Looking ahead, there could be further challenges for the business. Consumer confidence could continue to weaken, while investors may become nervous about Brexit. However, in the long run, the stock could offer turnaround potential, given its improving financial outlook and valuation. Could it therefore be worth buying alongside another recovery share which released an update on Monday?

Improving performance

That company in question is ULS Technology (LSE: ULS). The provider of online business-to-business platforms for the UK conveyancing and financial intermediary markets released its half-year results. They showed a rise in revenue of 3% versus the same period of the previous year, with underlying pre-tax profit increasing 6% to £2.89m.

During the period, it was able to increase market share. It enjoyed particular strength within the remortgage transaction segment, while a continued expansion of its sales team allowed it to focus increasingly on the intermediary market.

ULS Technology is forecast to post a fall in earnings of 5% in the current year, followed by a rise of the same amount next year. Although it trades on a price-to-earnings (P/E) ratio of around 11, it seems to lack an obvious growth catalyst. And with the wider conveyancing sector having the potential for future weakness, it may be a stock to avoid at the present time.

Growth potential

In contrast, Sports Direct is due to deliver an improving bottom line over the next couple of years. Its earnings are expected to rise by 16% in the current year, followed by further growth of 10% next year. Since its shares trade on a price-to-earnings growth (PEG) ratio of around 1.1, they could offer a margin of safety after their recent decline.

Although consumer confidence may be weak, this could provide a catalyst for the company’s financial performance. If consumers become increasingly price-conscious, they may begin to favour stores offering steep discounts and competitive pricing. Sports Direct’s business model is focused on offering value for money on major brands, while also obtaining high margins on its own-brands. As such, it could be one of the stronger performers in the retail sector over the medium term.

While the company has experienced elevated political risk and disappointing operational performance in recent years, it could enjoy a tailwind from changing consumer attitudes. As the Brexit process has the potential to cause uncertainty for consumers in terms of how it may impact on the UK economy in the short run, Sports Direct could prove to be a relatively rewarding, albeit risky, contrarian investment for the long run.

The post Thinking of buying FTSE 250-member Sports Direct after share price slump? Read this now appeared first on The Twelfth Magpie.

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In a spritely announcement ULS declared that, despite a more recent slowdown in the housing market, revenues boomed 56% during the six months to September, to £15.3m, and organic revenues jumped 22% in the period.

As a consequence, underlying operating profit at the firm grew 44% year-on-year, to £2.81m, and this encouraged a 5% hike in the interim dividend to 3.48p per share.

Adding colour to the results chief executive Ben Thompson commented: “This has been a strong first half for ULS. Once again, we have increased our market share and financial results against the backdrop of a housing market that has become quiet, relative to longer-term averages.”

Building a legacy

News that ULS — which provides online business platforms used across the conveyancing and financial intermediary market — is defying current difficulties in the homes market should soothe any jitters that investors may have had.

The company is proving adept at beating these difficulties by claiming business from its competitors, and it has doubled the number of lenders it carries out conveyancing work for (it now works for eight lenders versus four just a couple of years ago).

And there is still plenty of business for ULS to win (it estimates that it commands just 5% of the total conveyancing market).

The impressive performance of niche operator CAL, which ULS snapped up late last year, is a particular cause for celebration. The unit has “built up some good momentum with estate agents,” it said, with CLS “continuing to build up [its] portfolio of smaller mortgage brokers… with highly competitive technology, pricing and good service.” The number of completions here jumped 44% year-on-year in the first half to more than 10,000.

ULS has long proved a dependable growth generator, and City analysts expect the tech giant to keep providing plenty of jam to investors. In the year to March 2018 a 44% earnings leap is currently predicted, and a 6% advance is forecast for fiscal 2019.

And current projections make ULS a bit of a bargain. While a forward P/E ratio of 22.9 times isn’t much to shout about, a corresponding PEG of 0.5 comes in comfortably below the bargain watermark of 1 or below.

Supply shortage

Those seeking great-value growth heroes also need to take a look at Redrow (LSE: RDW) today.

Sure, homebuyer demand may be slowing at the moment as wider economic pressures and increased uncertainty rises. But put simply, there are still not enough new-build houses to go around, and particularly as these same troubles are encouraging existing homeowners to keep their properties off the market.

Like ULS, Redrow also has a strong record of earnings generation (the bottom line has swelled at a compound annual growth rate of 35.1% during the past five years). And City brokers are expecting further excellent growth, a rise of 11% in the year to June 2018 currently being anticipated.

With Redrow subsequently sporting a forward P/E ratio of 7.5 times and a PEG reading of 0.7, I think it is difficult to overlook the construction giant today.

The post 2 growth bargains that could make you a million 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 Redrow. 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.

I would regard this as nothing more than signs of light profit-taking following ULS’s heady ascent of recent months. The stock has gained 94% in value over the last year and topped out at 129p per share earlier in June.

The Oxfordshire company provides online technology for the UK conveyancing and financial intermediary markets. It advised that revenues increased 8% in the 12 months to March 2017, to £22.3m, while gross margins advanced 9% to £9.5m. The result powered underlying pre-tax profit 15% higher to £4.4m.

And chief executive Ben Thompson suggested that there is more to come, commenting that “we approach the new financial year in the knowledge that we are successfully increasing our conveyancing market share.”

He added: “Our current trading and instruction levels are buoyant and we intend to continue outperforming the market through further enhancing our technology and services that we provide to our business partners and their customers.” 

Home comforts

ULS’s ability to perform in a shrinking market is nothing short of outstanding, the business increasing organic sales by 4% even as market volumes receded by 13%. And acquisitions like that of Conveyancing Alliance Holdings last December should keep the bottom line on an upward trajectory.

The City shares my positive outlook, and expects earnings at ULS to detonate 40% in fiscal 2018. And another 8% rise is chalked in for the following year.

The tech giant may not appear to provide decent value at first glance, ULS sporting a forward P/E ratio of 19.7 times, perching above the widely-regarded threshold of 15 times or below. But in fact a sub-1 prospective PEG multiple of 0.5 suggests the business is actually brilliantly priced relative to its growth prospects.

And I reckon this should add to fresh share price strength in the weeks and months ahead.

Trading titan

Nex Group (LSE: NXG) is another London-quoted stock with very sunny earnings prospects, with expectations of improving trade volumes (boosted by the benefits brought by rising regulatory pressures) underpinning current analyst forecasts.

The broker advised this month that European repo volumes surged 34% year-on-year in May, to €226.9bn. Meanwhile, US Treasury and US Repo volumes improved 9% and 2% respectively, to $170bn and $216.5bn, while volumes at its currency operations shot 12% higher to $81.3bn.

City brokers are also pretty optimistic over Nex’s earnings picture in the near term and beyond. A 33% advance is predicted for the year ending March 2018. And an extra 17% rise is expected in fiscal 2019.

Like ULS, the London firm may not appear great value from a conventional standpoint, its prospective P/E ratio ringing in at a lofty 20.9 times. However, a forward PEG reading of 0.6 times tells a different story.

I also reckon Nex has what it takes to beat recent record highs, the stock having hit a peak of 672p per share just last month.

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

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Royston Wild 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.

Over the past six years, the company’s revenue has grown steadily from £6.2m in 2011 to £19.4m for fiscal 2016, a compound annual growth rate of 25.4%. Over the same period, reported earnings per share have grown from a loss of 1.8p to a gain of 5.9p. City analysts have pencilled-in further growth this year.

EPS growth of 13% is projected for the financial year ending 31 July 2017 on revenue of £25.4m. And for the year ending 31 July, 2018 analysts are expecting yet more growth with earnings per share set to grow by 23% to 10.2p on revenue of £29.6m.

Lucrative business

Proactis is involved in the sale of business software. The company offers software to help businesses streamline invoices and manage their supply networks. Other programs help with capturing data and managing IT networks. This business is extremely lucrative and provides a steady stream of recurring revenues for Proactis.

Selective bolt-on acquisitions have also helped drive growth, and the company has plenty of cash to invest in further growth initiatives. At the end of the fiscal first half, the company reported total debt of £7.6m and cash of £4.9m.

Historically, cash generation has been weighted to the second half, and the company spent £15.7m during the first half of fiscal 2017 on acquisitions. During the second half of the financial year ending 31 July 2016, the company generated £5.2m in cash from operations.

Expensive growth

The one downside about shares in Proactis is their valuation. The shares currently trade at a forward P/E of 21.5, falling to 17.8 for the year after. However, after taking into account the company’s explosive growth over the past five years and projected future growth during the next two years, it looks as if it’s certainly worth paying a premium to get your hands on a stake in this company.

Under the radar

Just like Proactis, ULS Technology (LSE: ULS) is a market tiddler with a total value of only £78.3m, but that shouldn’t detract from the company’s success over the years. Indeed, since 2012 the company has grown revenue at a compound annual growth rate of 25.4% and net profit rose at a rate of 30%. Between 2012 and 2016, earnings per share expanded from 1.3p to 3.5p and analysts are projecting earnings per share of 5p for the year that ended on 31 March.

Unfortunately, shares in ULS don’t come cheap, but this is easy to explain considering the company’s explosive growth rate. Shares in ULS currently trade at a forward P/E of 21.2 and support a dividend yield of 2.1%. After factoring in earnings growth, the shares trade at a PEG ratio of 0.6, which signals that they offer growth as a reasonable price for adventurous investors.

The post After growth of 25% p.a. for six years these stocks could help you retire early appeared first on The Twelfth Magpie.

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Rupert Hargreaves 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.

Fairpoint’s performance is expected to be aided by the acquisition of Colemans and Simpson Millar, with the integration of both companies progressing well. And while the first three months of the year have been quieter than anticipated in conveyancing services, the outlook for the wider company remains upbeat.

With Fairpoint trading on a price-to-earnings (P/E) ratio of just 6.6, it seems to offer a wide margin of safety. Certainly, further volatility in its share price can’t be ruled out, but for long-term investors it remains a relatively appealing buy at the present time.

Potential target

Also among the major movers today is 32Red (LSE: TTR). It’s down by 10%, although the online gambling company is still up by 80% in the last year. It hasn’t released any significant news flow today to prompt the share price fall and with it having upbeat earnings growth prospects, 32Red seems to be more likely to soar rather than suffer from a colossal correction.

In fact, 32Red is forecast to increase its bottom line by 62% in the current year and by a further 28% next year. This puts it on a price-to-earnings-growth (PEG) ratio of just 0.3, which indicates that now could be a good time to buy it for the long term. That’s especially the case since there’s a considerable amount of consolidation ongoing within the gaming sector and while 32Red may or may not be taken over, it retains bid potential due to its strong financial outlook.

On the up

Meanwhile, shares in ULS Technology (LSE: ULS) have risen by 12% today despite no significant news flow having been released by the company. Of course, market sentiment has been buoyant since ULS released a trading update in mid-April where it stated that results for the year are expected to exceed market expectations.

In fact, ULS announced that revenue is due to be around 28% higher and adjusted profit before tax 31% higher as its strategy of growing the number of trading relationships it has with challenger banks and mortgage intermediaries continues to work well. As a result, ULS’s order book has been well ahead of the same point in the previous year, which bodes well for its long-term future.

Certainly, there are fears surrounding the health of the UK housing market, but with ULS being confident in its outlook and predicting strong growth, its shares look more likely to be positive rather than negative in future.

The post Are ULS Technology plc (+12%), 32Red plc (-10%) and Fairpoint Group plc (-9%) on the cusp of colossal corrections? appeared first on The Twelfth Magpie.

More reading

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

Peter Stephens 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.