Here I’m running the rule over three terrific growth stocks to buy as well. Come and take a look.

In good health

Spire Healthcare Group (LSE: SPI) is a company that City brokers are predicting big things for. A 20% earnings bump is predicted for 2019, a figure that also leaves it dealing on a dirt-cheap forward P/E ratio of 9.9 times.

This figure is well inside the widely-regarded bargain benchmark of 10 times and not indicative of Spire’s exceptional profits potential as Britain’s ageing population likely drives demand for its private hospital care in the years ahead.

The business may have disappointed in mid-January when it announced that revenues growth would prove elusive in 2018, but signs of stronger trading in the second half have helped investor appetite to recover following an initial blip. And signs of further progress on this front, allied with news on its cost-reduction strategy when it announces full-year results on Thursday, February 28, could help its share price to continue rising.

A dependable earnings grower

Macfarlane Group (LSE: MACF) may not be expected to deliver the same sort of profits growth in 2019 as Spire. It’s expected to report a more modest 10% rise, but this is a projection that’s still not to be sniffed at.

Besides, the long record of earnings growth that the protective packaging giant has delivered over many years makes it worthy of attention from growth hunters. Particularly so as it deals on a prospective earnings multiple of just 11.7 times despite this pedigree.

Indeed, I reckon this low rating may give its share price licence to charge when full-year results are distributed on February 21. If November’s last update is anything to go by we could be in for a treat — back then, Macfarlane said that a sales jump of 13% during January-October meant that pre-tax profits were “well above” the levels of a year earlier.

Profits to double?

If you’re only interested in stocks predicted to report spectacular earnings growth in the near term, then Hochschild Mining (LSE: HOC) might be more to your liking.

City analysts expect the business to report a 94% earnings rise in 2019 because of the bright outlook for precious metal prices. I reckon bullion values could gain further traction in February alone as key macroeconomic and geopolitical issues, like a fresh US government shutdown and additional bickering over Brexit, threaten to blow up, a scenario that would drag the gold producers higher too.

Hochschild managed to raise production for six years on the spin, but total gold and silver output is predicted to fall this year, to 457,000 gold equivalent ounces and 37m silver equivalent ounces respectively. The long-term outlook remains robust as the Peruvian digger ramps up development of its assets like Inmaculada. In my opinion a forward PEG ratio of 0.3 times is exceptional value for a share with such compelling growth prospects.

The post Super growth stocks I’d buy for February (and for 2019) appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

But GlaxoSmithKline (LSE: GSK) has put in a decent 2018 so far too, with a gain of 16%. Yet while it’s still got a long way to go to catch up with it’s big rival’s superior five-year performance, it has had a much better 2018 than some.

Profit squeeze

For instance, a profits warning in early August sent Spire Healthcare (LSE: SPI) shares into a tailspin, and the private healthcare provider’s shares have continued downwards to become one of Thursday’s biggest FTSE fallers. The price was down nearly 10% in early trading, taking the drop since 3 August to nearly 45%.

The original warning said Spire “expects EBITDA for the full financial year 2018 to be materially lower than for 2017,” but the scale of the drop so far has taken investors by surprise. Interim results on 18 September revealed a 20.6% fall to £66.1m, with adjusted earnings per share down a crushing 52.9%.

If that wasn’t bad enough, operating cash flow dropped by 21.5% and net debt rose 5% to £458m.

NHS cuts

The big problem is a decline in referrals from the belt-tightening NHS, with cutbacks in elective surgery (such as hip replacements) leading to a 10% drop in NHS revenues.

For the full year, City analysts are expecting a 44% fall in EPS which would put the shares on a pretty toppy P/E multiple of 19, though an optimistic outlook for 2019 could see a 30% rebound to drop the P/E to under 15.

The question is, are the shares oversold now and do future prospects make Spire look like an attractive proposition? Debt and liquidity are my biggest concerns.

The company has just sold the site of its former hospital at Whalley Range in Manchester for £4.05m (after costs) and that sum will be used to reduce net debt. And at the interim stage we were told that that “robust operating cash flows enabled us to continue to invest in our estate and our systems, as well as maintain the interim dividend” — although the final dividend is forecast to be cut.

I’m cautiously optimistic that 2019 could see some share price recovery, but there could be more pain first.

Recovery

Meanwhile, back at GlaxoSmithKline, its share price underperformance compared to AstraZeneca might seem surprising, especially considering that Glaxo managed a relatively speedy return to earnings growth. EPS has grown by 60% in the past two years, while the share price hardly moved — dropping the P/E from a little over 18 to under 12.

Confidence may well be hit by a couple of years of essentially flat forecasts, with fears perhaps of a double dip for earnings before we see a sustainable recovery.

But I still see Glaxo’s dividend prospects as a great attraction, especially for those investing for pension income.

Though the level of dividend cash has remained fixed during the earnings downturn, forecasts still suggest healthy yields of 5.2% this year and next, and they look well enough covered.

On P/E multiples of a little over 13, GlaxoSmithKline still looks like a top long-term pick to me.

The post Is this FTSE 250 faller set to bounce back and crush the GSK share price? appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. 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.

As a consequence of its profit warning, investor demand for its shares is likely to move lower. At the same time, healthcare industry peer GlaxoSmithKline (LSE: GSK) appears to offer an improving outlook which could help it to outperform the FTSE 100.

Difficult period

Spire Healthcare’s trading update showed that revenue declined by 1.1% to £475m in the first half of the year. EBITDA was around £66m at a margin of 14%, with the company seeing major declines in NHS revenues. They fell by 9.5%, while PMI revenues were down by 0.9% in what was a challenging period for the business. Trading conditions impacted on its financial performance to a greater extent than anticipated, and this situation could continue over the near term.

As a result, it would be unsurprising for the company’s share price to deliver further declines in the short run. Although the business is seeking to improve its clinical quality and could enjoy a competitive advantage over rivals in this regard, investors may now price-in a wider margin of safety due to the difficulties being experienced by the business.

Certainly, there is scope for growth within the private sector, and an increasing focus on this area could boost Spire Healthcare’s financial performance. But with a number of other stocks such as GlaxoSmithKline offering stronger prospects, there could be better opportunities elsewhere within the healthcare industry.

Improving outlook

With the GlaxoSmithKline share price having risen by 19% since the start of the year, it continues to beat the FTSE 100. More outperformance could be ahead, since the business seems to be heading in the right direction when it comes to its strategy. It has a diverse business model and has resisted calls from some investors to split into different entities. In its current state, it offers a mix of growth potential from its pipeline and consumer brands, as well as defensive characteristics due in part to its diverse range of operations.

With GlaxoSmithKline having a dividend yield of around 5.2%, it continues to offer a wide margin of safety. Given that dividends have not risen in recent years, its cover is now at around 1.4. This suggests that dividend growth could restart over the medium term, and this may lead to an improving investment outlook.

Although the FTSE 100’s prospects appear to be sound, buying defensive stocks could be a shrewd move. The next bear market may not be too far away, and companies such as GlaxoSmithKline may perform better in more difficult trading conditions than the majority of their index peers.

The post Here’s why the GSK share price could climb while Spire Healthcare sinks by 20%+ appeared first on The Twelfth Magpie.

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

According to initial indications, Brookfield had valued IWG at £2.5bn, but was initially rebuffed. Discussions continued, but no formal deal was agreed as it seems the two parties could not agree on a price.

Despite this setback, I believe it’s only a matter of time before IWG, which was formerly known as Regus, sells itself to a more substantial peer.

Increasing competition 

Despite being one of the world’s largest serviced office providers, IWG is struggling due to the rapid expansion of WeWork that uses a similar model. Indeed, WeWork has only been in existence for a few years but is already valued at more than $20bn, compared to IWG’s market cap of £2.2bn.

Mark Dixon, IWG’s founder, CEO and currently the largest shareholder, believes the company has what it takes to fend off this young competition. Unfortunately, the figures don’t seem to support this conclusion.

According to a trading update issued by the firm today, revenue across the enterprise at all business centres increased by 9% in the first three months of 2018. Group revenue rose 6.7%, including the impact of new premises. Excluding new office space, mature income declined 3.6% at “actual rates“. During the quarter, 46 new locations were added and it plans to spend an additional £200m on new office space over the remainder of 2018, growing overall space by 11%.

IWG might not be growing as fast as it once was, but the company is still as profitable as ever. Returns on investment on a 12-month rolling basis, for those locations open on or before 31 December 2013, were 17.8%, a desirable ratio for the business.

These returns, coupled with its attractive cash generation, lead me to conclude that it will only be a matter of time before IWG becomes a bid target again and, in the meantime, investors can benefit from the group’s lucrative dividend policy.

 At the time of writing, shares in IWG support a dividend yield of 2.5%, which might not seem like much, but the distribution is covered 2.5 times by earnings per share. Oh, and the company has a history of increasing the payout at a double-digit rate every year.

Time for a takeover? 

Another FTSE 250 dividend stock that I believe is set for a takeover is Spire Healthcare (LSE: SPI).

 I should say that this is not a dividend champion in the traditional sense. Shares in Spire only currently yield 1.6%. However, the payout is covered four times by earnings per share, leaving plenty of room for growth in the years ahead — and flexibility if revenues come under pressure.

With earnings projected to expand by 49% this year and 14% for 2019, it’s entirely possible that management could increase the payout in the years ahead as well, as Spire builds on its capital investments made over the past few years.

There’s also a chance that the company could fall prey to a larger competitor. Last year, the private hospital provider was linked with South Africa’s Mediclinic. Mediclinic, as well as its FTSE 100 peer NMC Health, could return to make an offer for the firm as they continue to expand their private healthcare empires around the world.

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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.

Woodford Investment Management LLP is a major shareholder in UK-focused independent hospital company Spire Healthcare Group (LSE: SPI), which released painful-looking full-year results today. Underlying revenue was up only 1% compared to 2016, operating profit before exceptional and other items slipped almost 15%, net cash from operations plunged just over 30% and adjusted earnings per share crashed 25%. I had to look hard to find a significant ‘positive’ figure, but found one in net debt, which rose just over 7% — the one number we’d like to show a decline!

Demand rising fast

The directors bravely held the total dividend at last year’s level. It seems clear that we are looking for a turnaround in fortunes with this company, which is a major provider to the National Health Service (NHS) and runs 39 private hospitals, 11 clinics and one specialist cancer care centre. Chief executive Justin Ash told us in the report that the firm saw “challenging trading conditions in the NHS segment and a relatively flat insurance market” during 2017. He also owned up that “the business did lose some focus due to issues at our new-build facilities in particular, which distracted from core operations and strategic development.”

However, there were chinks of light during 2017 including “promising growth in Self-pay revenue, patient admissions, and increases in average revenue per case.” The firm’s biggest customer, the NHS, has the power to make or break the trading outcome in any particular period and Mr Ash said that in 2017 “eReferrals accounted for 86% of our NHS revenues, which offset some of the impact from local contract reductions.”  He set out the bull case for investing in Spire by explaining that demand for healthcare provision by the independent sector looks set to continue to rise fast because the NHS remains severely financially constrained.

Perhaps such increasing demand will propel Spire into a turnaround along with funeral-related services provider Dignity (LSE: DTY), which is a firm operating as a kind of backstop in the healthcare sector, so to speak.

Rebased profits

For a long time, we investors assumed that Dignity operated a defensive business with lots of predictable cash flow that it could use to service the debt it needed to consolidate the undertaking industry by buying up the funeral director competition. However, the wheels wobbled under that idea when it became clear that people have endured quite enough of high funeral prices and are now shopping around for the best deal when it comes to dispatching loved ones. The outcome is that Dignity’s earnings are set to crash around 50% during 2018 as it pursues a policy of more-competitive pricing going forward.

At today’s share price around 812p, the forward price-to-earnings ratio is around 12, which is much lower than the ratings in the 20s we’ve been used to. If the firm can keep its rebased level of profits and cash flow steady from here, we could be seeing a decent entry point to hold for ongoing, though less profitable, growth as the company continues its acquisition policy.

The post Is this Neil Woodford stock poised to turnaround along with Dignity plc? appeared first on The Twelfth Magpie.

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Kevin Godbold 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.

That was largely due to a profit warning in September, released along with first-half results. The results themselves weren’t bad, but early revenue growth at the independent hospital group had been driven by NHS referrals, and those were slowing.

There’s a drop in EPS of 23% expected for the year just ended in December 2017, with results due on 2 March. January’s pre-close update confirmed previous guidance, and told us to expect revenue between £929m and £932m, with underlying EBITDA in the range of £149m to £151m.

Net debt stood at around £465m at 31 December, which is a little over three times the mid-point EBITDA estimate. I generally prefer that multiple to come in at around 2.5 times or less, but for a company that’s still a small fish in a big pond with potentially plenty of room to grow, I’m not too disturbed.

Growth opportunities

Spire only floated in 2014, and I expect new growth companies to go through early periods of volatility before their genuine potential settles down. And I’m encouraged by current forecasts.

Though pared back a little from earlier predictions, mooted EPS growth of 7% for 2018 and 11% for next year would drop the P/E to around 12. The modest dividend (currently set to yield 1.6%) is very well covered, and should soon ramp up.

Despite the recent fall, I see Spire Healthcare as having attractive long-term prospects.

Gene Therapy

I was a bit more fortunate in my upbeat stance on Oxford Biomedica (LSE: OXB) last March, and the share price has doubled since I gave it the nod. Priced at 11.5p as I write, the shares don’t yet command anything in the way of P/E valuations as there’s been no profit yet.

The 2017 year is expected to have brought in a pre-tax loss of around £11.6m, but that looks set to change with only a £6m loss forecast for 2018 and a tiny profit by 2019.

The “leading gene and cell therapy group” is in a very exciting area of medical research which is really only in its infancy. It’s risky trying to guess which companies will come to dominate the field, but there are so many potential treatments out there that there must be scope for many competitors

Important deal

Thursday’s news boosted Oxford Biomedica’s prospects, with the firm announcing “a major new collaboration & licence agreement with Bioverativ Inc. for the development and manufacturing of lentiviral vectors to treat haemophilia.“

Bioverativ will gain access to Oxford’s LentiVector and manufacturing technologies, in a deal which is worth a $5m upfront payment coupled with “various milestone payments, potentially worth in excess of $100m” and royalties. I wonder if those Oxford Biomedica forecasts will be upgraded now?

I see Oxford Biomedica as a ‘picks and shovels’ operator in the gene and cell therapy business, offering technology that can be used for a variety of genetic therapies. Whichever treatments are eventually successful, companies which offer the development platforms should do well.

The market response has been a 7.5% share price rise (at the time of writing), but the full potential of this latest development might not have been fully understood. Oxford Biomedica looks a strong long-term buy to me.

The post One growth stock I’d buy alongside this Neil Woodford favourite appeared first on The Twelfth Magpie.

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Alan Oscroft 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 addition, healthcare stocks may provide defensive attributes that could become useful should the current bull market come to an end. With this in mind, here are two healthcare companies which could perform well in the long run.

Improving performance

Reporting on Tuesday was UK independent hospital group Spire Healthcare (LSE: SPI). It released a trading update for the 2017 financial year which showed that it is making progress with its strategy. It expects to report revenue for the 2017 financial year of between £929m and £932m, with underlying EBITDA (earnings before interest, tax, depreciation and amortisation) of between £149m and £151m. Its net debt is expected to be around £465m as at the end of December 2016.

These results would be in line with previous expectations and could cause investors to become more upbeat about the company’s prospects. After all, Spire Healthcare currently trades at what seems to be a discount to its intrinsic value. It is forecast to post a rise in earnings of 5% this year and 12% next year, yet it has a price-to-earnings growth (PEG) ratio of just 1.2. This suggests that it could provide sustainable share price growth in the long run.

With a network of UK private hospitals, the company offers a degree of stability which may become more valuable as Brexit talks progress. Therefore, its share price performance could be strong over the long run.

Buying opportunity

Also offering upside potential within the healthcare sector is opioid addiction specialist Indivior (LSE: INDV). The company has endured a hugely volatile period, with threats to its key brands from generic competition. While this volatility could continue, there could be a buying opportunity for the long run. The company has significant financial strength which may help it to fend off threats to its key drugs, while also providing the opportunity for it to invest in its product offering.

Investor sentiment now seems to have returned to previous highs after a challenging period in 2017. The stock now trades on a price-to-earnings (P/E) ratio of around 14, but with its bottom line expected to have risen by 10% in 2017 it could be worthy of a higher rating within what may become an increasingly popular sector.

With the market for opioid addition being vast and having the potential to grow in the coming years, Indivior could enjoy a tailwind over the long run. While less defensive and stable than many of its sector peers, the potential rewards on offer could be significant. As such, now could be the perfect time to buy it.

The post 2 monster stocks in the making I’d buy today appeared first on The Twelfth Magpie.

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Peter Stephens 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.

An opportunity to buy? 

Shares in Spire are falling today after it was revealed that the company is no longer in merger talks with larger peer Mediclinic International. Even though Mediclinic was interested in its smaller peer, it seems that the two parties couldn’t agree on a price, which resulted in merger talks breaking down. 

Commenting on the breakdown, Spire Chairman Garry Watts said: “The board carefully considered Mediclinic’s approach but determined that it did not reflect the true value of the company and was not in the best interests of shareholders as a whole.“

I believe that this is an excellent opportunity for investors. Spire is the most significant leading independent hospital group in the UK with 39 private hospitals, 10 clinics and two Specialist Cancer Care Centres. 

Over the past few years, management has capitalised on its unique position in the market by expanding its offering into new regions and acquiring smaller peers. Several new premises are being opened this year. Initially these will hold back earnings growth, but City analysts expect the company’s spending to begin to pay off in 2018. After falling by 22% in 2017, analysts are predicting 5% earnings per share growth for 2018. 

Even though this near-term outlook might not look attractive, I believe that over the long term, Spire will become a millionaire-maker stock. The firm is well positioned to grow in the UK market and management has a record of profitable growth. That being said, there are some concerns about the firm’s exposure to the NHS. 

Meanwhile, the shares trade at a forward P/E of only 18, below the Healthcare Providers & Services Industry sector average of 23. There’s a dividend yield of only 1.3% on offer but the payout is covered four times by earnings per share, leaving plenty of room for further rises. 

As Spire returns to growth, I believe the shares should re-rate and when management decides to slow the company’s expansion plan, shareholder returns should quickly materialise. 

Emerging market growth 

Spire has many attractive qualities, but for those investors who are willing to take more risk by investing overseas, Georgia Healthcare (LSE: GHG) might be a better buy. 

Listed in London, it offers exposure to the fast-growing economy of Georgia via the healthcare sector. The business is one of the largest in the industry and its size (as well as vertical integration) is helping to accelerate growth. 

For the first nine months of the year, it reported a 44% increase in EBITDA and a 26% increase in profit before tax. For the full year, City analysts have pencilled in a 22% decline in earnings per share, thanks to the ramp-up in spending on capital projects. 

However for 2018, growth is expected to return with a vengeance. Earnings per share are projected to rise 91% year-on-year to 17.9p giving a forward P/E of 21. Compared to Spire, this valuation might look expensive, but when you factor-in growth, the shares are trading at a PEG ratio of 0.2, which is exceptionally cheap. 

The post 2 mid-cap growth stocks with millionaire-maker potential appeared first on The Twelfth Magpie.

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Rupert Hargreaves has no position in any 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.

Despite this sharp fall, the group’s underlying business seems fairly healthy. So is this falling knife a potential buy?

Spire needs the NHS

Simon Gordon, chief executive of private hospital operator, believes in a “medium-to-long term growth opportunity in UK private healthcare”.

I suspect Mr Gordon is correct, but the firm’s recent growth appears to have been driven by NHS referrals. These account for about 31% of revenue, but are now falling. This decline forced Spire to issue a profit warning with its half-year results this morning, triggering a sharp sell-off.

Revenue during the second half of the year is now expected to be flat, with profit margins slightly lower than last year.

It’s not all bad

Today’s half-year results weren’t that bad. Revenue rose by 2.4% to £481m, while earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 1.5% to £83.2m.

Net debt was broadly flat at £436m, despite the firm spending £59.5m on new hospitals. This seems to support Spire’s claim of strong cash flow performance, with a reported 97.6% of EBITDA converted to cash.

Just one problem

Nearly a third of Spire’s revenue comes from NHS referrals. About 45% comes from health insurance referrals. Self-pay — where patients without health insurance choose to pay for a procedure — accounts for about 20%.

Today’s results suggest that insurance revenue is flat and warn of a slowdown in NHS referrals. The only hope seems to be self-pay, where revenue rose by 14% during the first half.

My concern is that self-pay growth may not be strong enough to make up for shortfalls elsewhere. I estimate that the shares trade on a P/E of around 16 after today’s slide. I’m not sure that’s cheap enough to justify a buy. I’d stay away until we learn more about trading conditions later this year.

A sure thing?

One of Neil Woodford’s biggest holdings is tobacco giant Imperial Brands (LSE: IMB).

The group’s share price has lagged the FTSE 100 this year, dampening the performance of Woodford’s big income funds. But in this case at least, I’m fairly confident that Mr Woodford’s faith in Imperial is likely to be rewarded.

The tobacco group’s shares are currently trading at a two-year low, having fallen by 16% over the last year. But I think the stock may be reaching a level at which it looks distinctly undervalued.

Imperial’s free cash flow remains formidable. It’s worth noting that the group has used its surplus free cash flow after dividends to repay £1.2bn of debt over the last 12 months. The group’s commitment to 10% annual dividend growth remains in place and a payout of 171p is expected this year, giving a prospective yield of 5.2%.

The stock currently trades on just 12 times forecast earnings for 2017. This compares favourably with rival British American Tobacco, which trades on a forecast P/E of 17 with a yield of just 3.8%. In my view, Imperial could be a sound buy at current levels.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Imperial Brands. 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.

After pondering further, I’ve changed my mind and I think Mr Woodford is right after all — though that won’t be much of a surprise given his track record of success. In fact, after a number of years of declining profits, I can see G4S heading into a new period of earnings growth.

Revenues up

A 6.3% revenue growth from continuing businesses in 2016 translated into a 16.6% earnings rise. Things look to be improving globally, with developed and emerging markets revenues rising, and revenues are up nicely across the company’s divisions.

Speaking of “stronger foundations, growing competitive capabilities and an attractive array of market opportunities,” chief executive Ashley Almanza added: “Our transformation strategy is expected to produce further performance improvements and underpins our aim of delivering sustainable, profitable growth.“

The firm’s 2013 turnaround plan does seem to be bearing fruit, and the City’s analysts are on board with it. Forecasts for the current year suggest a 44% rise in EPS, and give us an attractive PEG ratio of 0.4. That would put the P/E at 16.5, but a further 10% EPS rise penciled in for 2018 would drop that to around 15.

If you’d been smart and bought in at the dip in July last year, you’d now be sitting on a 78% gain after the shares have rebounded to 307p. Is there further growth to come and are the shares still attractively priced? I think so.

Healthcare prospect

Mr Woodford also likes the health and medical sectors, with AstraZeneca and GlaxoSmithKline his top two holdings. And he’s keen on smaller firms in the business too. I’m drawn to Spire Healthcare (LSE: SPI).

Spire, which bills itself as “one of the UK’s leading independent hospital groups,” only floated on the stock exchange in July 2014, and it has the makings of a good long-term growth story. Increasing pressure on the NHS, moves towards outsourcing, and the growth in private healthcare all suggest to me that Spire has an attractive market to target.

In its 2016 results, executive chairman Garry Watts said: “We remain well placed to benefit from opportunities arising from the demographics of UK healthcare and constrained NHS capacity. We expect the group to return to mid-to-high single-digit EBITDA growth from Financial Year 2018 onwards.“

Losses at St Anthony’s Hospital should hold back earnings this year, with the City forecasting a 10% fall. But there’s a 12% rebound pencilled-in for 2018 and that “mid-to-high single-digit EBITDA growth” wouldn’t take long to get earnings growth well under way. Just 7% growth per year from 2018 onwards would see earnings per share doubling in 10 years to around 38p, and would halve the P/E ratio to just 8.5.

Dividends too

We should also see dividends progressing in the coming years. The 3.8p announced for 2018 represented a yield of less than 1.2% on today’s share price of 325p, but that was covered five-fold by earnings, and in these early growth years I’d expect most of the company’s earnings to be ploughed back into expansion.

But that should set it up to become a tidy little income stock in the future too.

The post 2 Neil Woodford growth stocks I’d buy and hold forever appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended AstraZeneca. 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.