The Motley Fool

2 ‘secret’ growth stocks with massive potential

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.

With a relatively small market cap of £400m, IT security firm GB Group (LSE: GBG) isn’t a household name, but I reckon this fast growing company could be one day. That’s because GB Group is cashing in on the rapidly growing demand for its identity verification services for background checks, fraud detection, customer validation and marketing campaigns, among others.

As we see in the below table these offerings are increasingly popular with clients such as Ford, Barclays and HSBC concerned about fraud.

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!

 

2014

2015

2016

Revenue (£m)

41.8

57.2

73.4

Adjusted Operating profit (£m)

7.1

10.7

13.4

Earnings per share (p)

5.5

7.9

10.6

The company isn’t resting on its laurels either and is using internal R&D and acquisitions to constantly add to its list of offerings in order to increase its stickiness with clients. The latest of these additions includes ID Scan, the market leader in automating the process of biometric verification for banks, passports and e-commerce. It goes without saying that this is a high-growth sector due to security fears from companies and governments alike.

The growth in these markets and a stellar record of four straight years of double-digit earnings rises mean the market is unsurprisingly bullish on the company. And its valuation reflects this optimism with its shares trading at 31 times forward earnings.

But I still believe GB Group is a great stock to own for the long term with a proven management team, healthy balance sheet providing ammunition for further acquisitions, and huge organic growth potential. This is one secret growth stock I’ll be following closely.

Founders know best

Another little known small-cap primed to make waves is clothing retailer Joules Group (LSE: JOUL). The company’s high-quality classic floral prints and stripes aren’t competing with the newest designs from fast fashion retailers, but this is just fine with the 30-something demographic it’s targeting.

Indeed sales were up 16.2% year-on-year to £81.4m in H1 due to fast growing online sales, a presence in more department stores such as John Lewis, and new stores of it sown. And with just 107 stores at period-end there’s still plenty of room to expand in the coming years.

The company’s management team is also wisely moving into international markets at a gradual pace. Rather than over-extending itself with a slew of owned retail stores in a variety of new markets, it is instead introducing the brand through department stores and other wholesale customers.

The 39.3% year-on-year increase in international sales to £8.6m in H1 also suggest that the brand is finding success in marketing itself abroad as quintessentially British, much as other companies such as Cath Kidston have done.

The company’s shares are somewhat pricey at 26 times consensus forward earnings, but I believe Joules’ founder-led design team and extensive growth prospects at home and abroad is setting the firm up for a very bright future.

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…

Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Ford. The Motley Fool UK has recommended Barclays and HSBC Holdings. 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.