However, shares in the firm fell by 7% this morning, despite WANdisco revealing that its total bookings — the value of contracts received during the period — rose by 45% to $22.5m in 2017.

Even the news that bookings for the group’s Fusion product climbed 121% to $15.7m wasn’t enough to excite investors.

It’s clear that Fusion is the firm’s big growth hope for the future. Indeed, today’s figures suggest to me that bookings for the group’s other main product, Source Code Management (SCM), fell from $8.4m to $6.8m last year.

Why I’m worried

Unfortunately today’s trading update didn’t provide any update on expected revenue for 2017. Many of the firm’s contracts stretch over more than one year, so I expect revenue to be lower than the $22.5m reported as new bookings.

Consensus forecasts are for revenue of $17m in 2017. Today’s share price fall suggests to me that the company is not expected to have exceeded this figure.

After such a strong run last year, my view is that WANdisco looks a little too expensive for a lossmaking company, especially one that recently raised $22m by selling new shares. Another year of losses is forecast for 2018. On this basis, the stock’s price/sales multiple of 31 seems dangerously high to me. I would sell after last year’s strong run.

One stock I would buy

Investors seem to have given up all hope of earnings growth at spread betting and CFD firm CMC Markets (LSE: CMCX).

The main reason for this is that the market has no way of predicting how hard the company’s profits will be hit by the FCA’s planned leverage limits for retail clients.

Markets hate uncertainty and often discount shares heavily in such situations. This can create good buying opportunities.

A contrarian buy?

CMC shares have halved since hitting a high of 290p in July 2016. This decline has left the stock trading on a 2017/18 forecast P/E of 10.9, rising to a P/E of 12.6 for 2018/19.

This shares’ rising P/E ratio reflects an expected 14% fall in earnings this year. Clearly this isn’t good news. But CMC has a strong balance sheet with plenty of surplus cash. And the group’s current operating margin of 30% suggests to me that it could still operate profitably with lower margins.

One risk is that CMC is smaller than sector leader IG Group. Regulatory costs generally affect smaller companies more heavily, due to the higher cost per client. However, I think CMC should be big enough to manage.

What does the future hold?

CMC is focusing on higher-value retail clients and is diversifying into providing electronic trading facilities for institutional clients. Although this business isn’t quite so profitable, it should help support volumes if the number of retail clients falls.

The shares currently trade on a 2018/19 forecast P/E of 12.6, with a well-covered 5% dividend yield. I believe this stock could be worth buying for growth and income at current levels.

The post One growth stock I’d buy today and one I’d sell appeared first on The Twelfth Magpie.

More reading

• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• FTSE 250 stock CMC’s shares have rocketed 51%! What’s going on?
• CMC Markets: a FTSE dividend star worth considering for an ISA or SIPP?
• £1,000 buys 268 shares in this dirt-cheap dividend stock that’s on fire in 2026

Roland Head 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.

Impressive growth

Wandisco released its half-year results this morning, which showed an impressive 71% increase in revenue on the same period last year, maiden positive adjusted EBITDA and a move “significantly closer to our goal of becoming cash flow break-even.”

The company has an Original Equipment Manufacturer agreement with IBM and partnerships with Amazon Web Services, Cisco and Google Cloud (among others) to resell its patented technology. It said today: “The order book and sales pipeline continues to gather pace.”

Given the $9.7m revenue posted for the first half of the year and the positive momentum, I would anticipate upgrades to City analysts’ forecasts of $16m for the full year (trailing 12-month revenue is already up to $15.5m). Perhaps pushing $20m wouldn’t be entirely fanciful, certainly on a forward 12-month basis.

High profit potential

Today’s results certainly strengthen Wandisco’s credentials as a company with the potential to scale-up with minimal incremental increases in operating costs into a larger, highly profitable business. However, profitability remains some way off on current visibility, so I look to a sales (revenue) multiple for valuation.

As a rule of thumb, I’d only ever pay up to 10 times forecast 12-month sales. In the case of Wandisco, with its market cap of £265m ($345m at current exchange rates), I’d want sales of $34.5m at the very least.

As such, much as I like the business and its potential, I consider the stock too pricey at the present time, based on my $20m forward sales estimate. More adventurous investors than me may believe it can grow rapidly into its valuation and I certainly wouldn’t contest the possibility of that.

Under-the-radar turnaround

Operating nationally with 12 regional offices (and also some international consultancy work), North Midland Construction (LSE: NMD), which was founded in 1946, has somewhat outgrown its name. Its shares have soared from 140p to 420p over the last 12 months, turning a £5,000 investment into £15,000.

This FTSE Fledgling index constituent — now valued at £43m — is emerging from a difficult few years during which some ill-advised contracts ran their course. Under a new chief executive, the business is getting back on track. Half-year results last month saw EPS more than double, with four of the group’s five business segments (Construction, Power, Highways, Water and Telecommunications) delivering operating profits.

With trailing 12-month EPS of 30.93p and a dividend of 6p (scope for that to be increased rapidly), North Midland Construction has a price-to-earnings (P/E) ratio of 13.6 and running yield of 1.4%. I haven’t been able to find any broker forecasts, but with the board “anticipating enhanced like-for-like revenue growth in the second half of the year, coupled with an enhanced operating margin percentage,” the shares look capable of making further advances, if earnings continue to improve as seems likely.

The post 2 stocks that have turned £5,000 into £15,000 in just one year appeared first on The Twelfth Magpie.

More reading

• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?

G A Chester 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.

Highly attractive ratios

Kazakhstan miner Kaz Minerals (LSE: KAZ) has gained 65% so far this year. At a current price of 589p, this FTSE 250 firm is valued at £2.7bn.

In a production report last month, the company said it had met its copper guidance for the year and exceeded its guidance on by-products (gold, silver and zinc).

Copper output was 73% ahead of the prior year as Kaz ramped up production at its new Bozshakol and Aktogay projects. The company is rapidly developing into a top class, open pit copper miner with revenue expected to double from 2016 to 2017 and earnings forecast to rise by 175%.

This puts Kaz on a forward price-to-earnings (P/E) ratio of 12.6 with a P/E-to-growth (PEG) ratio of less than 0.1. These are highly attractive ratios and remain so if we look ahead to 2018 when the P/E falls to 9.1 and the PEG rises to little more than 0.2. There looks to be considerable scope for the shares to continue rising and they seem very buyable to me at their current level.

A nice little growth stock?

Shares of Premier Veterinary Group (LSE: PVG) have risen 71%, helped by an announcement of further good news this morning, which I’ll come to shortly.

Like Kaz, PVG is listed on the main market. However, it has a ‘Standard’ listing as opposed to the ‘Premium’ listing of top FTSE firms. Disclosure and compliance rules are less rigorous with a standard listing, so it’s wise to treat these companies with a bit of caution.

PVG has undergone a major transformation, selling its veterinary practices to focus on its buying business (which negotiates discounts on animal products to enable independent practices to compete with larger groups). It is also focusing on its high-growth preventative healthcare programme for pets, branded ‘Premier Pet Care Plan’.

The latter business increased its global revenue by 75% last year. Today’s good news is of a new contract, which further increases its penetration of the US market. Before today, the house broker was forecasting £4.35m revenue for 2017 with a pre-tax loss of £2.15m, followed by £8m and a £0.25m profit for 2018. At a share price of 235p the market cap is £35m, giving a price-to-sales (P/S) ratio of 4.4 for 2018. This could be a nice little growth stock but I’d like to see a broker update before deciding whether to look further into the business.

Considerable potential?

Wandisco (LSE: WAND) is the biggest riser. An 81% gain has seen the shares climb to 362.5p, valuing this AIM-listed big data firm at £132m.

In a trading update last month, the company reported record bookings in Q4, which comes on top of previous good progress on agreements, contracts and orders with a number of parties, including blue-chip IBM.

I believe Wandisco has considerable potential but it’s trading on a rich 14.5 times expected 2016 sales, and a still-high P/S of six looking ahead to 2018, at which time it’s also forecast to be still lossmaking. As such, I think this is one to watch for the time being.

The post These 3 growth stocks are already up 60%+ this year. Should you buy? appeared first on The Twelfth Magpie.

More reading

• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?

G A Chester 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.

The company revealed its Q4 trading numbers alongside second-half and full-year results to 31 December 2016 today, and the numbers will have come as a relief to long-suffering shareholders. 

For the fourth quarter, the company secured a record level of bookings with intake up 97% year-on-year to $6.1m. Bookings during the second quarter rose 109% year-on-year to $9.6m and totals for the year rose 72% to $15.5m perhaps, more importantly, Wandisco moved closer than ever to cash flow break-even during Q4. After significant cost-cutting efforts, cash burn fell to £200k during the quarter, down from $6.9m in the same period last year.

Improving cash flow metrics, coupled with the company’s capital raise last year, have enabled management to pay down group debt, and Wandisco now has a net cash position of $7.6m, which should start growing in the coming quarters as cash burn is all but eliminated. 

A relief 

Today’s update from Wandisco will come as a relief to the company’s long-suffering shareholders. Even though today’s 20% rise may seem impressive, since the end of 2013, shares in Wandisco have lost just over 80% of their value as the company has consistently failed to live up to expectations.

Still, today’s update shows that the group is getting back on track. For the full year, City analysts are expecting the company to report a pre-tax loss of £15.3m on sales of £9.2m, but I believe that investors should be concentrating on the firm’s ability to generate free cash flow over profitability at this early stage. If Wandisco moves to a cash flow positive position, the group will be able to grow without consistent cash calls to shareholders and management will be able to push ahead with its growth strategy without cash constrictions. 

A better buy? 

Until Wandisco prints a profit, it’s likely the company will continue to be viewed as a risky bet by many investors. The company has a long way to go until it can claim to have a similar reputation to Aveva (LSE: AVV), one of the UK’s leading tech companies. 

Unfortunately, Aveva’s growth has slowed in recent years and now shares in the company look relatively expensive. Indeed, even though Aveva’s earnings per share have fallen 30% in two years they still trade at a forward P/E of 28. City analysts are expecting the company to return to growth this year, but EPS growth of only 11% is predicted. 

On the other hand, shares in Wandisco may look relatively expensive, but as the company moves to cash flow break-even over the next 12 months, the investment case should change significantly, and the company will likely become a well-funded growth stock. 

Put simply, if Wandisco can repeat 2016’s growth, the company could be a better growth buy than Aveva. 

The post Is Wandisco plc set to take off after soaring 20% on FY results? appeared first on The Twelfth Magpie.

More reading

• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?

Rupert Hargreaves 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.

Software star

Shares in IT giant Fidessa Group (LSE: FDSA) were basically unchanged in Thursday trade, despite the release of a positive trading update.

Although trading conditions remain difficult for the software play’s client base, Fidessa advised that

“the themes Fidessa saw during 2015 are continuing, with more opportunities opening up as customers position their businesses for the future.”

Indeed, Fidessa said that it expects the investments made during the recent downturn to leave it well positioned for the near-term and beyond.

The City certainly believes that Fidessa is a company on the rise, and expects earnings to rise 4% in 2016 and 5% in 2017. While subsequent P/E ratings may be a tad heady on paper, a dividend yield of 3.5% through to the end of next year helps to mitigate these elevated multiples. I reckon Fidessa could prove a canny growth pick as market conditions steadily improve.

Over and out?

Things are not quite as bubbly over at digital radio manufacturer Sepura (LSE: SEPU), however. The stock continues to oscillate wildly, and although shares are up 18% in Thursday business, Sepura’s value is still down almost three-quarters since the start of the month.

Sepura announced at the beginning of April that “two significant opportunities” had not been signed-off in time for the close of the year. As a result, the radio specialists expected EBITDA for the period to March 2016 to register between €16m and €20m.

This estimate was confirmed today, with full-year earnings chalked up at €17m. However, the failure of Sepura to close out the orders has placed huge stress on the balance sheet. The company now plans to raise £50m via a rights issue, and has commenced talks with its creditors over possible covenant breaches.

Still, today’s release further illustrated the breakneck demand for Sepura’s gizmos, with organic revenues rising by 10% last year to €145m.

The City consequently expects earnings to surge 96% and 11% in 2017 and 2018 respectively, resulting in P/E ratios of 9.8 times and 9.1 times. And these ultra-low readings suggests that the near-term risks facing Sepura are currently baked into the share price.

WANdisco dances higher

Software play WANdisco (LSE: WAND) has fared much better in Thursday’s session, with an 18% surge taking the stock to levels not seen since last July.

The market became giddy following news that the firm had inked a non-exclusive OEM sales agreement with IBM, a move that will see WANdisco’s Fusion data replication product installed as a standard component for the US giant’s storage and analytics software.

WANdisco advised that

“whilst we expect that revenues will begin to flow during the second half of this year, we will provide further guidance once product launches have taken place and initial customer uptake has been evaluated.”

News of monster deals like these should, of course, make investors sit up. But the full financial impact of this latest accord is yet to be evaluated. And in the meantime, WANdisco is likely to remain at the mercy of variability in new contract bookings.

The City expects the tech play to remain in the red for the foreseeable future, with losses of 67 US cents and 55 cents expected for 2016 and 2017 respectively. I reckon investors should give WANdisco a miss until it can show signs of sustained revenues growth.

The post Should you buy WANdisco plc, Fidessa Group plc & Sepura plc & today? appeared first on The Twelfth Magpie.

More reading

• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?

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

Panic at WANdisco

Information technology play WANdisco (LSE: WAND) shocked the market in Wednesday trading following the release of a disappointing trading update, and the stock was last seen dealing 29% lower on the day.

WANdisco advised that revenues in 2015 are likely to have fallen below analysts’ expectations due to “new sales bookings continuing to show variability.” Although the Sheffield firm advised that deferred revenues from previous bookings mitigated these problems, variability in new contract wins remains a headache for the firm.

 On the plus side, WANdisco advised that marketing and co-selling activity with industry giants like Amazon, IBM and Oracle picked up between July and December. And behind the scenes, massive cost-cutting is helping to mitigate current revenues troubles — indeed, extra measures during the second half should result in a smaller adjusted earnings loss than the City is predicting, WANdisco advised.

The number crunchers expect the business to have experienced losses of 87 US cents per share in 2015, and additional losses — this time by 77 cents — are predicted for the current year. While WANdisco’s products show great promise, unless the firm can get to grips with revenues choppiness I expect investors to continue heading for the exit.

Housebuilder heading higher

Housing star Bellway (LSE: BWY) provided the market with a much-bubblier trading update in midweek trading, a factor that helped drive shares 3% higher from Tuesday’s close.

Bellway advised that housing completions surged 11.6% between August and January, to 4,188 units. And average selling prices rocketed 17% in the period to a record £257,000.

The Newcastle firm noted that “trading conditions continue to be favourable,” fuelling expectations that volumes should surge 10% in the year to July 2016. Bellway’s order book currently stands at a robust 4,434 homes, up from 4,213 homes last year, the company added.

The City expects Bellway to enjoy a 17% earnings advance for 2016, leaving the business dealing on an ultra-cheap P/E rating of just 9.9 times. And Bellway’s ultra-progressive dividend policy is expected to throw up a decent 87.8p per share payout, yielding a chunky 3.4%. I fully expect terrific profits growth to keep powering dividends in the years ahead.

Commodities play still crashing

Diversified resources giant Glencore (LSE: GLEN) has failed to benefit from the relief rally currently washing over the FTSE indices in Wednesday trading, with an extra 3% decline pushing it to levels not visited since last week.

And I expect Glencore to re-visit the troughs of last autumn, around 68p per share, as there are no signs of improving supply/demand dynamics in any of its key commodity markets. Data from China continues to disappoint, while other major material producers remain reluctant to follow Glencore’s lead and cut production across chronically-oversupplied markets like copper and coal.

The City expects Glencore to recover from a predicted 63% earnings slump in 2015 — the third dip on the trot if realised — with a 19% rise in the current period. I cannot see such a situation arising, despite the firm’s ambitious self-help measures, thanks to the enduring down trend in commodity values.

And with a prospective P/E multiple of 14.8 times failing to factor in Glencore’s high risk profile, I reckon the stock has much more ground to concede, particularly in an environment of intensifying market jitteriness.

The post Should You Buy Glencore PLC, Wandisco PLC & Bellway plc On Wednesday? appeared first on The Twelfth Magpie.

More reading

• Down 10% to below £6 now! Here’s why Glencore’s share price looks a bargain to me anywhere under £12.13
• Warren Buffett warns on valuations — is market cap-to-GDP flashing a bubble signal again?
• 2 FTSE 100 dividend stocks that stand out for shareholder returns
• Up over 100%, are these FTSE 100 names still among the top stocks to buy?
• Up 103% with a P/E of 261 — is this FTSE 100 stock still worth buying?

Royston Wild 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.

These companies are way too cool to have names like Moss Bros, A&J Mucklow or Jersey Electricity Company. They’re also way too cool to be making any profit! However, fans are not concerned with current losses; it’s the potential size of future earnings that turn heads.

Will it be boom or bust for investors in AudioBoom, blinkx and WANdisco?

AudioBoom

AudioBoom describes itself as “the audio equivalent of YouTube“. In the three years to 2013, the company generated revenues of £136,000 and racked up losses before tax of £3.2m. The company’s main backer and other shareholders were unable or unwilling to continue financing the cash drain, and spent nearly a year touting the business to Venture Capital and Private Equity in the UK and US. There was no interest.

However, AIM investors lapped up the AudioBoom story when the company was reversed into a cash shell last summer with a notional market capitalisation of £7m. By 30 September, the market cap had increased 11-fold to £77m, and the company raised £8m in a discounted placing. At today’s share price of 9.6p, the market is valuing AudioBoom at £50m.

AudioBoom will continue to burn cash “for the foreseeable future”, and has some heavierweight “direct competitors” — it names Soundcloud in particular — and “indirect competitors”, such as Spotify, as well as facing the potential threat of better-resourced new entrants.

Venture Capital and Private Equity — who could have cut an infinitely better deal than AIM investors are getting today — turned AudioBoom down. That tells me there’s a high risk of bust for investors in this company.

Blinkx

Video search engine firm Blinkx at least has a money-making history, posting a $17m profit on revenue of $247m for 2013. The company’s shares reached 230p (market cap £850m) in November that year, but were hammered the following January by a critical blog post from Harvard University professor Ben Edelman. Edelman alleged that some of the company’s methods were so dubious that the business model was unsustainable.

Blinkx immediately denied the allegations, and on 6 May reported strong results and a confident outlook (with no further reference to Edelman). However, eight weeks later, the company issued a profit warning, blaming “industry-wide issues of efficiency and effectiveness … compounded by the lingering effects of the disparaging blog”. A further profit warning followed in October, and in November the company reported a half-year loss of $12m.

Today, Blinkx’s shares trade at 28.7p (market cap £115m), suggesting the market has serious doubts about the viability of the business model and management’s explanation for the poor performance. It’s been an 88% bust for investors who bought into Blinkx at the highs. Whether the shares will boom from the current lows looks a high-risk bet. In my view, Blinkx has it all to prove.

WANdisco

WANdisco does “Big Data” and is loss-making: $20m in 2013, with further heavy losses expected into the foreseeable future. This time last year, the shares were trading at 1,370p (market cap £325m). Today we’re looking at 397p (market cap a bit under £100m).

Nevertheless, WANdisco has its share of enthusiastic AIM investors, who are ready to keep stumping up cash in the hope of vats of jam tomorrow. The company has recently proposed another discounted placing to raise $25m.

How much money AIM investors can be persuaded to stump up — and how frequently — isn’t a particularly reliable guide to how successful the company will be in delivering shareholder value in the future. However, banks tend to be a little more judicious, so I’m quite taken with the fact that WANdisco has been able to negotiate a $10m revolving credit facility with HSBC on very attractive terms. HSBC said: “We were sufficiently impressed with the company’s growth prospects to make a commitment at investment-grade interest rates”.

WANdisco could just be the pick of the three firms as a potential boom stock for investors with a high tolerance for risk.

The post Will It Be Boom Or Bust For Audioboom Group PLC, Blinkx Plc And Wandisco PLC? appeared first on The Twelfth Magpie.

More reading

• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?

G A Chester 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.