With stock markets tumbling around the world, now is the time to bag a bargain. In particular, there are a wide range of growth companies which are as cheap as chips. So here are my three small-cap picks.
Globo
Globo (LSE: GBO) is a technology company that provides mobile apps and services to business. This is a fast-growing area, and the company has seen an impressive increase in its earnings, as the eps progression below shows:
| 2011 | 2012 | 2013 | 2014 | 2015 |
| 3.26p | 4.22p | 6.2p | 8p | 10p |
When a company grows as quickly as this, there can be a lot of volatility, but choose your moment well and you can bag a growth company at a value price.
I think this is one such moment: the 2014 P/E ratio is 5.6, falling to 4.5 in 2015. Considering how quickly this company’s profits are growing, that is astonishingly cheap.
Plus500
Plus500 (LSE: PLUS) provides an online platform that allows customers to trade shares, commodities and currencies, with a particular emphasis on CFDs and derivatives. This business is also experiencing amazing growth, as the earnings per share numbers show:
| 2011 | 2012 | 2013 | 2014 | 2015 |
| 9.65p | 10.46p | 28.5p | 56.33p | 62.52p |
So this company is growing even more quickly than Globo, yet its current rating is surprisingly cheap. The 2014 P/E ratio is 9.3, falling to 8.4 in 2015. What’s more, there’s an added advantage: this is also an income share, with a dividend yield of 6.4%, rising to 7.0%. So this company is rapidly growing, with a high and rising dividend yield, yet it is priced like a value investment.
Quindell
I have written about Quindell (LSE: QPP) many times. But I am still convinced that this is one of the buys of the moment.
Stung by criticism from the now infamous report by Gotham, this insurance outsourcing company has adjusted its focus, trimming its ambitious growth targets and increasing its cashflow. I think this is a sensible move, and does not affect my view that this company is too cheap.
Despite the ups and downs of the share price, Quindell is pressing ahead with its expansion. Last week’s announcement of a contract with a leading insurer in Canada is one of many contract announcements it has made this year.
Of the three companies in this article, Quindell is the fastest growing – just look at its earnings per share progression:
| 2011 | 2012 | 2013 | 2014 | 2015 |
| 5.14p | 14.97p | 29.28p | 53.89p | 80.41p |
Yet it is also the cheapest: the 2014 P/E ratio is 2.7, falling to 1.8 in 2015. Personally, I think all three of these companies are well worth buying into.
