The Motley Fool

2 recovering growth stocks to help you achieve financial independence

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.

Shares in Quantum Pharma (LSE: QP) had already been falling when a shock profit warning at first-half results time in October saw a further 50% knocked off the price.

Incoming chief executive Chris Rigg had launched a major operational review, and a trading update Wednesday showed just how far the company has come — impressing the markets enough for a 6% share price rise to 58.5p on the day.

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…

Non-core activities have been dumped as the firm has been refocusing on its Niche Pharmaceuticals business, which is now described as “a highly profitable division” with an improving development pipeline.

With plans to expand internationally, Quantum is apparently ahead of its strategic plan — and that plan has already resulted in an improved financial performance and higher overall margins.

Net debt was slashed in half by the time the full year was reported in May, thanks to a £15m placing, and the lossmaking NuPharm being closed, though the company did report a pre-tax loss of £10.9m.

From the ruins

In short, the new Quantum Pharmaceuticals looks like a very different entity to its first incarnation from its original flotation in 2014, but I don’t think the markets have yet woken up to the potential of the regenerated company.

Forecasts indicate a return to profit for the year to January 2018, with earnings growth of 32% pencilled in for the following year, sending the P/E down as low as 14 and giving us a PEG of just 0.45. To me, that’s a very attractive valuation for a company with these growth prospects.

Those who bought in the dip after last year’s price crash will have seen their investment rise by close to 70% by now, but I reckon there’s still time to grab a bargain.

A Neil Woodford bargain?

In biotechnology probably more than anywhere, early promises often fail and the risks come home to roost. That much is clear from Circassia Pharmaceuticals (LSE: CIR), a growth prospect that top investor Neil Woodford bought a chunk of.

But the firm’s big promise, a cat allergy vaccine, failed in its phase III trials. That was followed by a dust mite allergy study failing to meet its phase IIb primary endpoint in April this year, bringing to an end the company’s investment in allergy research.

Since the bad news hit, Circassia shares have lost two-thirds of their value, as early growth investors fled. But Neil Woodford didn’t sell, seeing value in what was left of the firm at its new low price — and there’s actually still quite a lot left.

Impressive portfolio

The firm has a range of successful respiratory treatments, and has signed up with AstraZeneca to commercialise two of its COPD products in the US — and its US sales force is ramping up as a result.

Sales of asthma management product NIOX are growing too, up to £23m in 2016, and chief executive Steve Harris reckoned Circassia is heading to become a “world-class, self-sustaining specialty pharmaceutical business.

All of this promise will count for nought if we never see any profits, and there are none on the analysts’ radar for this year or next. But Mr Woodford has said that he sees the firm as being “very well-financed” and thinks he sees “long-term value in the shares.

For me that cements Circassia as a buy.

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…

Alan Oscroft 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.

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.