For full-year 2015, RWS reported revenues of £95m. By 2016 this figure had risen to £122m, and for 2017, the group reported total revenues of £164m. As sales and profits have boomed, so have the company’s shares. Since the end of 2015, the stock has returned 174%, outperforming the FTSE 100 by 164% over the same period. 

Still time to buy?

After such an impressive performance, at first glance, it appears as if the opportunity to profit from RWS’s success has passed.

However, on closer inspection, I seem that the opposite is true. I reckon the firm’s growth isn’t going to slow down any time soon, and there could still be plenty of upside left for investors buying today. 

According to the company’s year-end trading statement, published this morning ahead of full-year results, management is expecting the enterprise to report revenues of “not less than £305m” for fiscal 2018, compared to £164m in 2017. That’s year-on-year sales growth of at least 85%. 

The City was expecting the firm to report sales of around £300m for the year, so it looks as if the company is set to beat analyst expectations for growth on both the top and bottom lines. Analysts have pencilled in earnings per share (EPS) of 17.3p for the year, giving a forward P/E of 26.7. 

Room left to run 

This multiple is right at the top end of what I would consider to be appropriate for a growth stock. But RWS isn’t your average growth stock. The company is a world leader in the very niche business of patent translations for the intellectual property and life sciences industries. 

On top of these services, the company also provides “high-level specialist language services” in other technical areas. The group is using its position in these markets to expand into other sections of the tech space. For example, last year it acquired Moravia, a leading provider of technology-enabled localisation services to some of the largest tech businesses in the world. 

This is unlikely to be the last significant acquisition for the firm. RWS is throwing off cash from its high-margin legacy operation, which it’s using to fund the growth of the rest of the group.

To give some example of how profitable the firm is, at the end of its fiscal first half, RWS reported £83m of net debt. According to today’s update, net debt has since declined to £66m. As well as acquisitions, it looks as if the group’s organic growth is also set to continue. In today’s update, the company notes that it’s seeing “increasing momentum across the business which underpins our confidence in delivering further significant progress in the new financial year.” 

The bottom line 

Overall then, it looks to me as if RWS remains a ‘buy’ even after its recent performance. As organic growth picks up and the group continues to expand its offering with bolt-on acquisitions, I believe there’s a strong chance the shares could even go on to double again from current levels.

The post This stock has returned 180% in three years. Is there still time to buy? 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.

Since its 2003 flotation, it has posted 14 successive years of growth in sales, profits and dividends. Today’s update told us the group “performed in line with the board’s expectations” in the three months to December and that it’s “confident of further substantial progress in 2018.”

World leader

RWS is the world’s leading provider of intellectual property support services (patent translations, international patent filing solutions and searches). It’s also a market leader in life sciences translations and specialist language services in other technical areas.

The company’s success has been built on organic growth, complemented by selective acquisitions that have strengthened its market-leading position. Its recent $320m acquisition of localisation services specialist Moravia adds an additional profitable, cash-generative division of scale to the group, and further broadens and deepens its business and geographical diversification.

Far too cheap?

The good start to the current financial year reported today prompted little change in the share price (currently 425p, market cap £1.2bn) but puts RWS on track to meet full-year expectations.

City analysts are forecasting earnings per share (EPS) of 18.4p — 29% ahead of last year. The price-to-earnings (P/E) ratio is a tad over 23, while the P/E-to-earnings growth (PEG) ratio is 0.8, which is comfortably on the ‘good value’ side of the PEG ‘fair value’ marker of one. A forecast dividend of 7.85p gives a modest yield of 1.8% but with EPS growing fast, the payout is too. I believe RWS is trading far too cheaply and I rate the stock a ‘buy’.

Premier recovery stock

The progress of main-market-listed FTSE SmallCap firm Premier Oil (LSE: PMO) hasn’t been anything like as smooth as RWS’s. Indeed, it was in the FTSE 250 index, until the collapse of the oil price a few years ago sent its share price and market cap tumbling.

Premier managed to survive the oil rout, thanks to supportive lenders and the outlook is now considerably brighter in an improved oil price environment. The company said in a trading update in November that it’s on track to meet (previously increased) guidance of 75,000 to 80,000 barrels a day for 2017. It also advised that it expects to report 2017 year-end net debt below the $2.8bn level of 30 September.

Also far too cheap?

In December, Premier announced first oil from its Catcher field. It expects production from the Catcher area to increase to 60,000 barrels a day (30,000 net to the company) during the first half of 2018, which it says will help accelerate debt reduction through the course of the year.

City analysts are forecasting EPS of $0.24 (17.3p at current exchange rates) for 2018. At a current share price of 72p, the market cap is £545m and the P/E is just 4.2. With debt now falling, Premier is another stock that looks far too cheap to my eye and one I rate a ‘buy’.

The post Premier Oil plc isn’t the only growth stock trading far too cheaply appeared first on The Twelfth Magpie.

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G A Chester 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.

This is a key reason why ARM (LSE: ARM) is such an appealing stock. It’s now becoming a more mature business, offering a relatively stable financial outlook as well as increasing dividends at a rapid rate. However, it still offers a stunning rate of growth, with ARM’s bottom line forecast to increase by 43% in the current year and by a further 15% next year. And with ARM investing heavily in new market segments such as the Internet of Things, its longer-term growth potential remains highly encouraging.

With ARM trading on a price-to-earnings growth (PEG) ratio of just 1.5, it seems to offer substantial upside potential. Therefore, it remains a super growth stock worth buying for the long term.

Capital gain potential

Also offering upbeat growth prospects is patent translation specialist RWS (LSE: RWS). Its bottom line is forecast to rise by 27% in the current year and by a further 8% next year. Furthermore, RWS has a relatively wide economic moat and with it having a relatively consistent track record of growth, it seems to be an excellent growth play for the long term.

While RWS trades on a P/E ratio of 21, it still offers significant capital gain potential. Investor sentiment remains strong, as evidenced by its share price rise of 58% in the last year. And while RWS is expected to raise dividends per share by 6% this year so that it yields 2.4%, it remains an excellent growth play that has been able to increase its bottom line at an annualised rate of 10% over the last five financial years.

Wait and see

However during this period, connected healthcare software specialist Emis (LSE: EMIS) has been able to grow its bottom line at an even more appealing annualised rate of 12.4%. This shows that it has been an excellent growth play, with its share price soaring by 98% during the last five years.

Looking ahead, Emis is forecast to post strong growth numbers. Its earnings are expected to rise by 8% in the current year and by a further 9% next year. However, with the company’s shares trading on a P/E ratio of 20.7, Emis appears to be rather fully valued at the moment.

Certainly, with uncertainty among investors regarding the global macroeconomic outlook being high, more reliable growth stocks such as Emis could be of real value. But with other growth plays offering better value for money, it may be prudent to await a lower share price before piling-in to Emis.

The post 3 super growth stocks? ARM Holdings plc, Emis Group plc and RWS Holdings plc appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of ARM Holdings and RWS. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Furthermore, RWS is benefitting from positive currency translation and expects to consolidate its market-leading positions within its chosen sectors. As such, it seems likely that forecasts for growth in earnings of 17% in the current year will be increased and this makes RWS’s price-to-earnings growth (PEG) ratio of 1.3 appear to be extremely good value.

That’s especially the case when you consider that RWS enjoys significant barriers to entry and a relatively wide economic moat, thereby providing relatively consistent financial performance. As such, it seems to be a strong long-term buy.

Wait and see

Also reporting today is Tungsten (LSE: TUNG), with the electronic invoicing and analytics company stating that trading in the third quarter was in line with market expectations. Revenues for the full year to 30 April 2016 are expected to be broadly in line with previous guidance, while Tungsten continues to anticipate an EBITDA loss for the year of no more than £15m (excluding one-off items).  Furthermore, Tungsten believes it’s on track to break even on an EBITDA basis by the end of the 2017 financial year, which could be viewed as a positive event by the market.

Despite this, Tungsten’s share price has fallen by as much as 10% today following the release, although it’s still up by a whopping 61% since the turn of the year. While it’s tempting to buy now due to the improved investor sentiment of recent months and the expected improvement in the company’s financial performance, it could be prudent to wait for confirmation of profitability before buying a slice of Tungsten.

Bright future?

Meanwhile, Sainsbury’s (LSE: SBRY) has also been in the news of late regarding its bid for Home Retail. The inclusion of Argos within the Sainsbury’s business seems to be a logical step, since it should create synergies and boost sales at both companies due to the potential for cross-selling opportunities. In addition, it may help to diversify the Sainsbury’s brand away from food retailing and clothing.

Looking ahead, Sainsbury’s is likely to benefit from an improving UK consumer outlook. With inflation being low and wage growth on the up, disposable incomes are rising in real terms and this could help to push some customers back towards mid-market operators such as Sainsbury’s and away from no-frills supermarkets such as Lidl and Aldi. And with Sainsbury’s trading on a price-to-earnings (P/E) ratio of just 11.3, it appears to offer good value for money given its bright long-term future.

The post Should You Buy J Sainsbury plc, Tungsten Corp PLC And RWS Holdings plc After Recent News Flow? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of RWS and Sainsbury (J). The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

The improved performance is mainly due to organic growth across the company’s activities, with strong results from the core patent translation services. This division benefitted from the conversion to sales of clients won in earlier periods as well as a spike in patent applications arising from the 2011 America Invents Act.

Encouragingly, RWS has a net cash position and, looking ahead, it has an active acquisition strategy and a progressive dividend policy. As such, and with it operating within a niche area, its shares appear to be worth buying for further capital growth as well as for their diversification potential.

Similarly, water services company Pennon (LSE: PNN) also looks set to beat the index over the long run. It offers a very appealing mix of income and growth potential, with it currently yielding 4.2% and being forecast to increase dividends per share by almost 7% next year. And, with Pennon having grown its shareholder payouts at an annualised rate of 6.5% during the last five years, investors in the company should be reasonably confident that dividend growth will exceed inflation over the long run.

In addition, Pennon is also due to increase its earnings by 11% next year, which proves that utility companies can hold their own when it comes to increasing profitability. And, with the market being somewhat nervous regarding the liberalisation of the water services market in 2017, Pennon appears to be trading at a discount to its intrinsic value. It currently has a price to earnings growth (PEG) ratio of 1.8 which indicates that it is a buy.

Meanwhile, AstraZeneca (LSE: AZN) has been rather disappointing in 2015, with its shares underperforming the FTSE 100 by 6% since the turn of the year. A key reason for this is the erosion of the bid premium which had been priced in during recent years, with Pfizer making multiple bids for the business prior to the proposed closure of a US tax loophole.

Of course, a bid is still possible. AstraZeneca continues to invest in a rapidly improving pipeline which is markedly different to that of even a few years ago. And, with the company having excellent cash flow and a sound balance sheet, it remains a potential bid target – especially since a number of major pharmaceutical companies are struggling to grow their sales at the present time. Trading on a price to earnings (P/E) ratio of just 15, AstraZeneca seems to offer excellent upward rerating potential thereby making it a strong buy at the present time.

The post Why AstraZeneca plc, RWS Holdings plc And Pennon Group plc Are Set To Beat The Index appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of AstraZeneca, Pennon Group, and RWS. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Two notable examples of high quality companies are translation specialist RWS (LSE: RWS), and institutional stockbroker Numis (LSE: NUM). They are both highly profitable businesses, offer excellent value for money and pay relatively high (and sustainable) dividends.

In fact, RWS has been profitable in each of the last five years and, looking ahead, it is forecast to post a whopping 85% rise in its bottom line during the next two years. That’s a superb rate of growth and, despite this, RWS’s shares trade on a price to earnings (P/E) ratio of just 19.9. As such, when the company’s growth prospects and valuation are combined, it equates to a price to earnings growth (PEG) ratio of just 0.5, which indicates that superb growth is available at a very reasonable price.

Furthermore, RWS is expected to significantly increase dividends as a result of its improved profitability, with the company set to yield 3.3% in the current year. And, looking ahead, it would be of little surprise for there to be further dividend increases in future, since RWS’s dividends are presently covered 1.5 times by profit, which indicates that they are very sustainable.

It’s a similar story with Numis. It paid out just 44% of profit as a dividend last year, but that still equates to a very appealing yield of 4.2%. In fact, despite being a relatively cyclical play, Numis remains a hugely enticing income stock and, during the last five years, it has paid out around 34% of its share price from five years ago as a dividend. And, despite having posted a capital gain of 96% in that time, Numis still trades on a P/E ratio of just 10.5, which indicates vast upward rerating potential.

Meanwhile, mobile payments specialist Monitise (LSE: MONI) offers none of the above. Unlike RWS and Numis, it has not been profitable in any of the last five years, is forecast to remain loss-making in each of the next two years, pays no dividend and does not appear to have a clear strategy to become a very profitable and stable business. Furthermore, when it reviewed its strategic options earlier this year, no bids were made for the business.

Certainly, Monitise has a great product, but it is very difficult to label it a high quality business. As such, RWS and Numis appear to be far better places to invest at the present time, with their low valuations and more stable financial performance offering a more favourable risk/return ratio for long term investors.

The post Why I’d Sell Monitise Plc And Buy RWS Holdings plc And Numis Corporation PLC appeared first on The Twelfth Magpie.

More reading

• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?
• This 7.5% yielding passive income share is at a 13-year low! Time to consider buying?

Peter Stephens owns shares of Numis and RWS. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.