2 top growth stocks I’d buy right now

Royston Wild discusses two stocks with exceptional earnings outlooks.

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ULS Technology (LSE: ULS) found itself trekking south in Tuesday business after the release of full-year trading numbers, the stock last 2% lower on the day.

I would regard this as nothing more than signs of light profit-taking following ULS’s heady ascent of recent months. The stock has gained 94% in value over the last year and topped out at 129p per share earlier in June.

The Oxfordshire company provides online technology for the UK conveyancing and financial intermediary markets. It advised that revenues increased 8% in the 12 months to March 2017, to £22.3m, while gross margins advanced 9% to £9.5m. The result powered underlying pre-tax profit 15% higher to £4.4m.

And chief executive Ben Thompson suggested that there is more to come, commenting that “we approach the new financial year in the knowledge that we are successfully increasing our conveyancing market share.”

He added: “Our current trading and instruction levels are buoyant and we intend to continue outperforming the market through further enhancing our technology and services that we provide to our business partners and their customers.” 

Home comforts

ULS’s ability to perform in a shrinking market is nothing short of outstanding, the business increasing organic sales by 4% even as market volumes receded by 13%. And acquisitions like that of Conveyancing Alliance Holdings last December should keep the bottom line on an upward trajectory.

The City shares my positive outlook, and expects earnings at ULS to detonate 40% in fiscal 2018. And another 8% rise is chalked in for the following year.

The tech giant may not appear to provide decent value at first glance, ULS sporting a forward P/E ratio of 19.7 times, perching above the widely-regarded threshold of 15 times or below. But in fact a sub-1 prospective PEG multiple of 0.5 suggests the business is actually brilliantly priced relative to its growth prospects.

And I reckon this should add to fresh share price strength in the weeks and months ahead.

Trading titan

Nex Group (LSE: NXG) is another London-quoted stock with very sunny earnings prospects, with expectations of improving trade volumes (boosted by the benefits brought by rising regulatory pressures) underpinning current analyst forecasts.

The broker advised this month that European repo volumes surged 34% year-on-year in May, to €226.9bn. Meanwhile, US Treasury and US Repo volumes improved 9% and 2% respectively, to $170bn and $216.5bn, while volumes at its currency operations shot 12% higher to $81.3bn.

City brokers are also pretty optimistic over Nex’s earnings picture in the near term and beyond. A 33% advance is predicted for the year ending March 2018. And an extra 17% rise is expected in fiscal 2019.

Like ULS, the London firm may not appear great value from a conventional standpoint, its prospective P/E ratio ringing in at a lofty 20.9 times. However, a forward PEG reading of 0.6 times tells a different story.

I also reckon Nex has what it takes to beat recent record highs, the stock having hit a peak of 672p per share just last month.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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