The Motley Fool

Vodafone Group plc isn’t the only super stock I’d buy right now

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.

Two hands holding champagne glasses toasting each other with Paris in the background
Image source: Getty Images.

There was more good news this morning in full-year results from integrated marketing services company Communisis (LSE: CMS). Revenue during 2017 was up 4% over the previous year, adjusted earnings per share rose 5% and the firm’s strong cash flow enabled a 20% reduction in net debt, down to just over £24m. The directors expressed their satisfaction with this solid financial performance and their confidence in the outlook by pushing up the full-year dividend by 10%.  At today’s share price close to 67p, the forward dividend yield for 2018 sits at just over 4%, which looks attractive.

A new phase of growth

I like the stock because of its modest-looking valuation, strong showing on quality metrics and the momentum in the business and in the share price. The firm could be on the cusp of a new phase of growth, which may lead to a valuation re-rating down the line. Operational progress during 2017 looks compelling. Communisis won a new contract for marketing communication and renewed an existing contract for transactional communication with a “major UK bank,” which will last for five years providing useful earnings visibility. On top of that, a partnership contract with Proximity Ltd to provide communication services to the BBC for the TV Licensing programme was renewed for six years.

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!

Chief executive Andy Blundell announced the launch of a “focused three-year plan” aimed at enhancing returns to shareholders “as we raise the value we provide to our clients.” The firm said it has “clear evidence” that the themes of Digital First, Global Reach and Empowered Organisation “resonate” in its key markets. Buzzwords aside, I’m optimistic that because the new value enhancement programme has been built into the firm’s senior management remuneration policy, we’ll get some decent financial results in the years ahead to drive up the share price.

Underlying progress and a big yield

While we are waiting for renewed growth to materialise there’s a dividend yield running at just over 4% for 2018 to collect. I think it’s a good deal and the stock is well worth your research time right now. Perhaps Communisis would sit well in a portfolio alongside big-dividend payer Vodafone Group (LSE: VOD), the telecommunications company.

For a long time, I wasn’t keen on Vodafone because the firm looked over-valued to me. But since January 2014 the share price has wobbled up and down a bit without making any upwards progress. During that period, operating profits and cash flow have been rising, suggesting progress in the underlying business. Meanwhile, City analysts following the FTSE 100 stalwart have quite robust-looking expectations for forward earnings growth of around 11% for the year to March 2019 and 24% for the year after that.

On balance, I think it’s a good time to revisit the stock. Today’s share price around 206p throws up a forward dividend yield for the trading year to March 2019 of almost 6.5%. I think it’s worth collecting that income while we wait for growth to move the share price up over time. The company has held its dividend firm over the last few years so I think it unlikely we’ll see a cut in the dividend soon when expectations of earnings growth are high.

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

Kevin Godbold 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.