5 Small-Caps With Big Ambitions: Character Group plc, Inland Homes PLC, Tribal Group plc, Victoria PLC & Volex PLC

Character Group plc (LON: CCT), Inland Homes PLC (LON: INL), Tribal Group plc (LON:TRB), Victoria PLC (LON: VCP) and Volex PLC (LON:VLX) are all undervalued small-caps.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

There is a body of research that shows that over the long term, small-cap stocks consistently outperform their large-cap brethren.

With this in mind, I screened the market for the top small-cap growth stocks. Here are just five of the screen’s results.

All companies have a market cap between £50m and £150m with a price to earnings growth ratio of less than one. 

Leading toymaker

Character (LSE: CCT) is one of the UK’s leading toymakers and sales are booming. 

The company manufactures branded children’s toys including the Peppa Pig, Scooby Doo, Doctor Who, Fireman Sam and Weebles brands. 

And sales have really taken off over the past year. For the six months to 28 February 2015, Character reported record revenues and profits. Pre-tax profit jumped 178% year on year while revenue increased by a quarter. 

Further growth is predicted for the rest of the year. City analysts believe that Character’s earnings per share are set to jump by 51% for full-year 2015. The company is currently trading at a forward P/E of 10 and a PEG ratio of 0.2. 

Booming home sales 

Inland Homes (LSE: INL) is a great small-cap play on the UK’s booming housing market. City analysts have pencilled in 70% earnings per share growth for Inland during 2015, suggesting that the company is trading at a forward P/E of 14.5. These figures indicate a PEG ratio of 0.2. 

Analysts believe that Inland’s earnings will expand a further 18% during 2016, which means that the group is trading at a 2016 P/E of only 12.4. Inland currently yields 1.2%.

Slow and steady 

Education support services company Tribal Group’s (LSE: TRB) growth isn’t anything to get excited about, but the group’s low valuation, combined with its stable earnings growth, earns it a place on this list. 

Tribal’s earnings are set to expand 13% during 2015 and 10% during 2016. According to City figures, the company currently trades at a forward P/E of 11.4 and 2016 P/E of 10.4. This low valuation coupled with Tribal’s double-digit growth rate means that the group is trading at a PEG ratio of 0.9.

Tribal currently yields 1.4%. 

Boring is good

Victoria (LSE: VCP) is an international carpet producer and distributor… hardly the most exciting business in the world. 

Nevertheless, demand for carpets is taking off and Victoria’s earnings per share are set to jump by 36% this year. The company is currently trading at a relatively demanding forward P/E of 25.7, although when compared to Victoria’s projected earnings growth, this valuation isn’t overly concerning. Victoria currently trades at a PEG ratio of 0.7.

According to City figures, the company’s earnings are set to grow a further 41% during 2016. Victoria is trading at a 2016 P/E of 18.3. 

Recovery in progress 

The last company on my small-cap growth list is Volex (LSE: VLX). Volex has struggled to turn a profit during the past two years, as falling sales and a drastic restructuring program have taken their toll on results. 

Nevertheless, according to the City’s figures, Volex is set to return to growth during 2016. Specifically, Volex’s earnings per share are set to rise 126% during 2016. This means that the company is trading at a 2016 P/E of 13 and PEG ratio of 0.1. 

Earnings growth of 20% is expected during 2017 and Volex is trading at a 2017 P/E of 9.4. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Investing Articles

Dividend Shares

£3k in savings? Investors could consider putting it here for juicy second income

Jon Smith talks through how investors could buy dividend stocks with yield potential in excess of 6.5% for second income

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

Why the boohoo share price soared by almost 14% in November

Is troubled online fashion retailer boohoo beginning a turnaround that may cause the share price to rocket through 2025 and…

Read more »

Young Asian woman holding a cup of takeaway coffee and folders containing paperwork, on her way into the office
Investing Articles

Here’s how saving £5.40 a day could net me £1,971 yearly passive income for life

The price of a cup of coffee seems to have broken the £5 mark. Is it time to put that…

Read more »

Investing Articles

2 top FTSE 100 stocks surging to record highs (hint — not Rolls-Royce)!

Ben McPoland takes a closer look at a pair of high-performing FTSE 100 stocks that continue to enrich long-term shareholders.

Read more »

Investing Articles

A cheap FTSE 100 share to consider buying for the next 10 years!

This FTSE 100 share has pride of place in my portfolio. Here's why I think it could be a top…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Down 44% in 2 months! Is this FTSE 250 green energy pioneer priced too cheaply?

After a sharp tumble in recent months, this FTSE 250 company with a growing order book is almost 90% below…

Read more »

Investing Articles

Investing a £20k Stocks and Shares ISA in this high-yielder might give me a £2,000 annual income

Harvey Jones is now wondering whether to pour his entire Stocks and Shares ISA allowance into a single FTSE 100…

Read more »

Investing Articles

Saving £20k in an ISA? Here’s how I’m aiming to turn that into a stunning £2,035 monthly passive income

Harvey Jones is keen to build a high and rising passive income by investing in a balanced spread of top…

Read more »