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Power controller manufacturer XP Power (LSE: XPP) delivered bumper full-year results today. Revenue is 29% higher than the previous year and adjusted diluted earnings per share is up 27%. Management also demonstrated their confidence in the outlook by pushing up the total dividend for the year by 10%.

2018’s off to a good start

During 2017, the firm took customer orders worth just over £184m, which is 38% higher than in 2016. XP Power’s own-designed products drove the success and are proving to be a hit with customers. That demonstrates what a smart move it made by evolving beyond mere sourcing and product distribution and into design and manufacture.

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Chairman James Peters said in the report that 2018 is off to a good start with the backing of a strong order book. The firm will benefit from a full year’s trading from its September 2017 acquisition of Comdel, which Peters said “expands our addressable market.”

Comdel specialises in Radio Frequency (RF) power, which adds a high-power capability to the product portfolio. The company plans to acquire more complementary businesses that expand its engineering capabilities and product range over time. So we can potentially look forward to both organic and acquisitive progress in the years ahead.

Let’s not forget the cyclicality in the business, or that XPP is engaged in a constant battle to stay one step ahead of competition from aggressive Asian producers competing on price as well as quality. However, the outlook for 2018 seems bright and there’s no doubt that XP Power is expanding. In October 2017 construction started on a second manufacturing facility in Vietnam to add to the existing capacity in Vietnam and China.

Robust outlooks

Earnings growth looks set to continue for the next couple of years at least, which should help the firm extend its long record of dividend increases. As long as we don’t bump into a full-scale economic turndown anytime soon, the growth story here looks compelling. I’d be tempted to put shares of XP Power into a diversified portfolio alongside recruitment specialist Robert Walters (LSE: RWA), which also released full-year results today.

Its headline figures are good with constant currency revenue rising 14% compared to 2016, and basic earnings per share shooting up 55%. Management expressed confidence in its outlook by pushing up the final dividend for the year a whopping 50%.

Although there’s a lot of cyclicality inherent in the recruitment sector, things are booming right now. If your’e worried about the UK’s immediate economic outlook, it’s encouraging that 71% of the firm’s net fee income came from abroad during the period, and all operating regions grew both net fee income and operating profit. The company operates in 28 countries “including many of the world’s fastest-growing and exciting recruitment markets,” it noted.

Robert Walters has a good record of earnings and dividend growth and 2018 started well with a continuation of 2017’s operational momentum. At some point, the music will stop and the world will plunge into recession with the bottom falling out of the jobs market. But who knows how far away that point is. In the meantime, Robert Walters looks like an attractive potential investment.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended XP Power. 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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