.1% and 2.3% respectively. However, Robert Walters’ brilliant progress in abroad makes it a great bet for those seeking strong and sustained dividend increases year after year.

Open the door to terrific returns

Unlike Robert Walters, Tyman (LSE: TYMN) has endured a much more tumultuous time in 2018 (or since the autumn, in fact) as it has suffered a combination of rising costs and flagging performance on the other side of the Atlantic.

And the door and window parts manufacturer flagged up some of these problems again this month, advising that “input costs, particularly for metals, remain volatile.”

However, there was still plenty to cheer in the latest trading release. Acquisition activity has seen it build a robust foothold in North America and, with the business noting that these markets “continue to expand,” sales at the AmesburyTruth division have risen since the start of the year. And what’s more, its SchlegelGiesse arm has experienced an uptick in its order book from Europe, Middle East, Africa and India (EMEAI) countries, it said.

City analysts are thus predicting further earnings growth in the near-term — rises of 2% and 11% are forecast for this year and next — and this feeds into expectations of more dividend progression as well.

The company has almost doubled the annual payout during the last half-decade, and it is expected to raise the dividend to 11.8p per share from 11.25p in 2017, and again to 12.7p in 2019.

These figures yield a chubby 3.6% and 3.9% respectively. When you throw an ultra-low forward P/E multiple of 12 times into the bargain, I reckon Tyman provides plenty of bang for your buck.

The post 2 dirt-cheap growth dividend stocks I’d buy with £2,000 today 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?

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.

In my opinion, this is an excellent buy for beginner investors because it is a relatively simple business. The group is an international recruitment firm that specialises in finding “the highest calibre professionals” to fill job positions required by its clients. And while recruitment is a cyclical business, in the boom times it is very profitable — as the company’s most recent figures show.

Booming profits 

Last year, Robert Walters reported earnings per share growth of 49.5%, following an increase of 35% in 2016. Off the back of this growth, the company hiked its dividend payout by 42%, and if City forecasts are to be believed, it is on track to report another outstanding performance for 2018. Analysts have pencilled in earnings per share growth of 15% for 2018, with the dividend set to grow by a similar amount.

Based on these City forecasts, shares in the company trade at a forward P/E of 15.3 and support a dividend yield of 2%.

However, I believe that these growth targets are a conservative estimate. A trading update from the company, published this morning, showed 17% year-on-year growth in net fee income for the three months to the end of March. All of the regions Robert Walters operates in reported strong growth, particularly in Europe where net fee income jumped 32% on a constant currency basis. Even uncertainty about the UK’s economic outlook did not hold back growth. Net fee income for UK hiring expanded 6% in constant currency year-on-year for the first quarter.

As well as Robert Walters’ growth, the other desirable quality this business has is its cash generation. At the end of March, the balance sheet was stuffed with £34m of net cash, up 156% on last year and comprising 6.5% of the firm’s market capitalisation.

Buy and build 

Another fast-growing undervalued business I think would be a good pick for beginners’ portfolios is staffing solutions company Staffline (LSE: STAF). 

For 2018, City analysts are expecting the company to report earnings per share growth of 50%, a rate of growth that, in my opinion, is not reflected in Staffline’s lowly valuation of 8.3 times forward earnings. 

As my Foolish colleague Roland Head pointed out at the end of January, Staffline’s earnings per share have grown by an average of 18% per annum since 2011, as the company has augmented organic growth with acquisitions. These deals have helped to offset weakness at the firm’s PeoplePlus division, which provides staff for mainly public sector clients. Profits here fell 10% last year as the group continued to wind down its Work Programme scheme.

Still, Staffline has plenty of other growth avenues available to it. For example, last month the group acquired blue collar recruitment business Endeavour Group Limited, and in February, two other smaller deals were completed, contributing a total of £88m to Staffline’s top line.

With net gearing of just 17% at the end of 2017, it looks to me as if Staffline can continue with this strategy of consolidation for many years to come, and as long as there is not a severe economic depression in the UK, demand for its services should continue.

The post Are these the best growth stocks for beginners? 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?

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 packaging giant has an extremely good track history of earnings expansion, the bottom line having swelled by double-digit percentages in four of the past five years.

City analysts believe this trend will continue with a 33% advance in 2018. And this reading also makes MacFarlane sterling value for money — as well as rocking a forward P/E ratio of 12.4 times, investors can also enjoy a sub-1 PEG reading of 0.4.

A more modest 5% rise is chalked in for next year, but I see scope for this reading to be upgraded and for profits to continue rising at a sprightly pace thereafter.

Box up a beauty

You may not have heard of it but you’ve more than likely handled one of Macfarlane’s products as you’ve excitedly (or not) unwrapped something you’ve ordered online.

The company is a major distributor of a broad range of protective packaging products and, thanks in large part to a number of acquisitions made in recent times, turnover at its Packaging Distribution arm — which is responsible for about nine-tenths of group revenues — jumped 10% in 2017 to £171.8m. Organic sales were responsible for 3% of the rise, a not-too-shoddy result either.

MacFarlane has both the appetite and the financial means to keep the acquisitions coming thick and fast to keep sales moving through the roof. But this is not the whole story. Indeed, through its so-called Innovation Lab it is able to carve out major contract wins by engaging with customers to cut costs and to create bespoke packaging solutions.

As MacFarlane expands its nationwide footprint and product ranges, I am convinced the business should continue to prove a lucrative growth bet long into the future.

Globe trotter

Robert Walters (LSE: RWA) is another little-known growth share I reckon should provide brilliant returns in the years ahead.

Like MacFarlane, the recruitment giant has a long record of bottom line rises and City analysts are expecting this trend to continue with increases of 5% in 2018 and 6% next year. And like the packaging powerhouse, current forecasts also make Robert Walters a decent value pick, the firm sporting a prospective P/E multiple of just 14.7 times.

This is a particular bargain considering the rate at which revenues are growing. The London business noted in January that net fee income jumped 22% at constant currencies during October-December, to £90.5m, the fastest rate of growth since the turn of the decade.

While there is some concern over the UK economy going forwards, Robert Walters’ performance in its home market continues to be impressive and net fee income rose 13% in the last quarter.

But even if it does begin to lose traction at home, share pickers can take confidence from its pounding progress overseas. With sales growing 28% in Europe and 12% in Asia, its international divisions now account for 70% of total net fee income. And measures to turbocharge its headcount across the globe bode well for further growth in its far-flung territories.

The post 2 secret growth stocks I’d stash in my 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?

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.

2018’s off to a good start

During 2017, the firm took customer orders worth just over £184m, which is 38% higher than in 2016. XP Power’s own-designed products drove the success and are proving to be a hit with customers. That demonstrates what a smart move it made by evolving beyond mere sourcing and product distribution and into design and manufacture.

Chairman James Peters said in the report that 2018 is off to a good start with the backing of a strong order book. The firm will benefit from a full year’s trading from its September 2017 acquisition of Comdel, which Peters said “expands our addressable market.”

Comdel specialises in Radio Frequency (RF) power, which adds a high-power capability to the product portfolio. The company plans to acquire more complementary businesses that expand its engineering capabilities and product range over time. So we can potentially look forward to both organic and acquisitive progress in the years ahead.

Let’s not forget the cyclicality in the business, or that XPP is engaged in a constant battle to stay one step ahead of competition from aggressive Asian producers competing on price as well as quality. However, the outlook for 2018 seems bright and there’s no doubt that XP Power is expanding. In October 2017 construction started on a second manufacturing facility in Vietnam to add to the existing capacity in Vietnam and China.

Robust outlooks

Earnings growth looks set to continue for the next couple of years at least, which should help the firm extend its long record of dividend increases. As long as we don’t bump into a full-scale economic turndown anytime soon, the growth story here looks compelling. I’d be tempted to put shares of XP Power into a diversified portfolio alongside recruitment specialist Robert Walters (LSE: RWA), which also released full-year results today.

Its headline figures are good with constant currency revenue rising 14% compared to 2016, and basic earnings per share shooting up 55%. Management expressed confidence in its outlook by pushing up the final dividend for the year a whopping 50%.

Although there’s a lot of cyclicality inherent in the recruitment sector, things are booming right now. If your’e worried about the UK’s immediate economic outlook, it’s encouraging that 71% of the firm’s net fee income came from abroad during the period, and all operating regions grew both net fee income and operating profit. The company operates in 28 countries “including many of the world’s fastest-growing and exciting recruitment markets,” it noted.

Robert Walters has a good record of earnings and dividend growth and 2018 started well with a continuation of 2017’s operational momentum. At some point, the music will stop and the world will plunge into recession with the bottom falling out of the jobs market. But who knows how far away that point is. In the meantime, Robert Walters looks like an attractive potential investment.

The post 2 dividend and growth stocks I’d buy with £2,000 today 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?

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended XP Power. 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.

Since the beginning of January last year, the shares have gained 81% excluding dividends, smashing the FTSE 100 by 75% over the same period. At the beginning of the year, shares in the group supported a dividend yield of 2.8% so if you add in this growth, the stock has outperformed by around 78%. 

But can this continue? Well, if the firm’s fourth-quarter trading update is anything to go by, it can. 

Pushing ahead

According to Robert Walters’ fourth-quarter update, which was published today, net fee income for the fourth quarter of 2017 rose 19% year-on-year to £90.5m from £76.1m, a rise of 22% at constant currency rates thanks to the global economic recovery. The best performing region was Europe, as the area finally starts to pull itself out of its financial slump. For the period Europe posted a rise in net fee income of 31%, or 28% at constant rates, to £22.6m. The UK, despite Brexit woes, posted 13% growth to £26.2m. 

Commenting on the figures, CEO Robert Walters said: “The group delivered another quarter of record results with net fee income growing 22% year-on-year. Growth was once again broad-based across permanent, contract, interim and recruitment process outsourcing across the group’s geographic regions.” 

The strong end of the year means that the group is now well on track to hit City forecasts for growth for the year. Analysts are expecting the company to report an earnings rise of 30% for the third consecutive year. Over the past five years, the firm seems to have avoided all economic pitfalls and has grown earnings over 330%. 

With this being the case, I’m confident that as economic growth around the world picks up speed, Robert Walters can continue to notch up double-digit earnings rises every year. With this being the case, I believe that the firm’s current valuation of 17 times forward earnings may undervalue the business. 

No problems here

SThree (LSE: STHR) is another recruitment business that’s gone from strength to strength over the past few years. 

The company, which is focused on specialist recruitment services in the science, technology, engineering and mathematics industries has grown earnings 150% during the past five years. 

Only a few months ago the firm announced that it was set to outperform this year, following a strong performance in Continental Europe and in the US. The consensus had been predicting adjusted pre-tax profit is £43.8m for the year ended 30 November, but the group now expects to beat this, implying earnings growth of 14% or more for the full year. 

And like Robert Walters, SThree should be able to continue to rise at a double-digit rate as economic expansion picks up around the world. The shares currently trade at a forward P/E of 15.2 and yield 3.8%, so this stock offers a combination of both income and growth. 

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

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• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
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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.