Operating profits before amortisation rose by 18% to £37.8m for the year to 31 March, while revenue increased by 19% to £248.7m. The impressive growth was supported by improving infrastructure, housebuilding and construction markets, which more than offset continued weakness from energy and mining markets.

Optimistic

Moreover, the Harrogate-based equipment rental specialist is optimistic about the future. Neil Stothard, Vp’s chief executive, said the business has “good momentum” in 2017, with growth set to be enhanced by the two acquisitions it made earlier in the year.

“Notwithstanding the increased prospect of inflationary pricing pressures, the UK election and Brexit negotiations, subject to a stable economic backdrop, Vp is well positioned to deliver further progress for the business,” he added.

Looking ahead, I reckon Vp shares will act as a good proxy for the UK construction market. And as I expect to see continued growth in that market over the next few years, due to higher infrastructure spending and an increasing number of new housing starts, I’m bullish on the firm.

Although its shares are already up 16% since the start of the year, valuations remain tempting. That’s because, despite expectations of earnings growth in the mid- to high-single digits over the next two years, shares in Vp trade at just 10.9 times its expected 2018/19 earnings.

Revenue miss

Meanwhile, shares in identity data intelligence specialist GB Group (LSE: GBG) fell by as much 5% in early afternoon trading on Tuesday after the firm reported revenue growth that fell short of analysts’ expectations.

Revenue increased by 19% to £87.5m, against City forecasts of £87.7m, while adjusted operating profits rose by 27% to £17m. GB also announced a 13% increase to its proposed dividend for 2017 to 2.35p per share.

Structural growth

Despite the revenue miss, I remain positive about the exciting structural growth opportunities for the firm. GB Group provides ID verification services to companies and governments, which enables them to detect fraud, verify data and help protect the more vulnerable people in our society. And due to growing concern and awareness of cybercrime and identity fraud, there’s huge potential for the firm to cash-in on this rapidly growing market.

GB is mindful that data intelligence is a business that benefits from global scale, which explains why the firm has been making great strides in expanding its international presence. Its international revenues share rose from 26.4% last year, to 31.1%, with the firm having secured new contract wins from major blue-chip firms such as Saxo Bank A/S and Lufthansa.

Looking ahead, it intends to grow its capability with its acquisitions of IDscan and PCA Predict, and this is expected to widen cross-selling opportunities and help it to forge stronger relationships with existing customers.

GB Group seems rather expensive with shares in the company trading at 29.8 times its expected earnings in 2018/19. However, that’s to be expected for a quality structural growth play.

The post These 2 growth stocks have further room to run 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
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• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Jack Tang 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.

Show me the dividends

The London-focused group also revealed that on average, lettings had been secured at 6.9% ahead of December 2015 ERV, with vacancy rates remaining low at just 3.3%. Meanwhile Derwent is continuing to make progress with its major development programme under construction, of which 400,000 sq ft is due for completion by the second half of next year, with 66% already pre-let. An additional 620,000 sq ft is due for completion in 2019, including the Brunel Building in Paddington, central London.

In the second half of the year Derwent sold three properties for a total consideration of £130.1m, and on average these have been in line with June 2016 book values. But the company has admitted that the EU referendum introduced considerable market uncertainty, and together with the rise in Stamp Duty Land Tax in March, and recent confirmation of the higher business rates from April 2017, it has had a negative impact.

Derwent London has been operating as a Real Estate Investment Trust since 2007, but despite shareholder payouts being increased every year, the dividends have failed to keep up with the soaring share price, resulting in disappointing yields for income seekers. Derwent’s shares have looked expensive for quite some time, and at the end of 2015 the company’s was trading at 52 times actual earnings.

The prospective yield looks far healthier at the moment following this year’s share price slump, but at just 2% is still well below what I would expect from a property investment firm. In my view, there are plenty of other property investment firms out there with more modest valuations and healthier yields.

Premium valuation

Trading systems provider Fidessa Group (LSE: FDSA) is another mid-cap firm that has recently highlighted the uncertainty it faced as a result of the Brexit vote. However, the Woking-based software firm derives more than 60% of its revenue from outside Europe, and believes it remains well positioned to benefit from any continued weakness in sterling, providing further support for its strong cash generation and dividend policy.

The software group, which provides trading, investment and information solutions to the financial community, has seen little or no earnings growth over the last four years, and yet commands a premium valuation. And although market consensus suggests a return to growth this year, this will be no more than single-digits, and certainly not deserving of its high P/E rating of 28.

The post The most overvalued stocks in the FTSE 250? 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?

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Fidessa. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Troubled estate agent

Shares in Countrywide (LSE: CWD), the UK’s largest estate agency group, gained 13% on the release of first-half figures, to 289p. The shares are, admittedly, still down 48% over the past 12 months, having received a bit of a kicking following the EU referendum result. But could today’s response suggest they’re oversold?

The company reported a 25% fall in adjusted pre-tax profit from a year ago, to £21.8m, and a 22% fall in adjusted earnings per share to 8p as the London market has stalled. We heard of a “market slowdown evident in May/June 2016 in the run up to the EU referendum,” with chief executive Alison Platt telling us that “since the referendum result this has become more marked in London, the South East and expensive prime markets.“

The company warned it won’t be able to match last year’s earnings levels, so the analysts’ consensus of an 8% rise in earnings per share now has to be scrapped. But even a 10% fall in EPS would still leave the shares on a low forward P/E of 10. With dividends likely to be healthy, Countrywide looks like a decent long-term candidate.

Computer security

Meanwhile, Sophos (LSE: SOPH) shares are up 5.8% to 242p after the computer security specialist reported a “strong first-quarter performance,” with “significant cash generation.“

With billings up 25.2% to $141.9m, revenue grew by 12.2% to $127.4m and by 11.9% at constant currency rates (CCR). Cash EBITDA was up 55.2% (48.6% CCR). Free cash flow of $28.8m was far more impressive than the $3.7m outflow recorded at the same stage last year.

Chief executive Kris Hagerman spoke of “our confidence in the outlook for the full financial year,” as the company “expects to deliver mid-teens percentage billings growth on a like-for-like basis” for the full year.

The shares are on a lofty forward P/E of 38 for the full year, but it’s still early days for a company that only floated in July 2015 and it’s surely a strong growth prospect — but difficult to value right now.

Brexit bargain?

Investment manager Henderson Group (LSE: HGG) suffered a sharp fall as a result of the EU referendum, but its shares have started to come back a little, and first half results today have pushed them up another 2% as I write, to 227p.

Henderson told us “retail outflows accelerated considerably in the immediate aftermath of the UK’s referendum on EU membership,” but that was mitigated to some extent by the diversity of the firm’s product range. The result was a net outflow of £2bn, though assets under management of £95bn were up 3% since the end of December.

Underlying pre-tax profit dropped 14% to £100.5m, with underlying earnings per share falling 20% to 7.1p. But the company’s capital easily exceeded its regulatory needs, and the first-half dividend was lifted by 3.2% to 3.2p per share.

Henderson shares are valued at 15 times forecast earnings, and there’s a dividend yield of 4.6% on the cards. That’s probably a fair valuation, but with the uncertainty ahead I think there are better financial services options out there.

The post Three risers to buy on today’s results? 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?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Pessimism priced in

The thing is, in these tough times when the final extent of banking penalties for past misbehaviour is still an unknown, I’m really not so much interested in this year’s dividend as in future ones — and I’m encouraged by Barclays’ longer-term expectations to “pay out a significant proportion of earnings in dividends to shareholders over time“.

The 3p per share that Barclays intends to pay this year and next would be covered 5.6 times by forecast 2016 earnings and 7.6 times on 2017 predictions, which is massively over-covered in comparison to long-term requirements — even if Barclays aimed for longer-term cover of two times, which would be above the likely sector average, we’d be looking at yields getting up towards 8% or so.

That’s largely because the share price has taken a pummelling, losing 40% over the past 12 months to 145p. That puts Barclays on a forward P/E of only nine for this year, dropping as low as six on 2017 forecasts — and to me that means the current share valuation has far more pessimism built in than is warranted. And I see Barclays shares now as one of the best dividend bargains for 2020 and beyond.

Building profits

The housebuilding and construction sector has been the big success of the past few years, with Galliford Try (LSE: GFRD) a shining light. We’ve seen year on year of double-digit rises in EPS with two more forecast, and that’s helped boost the share price by 235% in five years — though a 24% fall back since September last year has left us with a forward P/E of under 11, dropping to nine on 2017 expectations.

That alone sounds like bargain territory, but the big attraction is Galliford Try’s dividends. They’ve been galloping ahead, and it was only the soaring share price that kept last year’s yield down to 3.9%. The year saw a 28% rise in the annual payment, with the board stressing its “progressive and sustainable dividend policy” and telling us it now aims to maintain dividend cover at 1.5 times rather than its previous more cautious 1.7 times.

That bodes well for the yield of 5.6% forecast for this year, and the 7% on the cards for 2017, which would be covered sightly more than 1.5 times by forecast earnings.

Calling customers

Who’s Netcall (LSE: NET), you may well ask. Netcall produces telephone and data services for call centres and customer engagement, and it’s used by healthcare and public-sector organizations as well as the private sector. After a few years of very strong earning growth, we saw EPS fall back by 4% last year and there’s a further drop forecast for this year. That’s taken the shine of the share price a little, and despite a five-year rise of 184% to 49p, there’s been a 7% drop in the past 12 months.

But what I really like about Netcall is that it is generating oodles of cash. At the interim stage in December, net cash had risen to £15.2m, boosted by £1.82m in operating cashflow in the period. Oh, and there’s no debt.

With more cash than it needs to invest in its latest cloud computing developments, the firm is embarking on “an enhanced three-year dividend programme“, leading to a forecast dividend yield of 6.1% this year followed by 7.8% next.

The post Are Barclays PLC, Galliford Try plc And Netcall plc Among The Best Dividend Payers Out There? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Barclays. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Top of the class

With revenue having more than trebled and pre-tax profit being 92% higher on a constant currency basis versus the first half of last year, investor sentiment in Micro Focus has been given a major boost. That’s at least partly because the performance is at the top end of management guidance and also because the company is on track to meet its medium-to-long term goals.

In fact, Micro Focus is aiming to deliver returns to shareholders of 15%-20% per annum over the long term, with modest medium term organic revenue growth also set to be achieved. Key to this is a new management structure that will see the current Executive Chairman staying on until at least April 2018. The company’s two divisions, Micro Focus and SUSE, will have two new CEOs from February next year.

Looking ahead to 2016, Micro Focus is expected to post a rise in earnings of 7% and this puts its shares on a relatively appealing price-to-earnings growth (PEG) ratio of 1.9. With dividends being increased by 10%, it remains a strong income stock with impressive cash flow. As such, further dividend rises seem likely and that will make the Micro Focus 2.5% yield hold greater appeal in the coming years.

With an appealing valuation, a rising income outlook and a bright future resulting from past M&A activity, Micro Focus appears to be a sound buy at the present time.

Back with a bang

ARM (LSE: ARM) also seems to be a very appealing purchase for the long term. Its shares were hit hard in the August correction due to the company’s reliance on sales of smartphones across the globe. And with China being a major market for such products, ARM’s shares fell by over 15% during August.

But ARM has staged an impressive recovery since and it now trades within 10% of its all-time high. Despite this, it still offers relatively appealing value for money as its shares trade on a PEG ratio of just 0.6. Certainly, ARM is becoming a more mature company but with double-digit earnings growth forecast for the next two years, it continues to be an excellent long term growth stock.

Long term pick

Meanwhile tech peer Imagination Technologies (LSE: IMG) has endured a very challenging recent past with the company releasing a profit warning in September. It said first-half trading had been disappointing due to a weak semi-conductor market. As such, it expects to make a loss for the period and while second-half trading is expected to be stronger, the company is unsure as to whether it will fully offset its H1 performance.

Clearly, Imagination Technologies is a high quality company that has posted strong earnings growth in previous years. While its outlook is highly uncertain and its shares are likely to be volatile, its PEG ratio of 0.6 indicates that there is a sufficiently wide margin of safety to merit investment for the long term.

The post Will ARM Holdings plc, Micro Focus International plc And Imagination Technologies Group plc Soar In 2016? 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?

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

If you’ve been a holder since the shares’ peak in late February 2014, you’ll be sitting on an 86% loss today! But who is InternetQ, what does it do, and why the fall?

Mobile software

InternetQ is a software development company based in Greece, doing “marketing and digital entertainment” for mobile networks, and today it released a response to the adverse share price movement. The collapse, it tells us, is due to allegations made in a blog post which the company claims are inaccurate. So who is the blogger and what do they say?

It turns out it’s ace bear-catcher Tom Winnifrith, he who helped expose the problems at Quindell (now Watchstone Group) and Globo. In his latest at ShareProphets, Tom has been been taking a close look at InternetQ’s accounts — and he doesn’t like what he sees.

InternetQ has been reporting impressive annual growth for the past few years, but at the same time it has been raising cash though new equity issues and expanding through acquisition — the most recent was in 2013, a year in which the company reported a 25% rise in EPS (after a 100% reported rise the previous year). Borrowings have been growing too, and the firm reported €18.5 million of bank debt at its interim stage this year — a period in which adjusted EBITDA was reported to have risen by 34%, although cash flow declined by 6%.

One thing the firm has been doing, which Mr W picks up on, is capitalizing a lot of its operating expenditure as software development. That means that instead of going down as a simple cost and just reducing headline profit, the expenditure finds its way onto the books as intangible assets — and Tom estimates that reporting it as conventional ongoing expenses would knock around 50% off 2014’s reported EBITDA.

Trade receivables have been growing too, which is rarely a good sign.

Super low P/E

So what do we do now? InternetQ’s fundamentals look impressive — the shares are trading on a forward P/E for this year of just 4.7, and that drops to only 3.6 based on 2016 forecasts. And EPS growth forecasts put the PEG ratio at just 0.2 and dropping to 0.1 (where growth investors typically see around 0.7 or less as being good).

But there only appears to be one broker issuing recommendations, and that’s InternetQ’s own broker and adviser Canaccord Genuity — perhaps unsurprisingly, they rate the stock as a Buy, and have a price target of 528p on the shares — nearly ten times the current price!

Other things being equal, a very low P/E like this could indicate a stunning bargain. But it can also mean that institutional investors are keeping well away for very good reasons. And in my experience, Mr Winnifrith is pretty good at spotting those reasons.

It’s bargepole time for me.

The post Why Has Internetq Plc Crashed 60% 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?

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

And in the past twenty years, the number of new-tech startups that have lost money for investors is pretty staggering.

Video advertising

Video technologist Blinkx (LSE: BLNX) was an early star with its technology for getting targeted advertising into video content, and the success of targeted ads on static web pages shows what potential there is. Blinkx’s early mover advantage was looking good at one stage, but the firm’s woeful failure to make the move to mobile computing in a timely manner could well have killed its chances completely.

That suggestion is supported by an interim profit warning this week, when Blinkx shocked us with the news that it expects a fall in revenue from $106m in the first half of last year to $85-95m this time round, leading to an adjusted EBITDA loss of $5-8m. That’s significantly behind analysts’ expectations, with forecasts sure to be downgraded now, and led to a 27% share price fall over the next two days, to 19.25p.

Although they’re back up to 21.5p as I write, Blinkx shares have lost 43% over the past 12 months — and they’re down a whopping 90% since their peak in November 2013. Is there a way back for Blinkx now? I wouldn’t put any of my own money on it.

Mobile cash

Monitise (LSE: MONI) is another that made a promising start, into the world of mobile electronic payments — an early mover, it even had Visa Inc on board as a partner and shareholder.

But it’s a business with relatively low barriers to entry, in which the big players have a significant size advantage — Apple Pay is making inroads, and Visa has moved on to develop its own system (and is not expected to renew its deal with Monitise). And rivals Paypoint and Optimal Payments seem to be going from strength to strength.  Monitise has not made a profit yet and is not forecast to do so for at least another couple of years, and there are some amongst us who fear it never will.

The share price has followed Visa’s mooted departure, with a fall of 88% over the past 12 months and a shocking 94% drop from February 2014’s peak, to today’s 6.1p.

Monitise’s chance lay in making sufficient inroads in the very early days, and possibly being snapped up by a big operator for a nice premium. I reckon it’s too late for that now, just as it’s too late for Blinkx to capture the market share its founders once dreamed of.

The post Is It Game Over For Blinkx Plc And Monitise Plc? 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?

Alan Oscroft has no position in any shares mentioned. 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.