Should you buy these two after today’s news?

With results out today, are we looking at two nice opportunities?

| 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.

Company news is starting to get a bit thin, but we’re still getting some interesting results coming our way. Here are two companies whose shares have been storming ahead, but is there more to come?

Growth from healthcare

Shares in Craneware (LSE: CRW) have had a storming year, climbing 65% over the past 12 months, and since the end of 2014 they’re up nearly 120%.

Tuesday’s full-year results gave the price a little boost, pushing it up 3% to 1,060p by mid-morning. The software company, which focuses on the profitable US healthcare market, saw revenue up 11% to $49.8m, with adjusted EBITDA rising 10% to $15.9m. Adjusted EPS perked up 13% to 42.9 cents, and an increase in year-end cash to $48.8m helped enable a total dividend of 22 cents (16.5p) per share.

That’s a yield of only 1.6%, but Craneware is on more of a growth valuation at this stage in its development. With several years of double-digit earnings growth expected to continue into 2017, the shares are on a forward P/E of 29 based on June 2017 forecasts.

That might look steep, but chief executive Keith Neilson did say that today’s growth in revenue and EBITDA is “only beginning to reflect the record levels of sales which began three years ago,” adding that the development of the firm’s software suite has enlarged its potential market to “several times larger than it was when we joined AIM in 2007.”

If he’s right, then we could be looking at an attractive growth proposition here, although a PEG ratio (which compares P/E to forecast EPS growth) of 2.6 right now does suggest a lot of the hoped-for growth is already factored into the price and the super bargain days are behind us now.

But having sounded that note of caution, I think earnings growth could start to accelerate in the coming years, and I reckon Craneware could be a good long-term bet.

Back in fashion?

Shares in Ashmore (LSE: ASHM) had a more subdued start to Tuesday, with full-year results keeping them unchanged at 355p by late morning.

The investment manager had been out of fashion for some time with fears over its exposure to emerging markets having an adverse effect on sentiment. But the firm did manage to beat forecasts, after reporting a “recovery in markets and investor sentiment” in the second half. Net revenues fell by 18% to £232.5m, although pre-tax profit declined by a more modest 8% to £167.5m with an impressive EBIDTA margin of 62%. EPS was down 7%, but a total dividend for the year of 16.5p provides an attractive yield of 4.7%.

After a quick post-Brexit dip, the share price recovered to produce a 15% share price rise since the day of the vote — and it’s now up 81% since a 2016 low point on 21 January. So there’s a big question now over whether we should see Ashmore shares as a buy.

City analysts are still putting out a bearish consensus, and with Ashmore shares now on a forward P/E of more than 20 (they’ve been around 14-15 for the past couple of years) I can see why. Investing in areas like emerging markets can be volatile, and they are cyclical — and what that means is we should be getting in when everyone else is pulling out.

Ashmore is still probably a decent long-term investment, but I’d say the best recent opportunity has passed us.

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.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Craneware. 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

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

The National Grid share price just plunged another 10%. Time to buy?

The National Grid share price is one of the FTSE 100's most stable, and nothing much happens to it? Well,…

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

Up 15% in 3 months, but I still won’t touch Vodafone shares with a bargepole

Harvey Jones has been shunning Vodafone shares for years. The FTSE 100 stock is finally showing signs of life, but…

Read more »

Growth Shares

This UK stock could be like buying Nvidia in 2021

Jon Smith thinks he's missed the boat with Nvidia shares, but flags up a UK stock that has some very…

Read more »

Businesswoman calculating finances in an office
Investing Articles

The FTSE 100’s Intertek delivers a bullish update — can the share price soar?

I’d describe Intertek as a quality business with a decent dividend income, but will the share price shoot the lights…

Read more »

Market Movers

Up another 10% yesterday, how high can the Nvidia share price go?

Jon Smith talks through the latest results but flags up why further gains could be harder to come by for…

Read more »

Investing For Beginners

Down 43% in a year, I think this value stock is primed for a comeback

Jon Smith flags up why a FTSE 250 share has fallen so much in the recent past, but explains why…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Nvidia stock is stupidly expensive. Or is it?

Nvidia stock's up over 2,000% in the past five years. Christopher Ruane explains why it could be wildly overvalued --…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

The FTSE 100 stock I’ve been buying this week

Stephen Wright thinks the FTSE 100 slipping back this week has offered an opportunity in one of the highest-quality UK…

Read more »