Underlying earnings per share climbed 22.8% to 25.8p, while the interim dividend was lifted 19% to 9.3p.

Can this company continue to generate the kind of sales growth needed to drive the shares higher?

Two giant opportunities

One advantage Superdry has over some UK high street rivals is the global appeal of its brand. The firm’s fashion is already sold in 148 countries. However, until quite recently there have been two big names missing from the list — the USA and China.

The company is now working to put this right and has begun a “disciplined roll-out” in these two giant-sized markets. I believe that similar success in these two markets to that achieved elsewhere could have a big impact on profits.

Analysts certainly expect further strong earnings growth. Earnings per share are expected to rise by 16% to 96p this year and by a further 17% to 112p in 2018/19. These forecasts leave the stock on a forecast P/E of 21, falling to a P/E of 18 next year.

This may seem expensive, but in my view it’s worth remembering that this business typically generates payback on new stores in just two years. I believe the shares could still represent good value at current levels.

Where next for this triple-bagger?

I’m less confident about triple-bagging tech stock IQE (LSE: IQE), which supplies “advanced wafer products and wafer services to the semiconductor industry”. Although this firm’s shares are still worth three times as much as they were one year ago, they’ve fallen by nearly 25% since mid-November.

I suspect this is a sign that savvy investors are taking profits, believing — as I do — that IQE’s valuation has run ahead of itself.

That doesn’t mean the growth potential here isn’t real and impressive. I think it could be.

For example, in December IQE reported that sales of its Photonics products were expected to have doubled in 2017. The firm believes it has a “sustainable lead in this market” thanks to its intellectual property and its ability to scale this complex technology.

Key risks

My concern is that investors in this Cardiff-based firm face some risks that aren’t reflected in the current share price. For example, the 2016 annual report shows that 45% of sales come from two customers. The loss of a major customer can be devastating for companies like IQE, as we saw with Apple supplier Imagination Technologies last year.

A second risk is that the company has spent heavily on expansion in expectation of future growth. This is necessary, but I suspect it means that the firm currently has costly surplus capacity.

With the shares trading on a 2017 forecast P/E of 42 and a 2018 forecast P/E of 31, I think a lot of good news is already in the price.

Although the stock’s PEG ratio of 1.2 is fairly low, I think the shares could have further to fall before finding support. Personally, I’d put a buy price on this stock of around 100p-110p.

The post One super growth stock I’d buy before IQE plc appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Apple. The Motley Fool UK owns shares of Imagination Technologies and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool UK has recommended Superdry. 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.

Retail play Joules Group (LSE: JOUL) was trading fractionally higher in Tuesday trade, its share price up 1% at pixel time following the release of reassuring financials.

Whilst many of Britain’s listed retail players are suffering amid a sharp inflationary spike and rising consumer uncertainty, Joules Group is thriving at the minute. The AIM-listed share saw group revenues leap 18.2% during the six months to November, to £96.2m.

Sales boomed on the back of “the brand’s expansion, growing customer base… and the strong performance of both new and core collections,” the company said. Its active customer base now stands at one million customers.

Joules Group saw retail revenues jump 16.2% in the period, to £65.9m, driven by “good growth across both stores and e-commerce.” Meanwhile sales at its wholesale division rose 23% year-on-year to £30.1m.

The strong first-half showing prompted chief executive Colin Porter to comment: “The Joules brand has performed well in the first half of fiscal 2018, delivering further expansion across markets, channels and product categories. The Group’s performance reflects the growing appeal of the Joules brand amongst both new and existing customers across our target markets.”

Another British beauty

Now although Porter added that “trading conditions will remain challenging,” City analysts do not see this as a barrier to terrific earnings growth in the near term and beyond. Current forecasts point towards earnings expansion of 19% and 23% in the years to May 2018 and 2019 respectively.

And current forecasts make Joules Group exceptional value for money. While a forward P/E ratio of 24.1 times is far from cheap, a corresponding PEG readout of 1.3 shows that the retailer is exceptionally priced relative to its profit prospects.

The company opened 10 new stores during June-November as part of its ongoing expansion strategy, and with demand from foreign customers also continuing to boom (international sales jumped 36.2% last year), Joules Group is rapidly expanding across Europe and the US.

I am convinced it could deliver the type of breakneck growth seen by fellow British brands Supergroup and Ted Baker.

Train and gain

JD Sports Fashion (LSE: JD) is another London-listed retailer whose international expansion programme could deliver brilliant earnings growth in the years ahead.

In the more immediate term, City analysts are expecting its earnings to rise 19% in the year to January 2018, and by an extra 11% in fiscal 2019. These projections create a cheap forward P/E ratio of 14.1 times as well as a corresponding PEG reading of just 0.7.

The trainers-and-tracksuits specialist launched a joint venture in South Korea back in September, giving it a firm base in Asia’s third-largest retail market and continuing its aggressive foray into overseas territories. Recent bubbly M&A action complements the huge organic investment JD Sports is making across the globe. It opened 40 new stores in the first half of this year alone, more than half of which were opened in mainland Europe.

I am convinced these measures should deliver brilliant profits growth long into the future.

The post 2 super growth stocks you might regret not buying 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 recommended Supergroup and Ted Baker plc. 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.

Delivering the goods

I’ve been bullish on mid-cap, Leeds-based Clipper Logistics (LSE: CLG) for some time now. Today’s interim numbers go some way to explaining why.

In the six months to the end of October, group revenue rose 21.1% to just under £200m with earnings before interest and tax (EBIT) climbing 19.4% to £9.2m. Pre-tax profit increased a healthy 15.6% to £7.9m.

Over the reporting period, Clipper expanded its click-and-collect network with new clients such as Supergroup and Urban Outfitters, while also launching new operations with, among others, FTSE 100 giants Marks and Spencer and British American Tobacco. As evidence of further expansion overseas, the company is now working with ASOS at the latter’s new returns facility in Poland, building on its established relationship with the online fashion star in the UK. 

Having completed on two “immediately earnings-enhancing” acquisitions over the reporting period (Tesam Distribution and RepairTech), Executive Chairman Steve Parkin reflected that Clipper’s business pipeline “continues to be strong” and that the company expects “the positive momentum from existing and new contracts to continue into the second half of the year”.

Trading at 27 times forecast earnings for the current financial year, Clipper’s stock certainly isn’t cheap.  Then again, a fairly low price-to-earnings growth (PEG) ratio of 1.24 (dropping to 1.1 in 2018/19) suggests that prospective buyers would still be getting a good deal for their money.

Add to this the assumption that online retailing will only become more popular and the fact that Clipper isn’t dependent on any one business for its success and I remain convinced that the logistics services provider is an excellent addition to most growth-focused portfolios.

Multi-channel marvel

Assuming recent performance has continued over the Black Friday/Cyber Monday period, another stock that I think might be worth snapping up before Christmas is the owner of the aforementioned Superdry brand, Supergroup (LSE: SGP).

November’s trading update from the Cheltenham-based business — revealing a solid 20.4% rise in group revenue to £402m over H1 — gives some indication of just how well this company is faring relative to peers. Although gross margin is expected to be lower as a result of growth in wholesale, inflation and ongoing investment, the board still anticipates underlying pre-tax profit for the full year being in line with market expectations.

Like Clipper, Supergroup’s global expansion continues at pace with a total of 50 new stores, spread across 23 countries, added to its portfolio over the reporting period. As CEO Euan Sutherland explained at the time, this should help “insulate the business from trading conditions in any single market“.  

Having climbed just over 30% in value over the last six months, Supergroup’s stock currently trades on a still-fairly-reasonable forward price-to-earnings (P/E) ratio of 21. Assuming analyst earnings growth targets are hit, this reduces to 18 in the next financial year.

Taking into account its rock solid balance sheet and history of delivering consistently decent returns on the capital it invests, Supergroup is surely one of the best retail picks on the market.

The post 2 high-growth stocks you might regret not buying before Christmas appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Supergroup. 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.

Demand for the popular Superdry label remains red hot with shoppers all over the globe, and this was reflected in November’s trading statement in which Supergroup advised of a 20.4% advance in group revenues during the six months to October, to £402m. The company opened 50 new directly-owned stores in the period to tap into this trend, while it is also hiking investment in the exciting growth markets of the US and China to deliver future profits growth.

What’s more, after years in which the company’s owned stores have driven profits in recent years, signs are emerging that the Wholesale division is becoming an increasingly impressive cog, while digital sales growth at its online division is also picking up the pace. Revenues in these two areas jumped  34.1% and 31.6% respectively in the first half.

City analysts are expecting earnings to rise 13% in the year to April 2018, and for the FTSE 250 play to follow this with a 19% advance in fiscal 2019.

A forward P/E ratio of 20.4 times may look pretty toppy on paper. But a company of Supergroup’s calibre and increasing dominance on the global fashion stage makes it worthy of such a premium, in my opinion. I can easily see the fashion giant’s share price continuing to rip higher (it has swelled by almost a quarter in the past three months alone).

Don’t fear the reaper

Now, while Dignity (LSE: DTY) isn’t expected to deliver the kind of breakneck earnings growth expected at Supergroup, I would be more than happy to buy and hold the undertaker long into the future.

As far as defensive picks go, few can stand up to the funeral services provider. As Benjamin Franklin famously declared, “nothing can be said to be certain, except death and taxes.” But the business is not content to rest on its laurels and is rapidly expanding to improve its share of the market, it has acquired 24 funeral locations plus one crematorium, and opened 13 satellite locations, in 2017 alone.

Dignity has fallen out of favour with share pickers in recent weeks, its market value tanking 32% since the release of third-quarter trading numbers last month. It is now changing hands at its cheapest level since November 2014.

Three weeks ago it advised that revenues rose 6% in January-September, to £243.9m, supported by a 1% rise in the death rate to 440,000. But investors took fright after the firm advised of “significant competition across the business.” The undertaker added that “whilst our pre-arranged and crematorium businesses are performing strongly, we continue to see increasing price competition and new competitors in our funeral business.”

Reflecting these pressures, Dignity is expected to report a 4% earnings rise in 2017, a result that would mark a rapid deceleration from the double-digit increases of yesteryear (profits jumped 34% in 2016, to cite one recent example).

But growth is expected to heat up again from 2018, when a 9% advance is expected. While the aforementioned competitive pressures may see Dignity struggle to replicate the profits advances of recent years, I still expect the firm — assisted by its aggressive expansion strategy — to keep these rising at a healthy rate.

And I reckon a forward P/E ratio of 13.5 times represents an attractive level upon which to buy in.

The post Two growth stocks I’d hold for the next 10 years appeared first on The Twelfth Magpie.

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• 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 recommended Supergroup. 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.

Growth galore 

In the half year to October, SuperGroup revenue rose 20.4% year-on-year to £402m driven by increased same-store sales, the opening of new outlets and £12m in benefits from the weak pound. Now, gross margins did fall by 170 basis points during the period due to input cost inflation and very good performance from franchised wholesale stores, which produce lower margins for the parent group.

While they may come with lower margins, these franchised stores are still a smart investment. They allow management to focus on developing the brand and increase the speed at which the group can open stores in growth markets such as the US and China. Evidently, management’s focus on brand development is working as like-for-like sales rose a very solid 6.3% across the portfolio during the period.

Now, this rate of growth is slower than the 15.4% posted in the period before and future performance should be followed closely by shareholders, but it’s still a good sign of positive momentum for the brand. Management also disclosed that it expects to hit consensus analyst estimates for full-year pre-tax profits of around £98m, which would be 16% ahead of the year before.  

Maybe next year?

In opposition to SuperGroup’s cheery update, Next’s management team sent the group’s stock price downwards after its Q3 update earlier this month due to a pessimistic outlook for the critically important holiday shopping season. Full-price sales in Q3 were decent and rose 1.3% y/y as Directory sales grew by double-digits and compensated for a large decline in Retail sales. Yet the company’s share price still retreated by some 7% on the day results were announced.

That was because year-to-date sales were down 0.3% and management said it expects Q4 sales to reduce by a similar amount with full-year earnings per share down anywhere from 10% to 3.5%. This fits in with consensus analyst estimates of an 8% drop in EPS that would put Next on a valuation of 11 times forward earnings.

This may appear to be an attractive price for the company given that analysts expect it to pay out some 335.81p in dividends this year that would yield roughly 7.5% at today’s share price. But with sales in retreat and few signs of management figuring out how to staunch the bleeding in the company’s huge estate of retail stores, I’d be hard pressed to invest in Next at this point in time.

Although the clothing sector scares me due to its cyclicality and reliance on ever-changing consumer habits, if I were to invest in the industry, SuperGroup would be near the top of my list due to its rollout potential, despite its shares trading at an elevated 19.5 times forward earnings.

The post One fast-growing competitor I’d buy ahead of Next plc appeared first on The Twelfth Magpie.

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Ian Pierce has no position in any of the shares mentioned. The Motley Fool UK has recommended Supergroup. 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.

However, the firm’s share price declined by over 7% following the update. Investor sentiment seems to have come under pressure because of a fall in Retail sales of 7.7% in the third quarter. But with online sales growing by 13.2%, the company’s outlook may still be very positive.

Difficult outlook

While a 7% share price fall is disappointing, the reality is that Next seems to be performing well in a difficult period for UK retailers. It is expected to report a decline in earnings of between 3.5% and 10% for the full year, with it being relatively downbeat regarding its fourth quarter performance. Despite improvements in its product ranges, it anticipates a decline in sales of 0.3% in the final quarter of the year.

However, such figures may prove to be relatively strong in what could prove to be a highly challenging UK retail environment. Inflation is now at 3% and above and beyond the pace of wage growth. This is likely to lead to consumers trading down to cheaper products, or postponing purchases of items which are non-necessities. In such an environment, the company’s current level of performance may be relatively sound.

Investment potential

Of course, Next’s share price may be volatile in the short run due to the difficulties it faces and their impact on market sentiment. However, in the long run it has the potential to generate high returns for its investors. For example, it trades on a price-to-earnings (P/E) ratio of just 11.4. This suggests that it has a wide margin of safety which could lead to high share price returns in the long run. And with a dividend yield of 7.2%, including special dividends, it could offer a potent mix of income and capital growth.

Retail prospects

Clearly, Next is not the only retailer which could help investors to generate a seven-figure portfolio. Sector peer Supergroup (LSE: SGP) is expected to post a rise in its bottom line of 13% in the current year, followed by further growth of 17% next year.

Despite this, the company trades on a price-to-earnings growth (PEG) ratio of just 1. This suggests that the stock market has not yet priced-in its growth prospects over the medium term, which may lead to further share price growth following its 15% gain in the last six months.

With a strong brand and loyal customer base, Supergroup appears to have significant investment potential. Its international focus may help it to overcome potential difficulties in the UK economy, with its risk/reward ratio seemingly highly favourable at the present time.

The post Why Next plc is set to be a millionaire-maker stock 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?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup. 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.

It advised that net profit surged 57.3% between January and June, to €12.9m. This was despite rental income falling 1.7% to €28.4m year-on-year, while funds from operations dropped to €17.5m, from €18.2m previously.

Meanwhile, Summit Germany declared that EPRA net asset value improved to €474.4m from €466.3m in the corresponding 2016 half.

Boring but beautiful

And Summit Germany remained pretty busy on the acquisition front in the first half to lay the groundwork for future profit growth. It paid €100m in the summer to snap up a property portfolio in Wolfsburg, comprising 80,000 square metres of fully let properties generating net rent of around €7.9m.

But splashing the cash is not the only game in town, with the Guernsey-headquartered business also busily hiving off non-strategic assets to improve the quality of its holdings (it has made €17.6m worth of disposals in the year to date).

Meanwhile, the property powerhouse also added two new joint ventures in H1 to develop 95 residential units in Berlin. Summit Germany sources almost 90% of all rents from the country’s major cities, and half from Germany’s five biggest metropolitan areas (namely Berlin, Frankfurt, Stuttgart, Hamburg and Dusseldorf). And this gives the company terrific income potential given the improving strength of the German economy and housing shortages in these cities.

Now while the business is expected to endure another heavy earnings slide in 2017 (a 31% decline is currently predicted), City brokers expect it to move back into growth with a 5% advance next year. And current projections make Summit Germany a great value share, the firm sporting an undemanding forward P/E ratio of 15 times.

There is also plenty for dividend chasers to get excited about, with predicted dividends of 4.04 euro cents per share this year and 4.23 cents in 2018 yielding 3.7% and 3.8%, respectively.

I am convinced the brilliant structural opportunities open to Summit Germany could generate excellent shareholder returns now and long into the future.

Sweet style

Supergroup (LSE: SGP) is another stock I am tipping to provide excellent investment riches in the years ahead.

The owner of the much-loved Superdry clothing brand is playing a blinder in terms of developing its global brand, expanding its geographic footprint and improving its position in the critical e-commerce segment.

It has seen like-for-like sales rise for 10 successive quarters, with growth averaging around 12%. The company currently operates in almost 150 countries and is ratcheting up its operations in white-hot growth markets like the US and China to keep revenues tearing higher.

So the number crunchers are predicting meaty earnings growth of 13% and 15% in the years to March 2018 and 2019 alone, leaving Supergroup dealing on a prospective P/E ratio of 17.2 times and corresponding PEG reading of 1.3.

I reckon this is a steal given the likelihood of lasting, and electrifying, earnings growth beyond the medium term. And with Supergroup also expected to keep its progressive dividend policy on track (payouts of 31.3p and 36.3p per share are forecasted for this year and next, yielding a handy 1.9% and 2.2%, respectively), I reckon the fashion star deserves a serious look right now.

The post Could these value dividend shares be millionaire-makers? 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 recommended Supergroup. 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.

Brexit impact

Full-year numbers for the FTSE 250-listed fashion retailer were, dare I say it, Super! The Cheltenham-based group reported a 27.4% rise in revenue to £752m for the 52 weeks to April, with like-for-like retail sales growth of 12.7%. Underlying pre-tax profits climbed to £87m, an 18.4% improvement on the £73.5m reported for the same period a year earlier. The full-year dividend was lifted to 28p per share, representing a substantial 20.7% increase on the 23.2p paid out to shareholders for FY2016.

Management did however acknowledge that the economic environment had been tough and the political backdrop uncertain, with the Brexit vote and fluctuating exchange rates having had the most significant direct impact during the course of the year. But the Superdry brand has proved resilient with increased exposure to different countries, markets and currencies helping to soften the blow.

Expanding globally

SuperGroup is now fully focused on expanding globally with a clear strategy for growing its e-commerce business as well as its operations in key markets within Europe, North America and China. The retailer now has a physical presence in 62 countries, with 863 stores and concessions worldwide, as well a successful online operation with 27 international websites across 18 countries covering 12 different languages.

I can still see plenty more growth in the coming years, particularly in the Sport and Womenswear categories, with management also keen to exploit the growing trend in ath-leisure. Analysts also seem optimistic about the outlook, with consensus estimates suggesting a 30% rise in underlying earnings over the next couple of years, leaving the shares trading on a very undemanding P/E rating of 14 for fiscal 2018/19.

British success story

Another UK fashion brand that I’ve had my eye on for quite some time is Ted Baker (LSE: TED). Lots of others have had their eye on it too. The London-based retailer has seen the value of its shares soar from below 900p in 2012 to all-time highs of 3,555p near the end of 2015. But at 2,444p, the share price has now fallen back considerably and I believe this presents an excellent opportunity to pick up this premium lifestyle brand on the cheap.

The FTSE 250 business continues to outperform, delivering consistently rising earnings year-on-year, and seldom disappoints. In its latest trading update, the group reported a 14.2% increase in revenue for the 19 weeks to June, with total retail sales up 14.3%, despite external factors continuing to impact trading conditions across some of its global markets.

The online business in particular, continues to perform well, with sales increasing 35.9% during the period from 29 January 2017 to 10 June 2017, reflecting continued growth across its e-commerce sites as well as the strength of its retail proposition. At 19 times forward earnings, Ted Baker’s shares are trading well below historical levels, giving new investors a great opportunity to buy into this remarkable British success story at a very affordable price.

The post 2 growth stocks I’d buy right now appeared first on The Twelfth Magpie.

More reading

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

Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup and Ted Baker plc. 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.

However, the reality is that many stocks can continue to make major gains even after a purple patch. As long as their valuations remain sensible, then buying them can prove to be a sound move. Here are two companies which appear to fall neatly into that bracket.

Improving performance

Reporting on Monday was lifestyle brand Supergroup (LSE: SGP). The company’s results for the full year showed further progress has been made with its strategy. Under the current management team, it has sought to expand and diversify its operations, while becoming increasingly efficient.

The effect of this has been a rise in sales of 27.4%, with underlying earnings gaining 17.4% on a per share basis. The company seems to have benefitted from a multi-channel approach. It has sought to broaden its sales channels, with its Wholesale business now a more prominent part of the business. Similarly e-commerce has undergone further investment, while the firm has expanded into new territories and become increasingly innovative in terms of the range of its products.

Looking ahead, Supergroup is expected to grow its bottom line by 13% in both the current year and next year. This puts its shares on a price-to-earnings growth (PEG) ratio of just 1.1, which suggests they offer growth potential at a reasonable price. That’s despite their rise of 26% during the last year. As such, while they may not have as much capital growth potential as a year ago, they continue to offer a logical investment outlook.

Brand strength

Also rising significantly in the last year have been shares in Burberry (LSE: BRBY). They have easily outperformed Supergroup and are now 42% higher than they were a year ago. At least some of this gain is due to the weaker pound. Burberry operates mostly abroad, and its key markets remain places such as China, the US and other major world economies. Therefore, it has benefitted from a depreciating pound in the last year, with a positive foreign currency translation being the result.

However, Burberry has also made changes to its business that have positively impacted on its performance. Efficiencies and cost savings seem to have been welcomed by the market, while its change in management structure may also lead to a better-organised business over the medium term.

Looking ahead, Burberry is expected to grow its bottom line by 12% next year. This puts it on a PEG ratio of 1.5. Given its size, scale and diversity, this appears to be a low price to pay. Furthermore, the company has a high degree of customer loyalty which may make its overall performance and returns more sustainable than some of its sector peers in the long run.

The post 2 rising stocks I’d buy in July appeared first on The Twelfth Magpie.

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

Investors reacted to the news that Frenkel has, following the completion of a strategic review, decided to withdraw plans to put itself up for sale.

The business — which provides asset protection for vulnerable clients — said that having launched a review at the start of April, it has “decided that it is in the best interest of shareholders, employees and clients to continue as an independent company, pursuing its existing business plan.”

In particular, Frenkel noted the improved prospects brought about by the proposed changes to the Ogden Discount Rate, amendments that it says “will materially alter the landscape of the industry.”

Frenkel noted that “the effects of the Ogden Review are now starting to translate into higher levels of damages available to our clients and this should accelerate the growth of AUM for the group.”

As a consequence Frenkel advised that it “is not in active discussions with any third party in relation to a corporate transaction, such as a merger with or sale of the company and as such the Formal Sale Process has now been terminated.”

On the right track

And today’s positive half-year numbers go some way to vindicating Frankel’s decision to keep going it alone.

Frenkel advised that it expects profit from operations for the six months to June to have rocketed to £1.2m from £300,000 in the same period last year, while revenues are also anticipated to have increased to £3.7m from £2.8m previously.

Furthermore, assets under management are expected to have clocked in at £770m, up from £745m last year. It has designs on hitting the magic £1bn marker on an organic basis.

The City certainly believes it is a hot growth stock to watch, and anticipates earnings expansion of 302% and 37% in 2017 and 2018 respectively. These projections make the Manchester business very attractive value for money, a forward P/E ratio of 14.6 times falling below the widely-considered value watermark of 15 times.

And a sub-1 prospective PEG reading of 0.1 underlines Frenkel’s brilliant value relative to its growth prospects.

Catwalk star

Fashion favourite Supergroup (LSE: SGP) may not be packing the same sort of value as Frenkel, but I reckon those seeking excellent long-term growth need to check out the London label.

The number crunchers have pencilled in earnings expansion of 13% in the years to April 2018 and 2019 respectively, following on from an expected 17% rise last year. And these punchy projections come as no surprise given the exceptional progress the Superdry owner continues to make across the globe.

The business saw revenues explode 20.6% in fiscal 2017, to £501.6m, underlining the success of its store rollout programme and improvements to its e-commerce proposition. So while Supergroup trades on a slightly-toppy forward P/E ratio of 16.4 times, I reckon this remains great value given the company’s stunning top-line momentum.

The post 2 growth stocks that could deliver spectacular returns appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Supergroup. 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.