The Motley Fool

2 stock market newcomers on my radar after maiden results

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.

Many companies that list on London’s junior AIM market are infant businesses with little in the way of trading histories. Most of them I consider to be sub-investment grade material.

However, some well-established firms also choose to float on AIM and these are often worth a second look. Media group Time Out (LSE: TMO), which was founded in 1968, and property company Watkin Jones (LSE: WJG), whose history goes back as far as 1791, have both joined the junior market this year.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Ambitious growth strategy

Time Out was floated at 150p a share in June, raising net funds of £59m after paying off debts of £25m. Management plans to continue the transformation of what was originally a traditional print brand into a global multi-platform media and e-commerce business.

It’s an ambitious and many-pronged growth strategy. It includes content distribution through magazines, online, mobile apps and mobile web, live events and the rollout of Time Out Market, a concept trialled in Lisbon that brings together a curated selection of a city’s best restaurants, food shops and culture under one roof.

Results and valuation

In its maiden half-year results as a listed company, announced today, Time Out reported pro forma group revenue of £16.6m — an increase of 16% (13% at constant currency) on the same period last year. Meanwhile, the operating loss was broadly the same at £7.3m.

The shares are little changed from yesterday’s closing price of 140p, which gives Time Out a market value of £182m. This represents 5.5 times annualised first-half sales, which strikes me as rather rich for a company with healthy, but unspectacular, mid-teens revenue growth.

Time Out’s multi-faceted growth strategy has potential, but appears far from straightforward to execute. And with the company being lossmaking and not intending to pay a dividend for the foreseeable future, I think this is a stock best watched for the time being.

All according to plan

Watkin Jones was floated at 100p a share in March. The company, which specialises in the development, construction and management of student accommodation, today released an on-track update on projects that have been completed ahead of the start of the 2016/17 academic year.

This continues the solid news issued by the company since the release of its maiden listed interim results in June. Those results saw revenue increase by 41% on the same period last year, with earnings (excluding the one-off flotation costs) increasing 87%. The board declared an interim dividend in line with the guidance it gave at flotation.

With everything going according to plan, the market has begun to warm to Watkin Jones. The shares have edged higher again today to 119.5p, giving the company a market value of £305m.

Undemanding valuation

I like Watkin Jones’ area of specialisation, its forward-sale business model and end-to-end service, all of which reduce risk and improve earnings and cash flow visibility. And I reckon the shares remain good value despite the rise since flotation.

A rating of 11.5 times annualised first-half earnings is undemanding, and falls to 9.9 based on the house broker forecast for the full year ending 30 September. Meanwhile, company guidance on the full-year dividend gives a nice yield of 3.3%.

I’m expecting earnings and dividend growth of at least 10% next year, which gives me further cause to rate the shares a buy.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.