3 attractive growth shares I’d buy in February

There could be some nice growth stock bargains among February’s results.

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We’ll start to see lots of full-year results for 2016 rolling in during February, along with other enticing news. I’ve been trawling through the month’s expected company announcements, and a few are showing nice growth potential over the next few years. Here are three that I’d definitely consider buying:

Electric surge

There’s a trading update due from Electrocomponents (LSE: ECM) on 10 February, and after a few years in the doldrums, shares in the the electronics and electrical supplier have more than doubled to 488p over the past 12 months. That puts them on a P/E for the full year to March 2017 of nearly 25, which is high by average measures, but the PEG ratio stands at an attractive 0.5. And we’re still looking at several more years of forecast earnings growth, starting with 54% for the current year.

The first half brought an 85% spike in underlying pre-tax profit, leading to a 57% rise in underlying EPS — as an exporter, the company benefited from the falling pound. Chief executive Lindsley Ruth was moved to say that “while we have taken a major step forward, we are only just at the beginning of this journey“.

The P/E should drop to under 20 by 2018, and after a few flat years, dividends look set to start growing in 2017 from a base of 2.5%. If the update confirms what analysts are predicting, we could be at the start of a strong long-term spell for Electrocomponents.

Packing up

Packaging and labeling specialist Macfarlane Group (LSE: MACF) is one that would pass under many investors’ radar, but I’m seeing attractive growth characteristics here.

Full-year results are due on 23 February, and in its last update, Macfarlane told us that the “momentum achieved in the first half of 2016 has strengthened in the second half of the year with improving organic growth and the continuing benefit from acquisitions” while predicting that full year expectations will be met.

We’ve seen earnings per share growing strongly for several years, only slightly interrupted by a 5% fall in 2012 — but that came after a 43% rise in 2011. There’s more of the same to come, with the City experts suggesting an EPS gain of 26% for the year just ended in December 2016.

That puts the 60p shares on a P/E of only 11, dropping to 10 on 2017 forecasts, and a PEG of just 0.4 (where anything under 0.7 is usually seen as a good sign). And there are progressive dividends too, set to yield 3.2%.

Betting bargain

Shares in Playtech (LSE: PTEC) have fallen over the past few months, to 806p, over fears that new regulations on online spread betting could put a squeeze on profits — Playtech supplies software for the industry.

But the company doesn’t believe there will be any adverse effect, although forecasts suggest a modest 2% fall in EPS for the year just ended — results are due on 23 February. In its 10 January trading update, the firm told us that everything is going in line with expectations and that it “remains confident of further growth in 2017 and beyond“.

On the fundamentals front, we’re looking at a P/E for December 2016 of 14, forecast to drop to under 10 by 2018, giving us forward PEG ratios of 0.4 and 0.9 for this year and next. Coupled that with a 2016 dividend yield of 3.3%, predicted to rise to 4.1% this year and 4.6% next, and Playtech could be another nice little growth purchase.

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 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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