The Motley Fool

2 high-growth stocks you might regret not buying

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 of small-cap fund manager Miton Group (LSE: MGR) clocked up a 9% gain on Friday morning after the company said that results for 2017 should “exceed market expectations”.

This is the second time this year that Miton has forced City analysts to upgrade their estimates. The business is often overlooked by private investors due to its modest £65m market cap, but in my view it’s potentially a better buy than some larger rivals.

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!

Still looks cheap to me

At the end of October, the group had £3,635m of assets under management. It said that it has seen net inflows of new investor cash over the second half of the year and this suggests rising demand for the group’s investment expertise, much of which is focused on small-cap stocks.

Another attraction is that the group’s top fund manager, Gervais Williams, has a 6.88% stake in the firm. Mr Williams also has a seat on the board, so I think it’s fair to say that the company is unlikely to take short-term risks that could sacrifice long-term growth. Although he could unsettle the market if he ever chose to leave, this seems unlikely at present. On balance, I believe management interests are well aligned with those of shareholders.

Miton shares have risen by 28% over the last year, and by 69% over the last five years. Despite these gains, the stock currently trades on a forecast P/E of around 14, falling to a P/E of about 12 for 2018.

The dividend payout has grown at an average of 20% per year since 2011. A payout of 1.1p per share is expected this year, giving a forecast yield of around 3.1%. I believe further growth is likely in 2018, given the group’s debt-free balance sheet and strong cash generation.

In my view, Miton certainly rates as a potential buy after today’s news.

Follow the expert money

Miton’s strength is its expert team of specialist fund managers. For investors with an interest in small-cap mining stocks, that kind of expertise is often hard to find. Companies can appear credible but later prove disappointing.

One way to select potential winners is to follow the investments of larger mining firms. For example, the Cascabel project owned by gold and copper miner SolGold (LSE: SOLG) looked an uncertain bet for many years, until autumn 2016, when the group secured financial backing from A$18bn firm Newcrest Mining Limited.

Newcrest has since invested $63m in SolGold in exchange for a 14.54% holding in the company. Based on information in the latest presentation, I estimate that the average share price paid by Newcrest so far is about 30p.

However, SolGold shares currently trade at about 27p, giving us the opportunity to invest at roughly the same price Newcrest has been happy to pay.

SolGold believes that Cascabel could be a world-class discovery, with as much as 10bn tonnes of ore potentially containing 60m tonnes each of gold and copper. The company is now well funded for now, with a supportive industry investor.

Although this is only a small investment for Newcrest, which reported a profit of A$408m last year, I believe SolGold shares could be a good long-term buy at current levels as part of a diversified portfolio.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Roland Head has no position in any of the 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.