The cable-and-connector manufacturer has seen its market value surge 110% over the past year and, if Friday’s explosive half-year financial report is anything to go by, we should expect this stunning ascent to keep on going. Indeed, Volex shot 6% higher on account of the latest trading update.

Sales fell 2.8% during the six months to October 1, to $161.4m as the result of an $11m drop in the company’s largest Power customer’s revenues. In better news, however, Volex saw revenues from its other clients boom 4.8% during the half year, reflecting ongoing efforts to increase its revenue streams. And at its Cable Assemblies arm, turnover jumped 8% year-on-year.

Meanwhile, the London-based business announced that operating profit clocked in at $5.1m for the first half, swinging from a loss of $4.6m a year earlier and the best result for five years.

On the mend

Volex has put in the hard yards in recent times to cut out costs in response to tough trading conditions and rising input costs, and to put it in a stronger position to generate sales in the years ahead.

Today chief executive Nat Rothschild commented: “I am pleased to report that the group has returned to profitability. The restructuring activities taken in previous periods have allowed the group to operate more efficiently and we are now seeing growth from both new and existing customers as we diversify our revenues.”

City brokers expect earnings to slump 22% in the year to March 2018, but the firm’s turnaround measures are expected to get profits propelling higher thereafter — an 11% advance is chalked in for fiscal 2019.

And despite the aforementioned share price ascent, Volex remains exceptionally priced, its forward P/E ratio of 13.5 times falling comfortably below the widely-accepted value yardstick of 15 times or below.

Given the impressive progress of the firm’s self-help measures, I am not alone in believing that this represents seriously good value.

Another cut-price corker

Costain Group (LSE: COST) is another small-cap that merits serious attention at current prices, in my opinion.

Earnings are predicted to spring 8% higher in both 2017 and 2018 and, as a consequence, the construction and engineering colossus deals on a prospective P/E multiple of just 12.7 times.

Additionally, chunky dividend yields of 3.3% and 3.7% for 2017 and 2018 respectively — driven by the company’s ultra-progressive payout policy — should provide plenty of incentive to give Costain a look.

The billions of pounds that is being thrown at improving Britain’s transportation, energy and water infrastructure continues to drive business at Costain, and as a result reported revenues at the firm leapt 11.5% during the first half to £847.8m. Reported pre-tax profit grew 38.9% to £15.7m.

And its fat order book, which stood at £3.7bn as of June, 90% of which was for repeat business, suggests sales, profits and dividends should keep growing at an eye-popping pace. Costain is a company that could make share pickers exceptionally rich in the coming years.

The post 2 bargain small-cap stocks that could make you very rich 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.

Unilever

Household goods goliath Unilever (LSE: ULVR) has bounced higher in recent months, as concerns over slowing consumer spending power in developing regions have moderated. While it is true that sales in these territories expanded by ‘just’ 5.7% last year, down from 8.7% in 2013 and 11.4% in 2012, I believe that galloping spending power from customers in these far-flung should power group profits higher over the long-term.

Indeed, the City’s army of number crunchers expect Unilever to wave goodbye to the problems that have hampered earnings growth in recent years, and the business is expected to punch robust rises to the tune of 13% and 9% in 2015 and 2016 correspondingly. These figures create P/E multiples of 21.7 times prospective earnings for this year, and 20.3 times for 2016, some way outside the value benchmark of 15 times or below.

Still, I believe that Unilever’s terrific exposure to lucrative emerging markets — the company sources around 60% of total sales from such regions — combined with a broad suite of industry-leading products from Dove soap to Domestos bleach, labels which carry formidable pricing power, fully merits this premium price. I fully expect earnings growth to rocket higher in the coming years.

Volex Group

Power and data cable manufacturer Volex Group (LSE: VLX) cheered investors today after a bubbly trading update, driving the shares 1.1% higher in end-of-week trading. The company announced that it expects profit for the full financial year to come in line with guidance, and added that it had completed its all-singing, all-dancing transformation plan. These measures have already had a positive effect on sales and margins, it noted, a trend which Volex expects to carry forwards.

Barclays analysts expect Volex to swing from losses of 9 US cents per share last year to earnings of 2.6 cents in the year concluding April 2015, in turn creating an elevated P/E rating of 37.4 times. But with earnings anticipated to surge to 7.5 cents in fiscal 2016, this figure falls to a much-more appetising 12.8 times.

And earnings forecasts of 12.9 cents the following year pushes the earnings multiple to just 7.5 times — any reading below 10 times is widely regarded a steal. With restructuring at the plan now complete, and Volex vowing to increase investment across the company and to extend its customer base, I believe that the Paddington firm is in good shape to enjoy improving demand for its products.

Kingfisher

DIY giant Kingfisher (LSE: KGF) suffered a whack in the midriff yesterday with news that its proposed €275m acquisition of France’s Mr Bricolage chain had hit the buffers. Last summer the British company had agreed to purchase ANFP’s 41.9% holding in the Gallic business, as well as the 26.2% stake held by the founding Tabur family, with a full takeover expected afterwards.

But Kingfisher announced that the French parties were no longer interested in obtaining the necessary competition clearances for the deal to go through, and advised that it is now “considering all of its options.” The news comes a huge blow to Kingfisher’s overseas expansion plans, and follows December’s decision to sell 70% of its struggling Chinese business for £140m.

It is true that improving retail conditions in the UK should continue boost sales across its Screwfix and B&Q outlets looking ahead — the firm announced in November that retail profit in its domestic markets rose 11.1% during the previous three months. But while sales performance continues to drag in France, as well as in its other continental markets, I believe that Kingfisher remains a risky selection at the current time.

The post Why I Would Buy Unilever plc And Volex Group PLC But Sell Kingfisher plc appeared first on The Twelfth Magpie.

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