3 top stocks you’ve been overlooking

Royston Wild reveals a clutch of stocks shockingly ignored by the market.

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Market appetite for Sage Group (LSE: SGE) has trended lower since the stock hit record tops in October, the firm now dealing at a 10% discount to those heady levels. I reckon this provides a fresh opportunity for savvy dip hunters to pile in.

And I reckon a bubbly full-year statement (scheduled for Wednesday, 30 November) could prompt fresh inflows into the accounting software specialist.

Sage announced in July that organic revenues jumped 6.1% during the nine months covering October-June, with organic recurring revenues leaping 10.1% in the period. This strong performance was “driven by continued momentum in Europe and North America,” Sage noted, while an improvement in its other territories during the third quarter also helped drive the top line.

The City certainly expects Sage’s compelling growth story to keep rolling, and rises of 9% and 16% are chalked in for the periods to September 2016 and 2017 respectively.

While this year’s projection results in a slightly-topping P/E rating of 21.4 times, I reckon Sage’s growing success across the globe merits such a premium.

Payment powerhouse

Investor demand for PaySafe Group (LSE: PAYS) has also sunk in recent sessions, the company also retreating from recent all-time highs despite the release of upbeat trading numbers in November.

Paysafe — which provides online payment and money transfer services — announced that it remained on track to meet its upgraded revenues guidance of $970m-$990m made during the summer. As well as benefitting from an increasingly-cashless world, shrewd acquisitions like that of Skrill in 2015 are also helping to drive business.

And Paysafe certainly appears attractively priced at current levels. The number crunchers expect earnings at the company to detonate in 2016, and another 15% rise is predicted next year.

These figures result in P/E ratios of 12.6 times and 11 times correspondingly, well below the benchmark of 15 times widely considered attractive value. I reckon Paysafe’s rising position in a fast-growing market should undergird stunning earnings growth in the years ahead.

Paper tiger

Packaging giant Smurfit Kappa Group (LSE: SKG) is another FTSE 250 star I consider to be dealing far too cheaply at current prices.

The company’s long-term growth story is expected to come under pressure in 2016, and an 8% decline is currently predicted by City brokers. But this weakness is expected to be a temporary phenomenon, and a 4% rise is forecast for 2017.

These predictions result in ultra-cheap P/E ratings of 10 times and 9.6 times. And Smurfit Kappa also provides exceptional value for income chasers — yields of 3.7% for this year and 3.9% for 2017 trump the London big-cap average of 3.5%.

And I expect Smurfitt Kappa to generate splendid shareholder returns long into the future as the firm expands its geographical footprint, a factor that helped revenues at constant currencies jump 6% during July-September. And I expect sales to keep rising as the packaging play’s strong balance sheet likely powers even more acquisitions.

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.

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.

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