3 small-cap shares with stunning growth potential

Royston Wild looks at a handful of small caps with exceptional earnings potential.

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I believe a robust US economy should continue to propel demand for the promotional materials created by 4Imprint Group (LSE: FOUR) in 2017 and beyond.

4Imprint saw sales of its branded T-shirts, pens and other nick-nacks shoot 17% higher during January-June, to $270.2m. Total like-for-like trading was 15% ahead of the corresponding period in 2015. And in a promising update last month, the firm announced that “further organic revenue growth has been achieved” since the beginning of August.

The marketing giant generates 96% of total sales from North America, making it relatively immune to any adverse Brexit-related troubles in the months and years ahead.

City analysts certainly expect earnings at 4Imprint Group to keep shooting higher, and expect earnings growth of 23% and 11% for 2016 and 2017. While these readings create slightly-heady P/E multiples of 21.3 times and 19.2 times, I believe this is a snip considering 4Imprint’s exceptional revenues momentum.

Building beauty

But for those seeking hot growth at bargain-basement prices, I reckon building products provider Tyman (LSE: TYMN) more than fits the bill.

A sleepy US residential market is showing signs of finally cranking into gear, with construction spending hitting seven-month tops in October and driven by a 1.6% rise in residential-related expenditure. And Tyman is banking on recent acquisitions, new product lalunches and organisational improvements to keep driving the top line, even if macroeconomic turbulence troubles its other regions.

Tyman’s broad geographic diversification has already made it a reliable deliverer of sizeable earnings growth year after year, and the City expects this to continue with bottom-line expansion of 12% in 2016 and 13% next year.

Not only do such projections create modest P/E ratios of 11.6 times and 10.2 times — well below the benchmark of 15 times widely considered attractive value — but this year’s PEG rating is bang on the value yardstick of one. And this slips to an even-better 0.8 for 2017.

A shoe in

I’m convinced that electric demand for Jimmy Choo’s (LSE: CHOO) fashionable footwear should also underpin stunning earnings growth in the years ahead.

The company continue to face up to the difficulties enveloping the global luxury market, and commented last month that “Jimmy Choo is seeing revenue growth driven both by new store openings and by improving retail trading in all regions.” And the label is looking to capitalise on huge pent-up demand in Asia by aggressively expanding its shop network there — regional sales of its shoes (excluding Japan) climbed by almost a quarter during January-June.

The number crunchers share my optimistic view of Jimmy Choo’s bottom line, and have pencilled-in a 33% earnings rise in 2016. And an extra 24% bump is predicted for next year.

These projections  push a P/E multiples of 20.3 times for the current year to 16.4 times in 2017. Meanwhile, PEG ratios of 0.6 and 0.7 for 2016 and 2017 suggest that Jimmy Choo is great value at current prices.

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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