The Motley Fool

2 hot growth stocks I’ve added to my watchlist

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.

Magnifying glass on charts
Image source: Getty Images.

Looking for companies exhibiting signs of above-average growth? Here are two great examples from lower down the market spectrum that I’ve added to my own watchlist over the last couple of weeks.

Expectations-beating

With a market capitalisation of just £80m, it’s not surprising if many market participants are unfamiliar with bio-decontamination and containment equipment supplier Bioquell (LSE: BQE). This could be all set to change.

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!

Over the last year, the Andover-based company’s stock has climbed almost 170% in value — yet another demonstration of just how profitable small-cap investing can be if you pick the right stocks at the right time.

While some may claim that the ‘easy money’ has already been made, I’m not so sure. Based on recent trading, it looks like positive momentum seen over the last six months could continue for some time to come.

This month’s trading statement revealed that revenues for the 2017 financial year would be ahead of management’s previous expectations at roughly £29.3m — a 9% rise on the £26.8m achieved in 2016. Even better, the company now predicts that its pre-exceptional earnings before tax will now be significantly ahead of market expectations.

Aside from these encouraging numbers, Bioquell boasts a solid balance sheet with a net cash position of £14.5m at the end of last year. Free cash flow has become healthier over the last couple of years as a result of a reduction in capital expenditure. There’s no dividend right now but this is perhaps to be expected. 

Bioquell confirms its full-year numbers in early March. With its relatively small free float (the proportion of shares in the hands of investors), expect further good news to push the share price firmly onwards and upwards.

“Exceptional” growth

E-learning solutions provider Learning Technologies (LSE: LTG) is another company that’s put in solid gains recently. Its shares have already climbed 55% in value since I last looked at the company in September.

As a result of “exceptional” organic growth and a contribution from a new acquisition, last week’s pre-close update revealed that group revenue would now come in no less than £51.8m — an 83% rise on the £28.3m achieved in 2016. Adjusted earnings before interest and tax (EBIT) are also expected to be “materially ahead” of market expectations of at least £14m — a 100% increase. Based on current performance, it seems the company is well on the way to realising its goal of delivering run-rate revenues of £100m and run-rate EBIT of £25m within the next three years.

With the company’s order book becoming increasingly populated with blue-chip firms and national governments, a promising pipeline of acquisitions and £1m in net cash at the end of December (compared to 38.5m of net debt at the end of 2016), Learning Technologies looks an ideal pick for risk-tolerant growth aficionados.  

Like Bioquell, the company will provide its full-year figures to the market in March. 

Only your watchlist?

So, why not simply buy the shares if I’m keen on them? In a word, valuation.

Thanks to their superb performance over recent months, neither Bioquell nor Learning Technologies come cheap. At 31 times and 39 times forecast earnings respectively, a lot of good news appears already priced-in, suggesting that it might be prudent for prospective investors to consider waiting for short-term traders and early holders to depart with their profits before building a position. 

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

Paul Summers 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.