After the long bear phase we’ve seen for stocks and shares, it may be a good time to buy a few for the next bull market.
For example, I like the look of Volex (LSE: VLX), the specialist integrated manufacturer of critical power and data transmission products. It serves several industries such as data centres, healthcare, and electric vehicles.
And over the past few years, the business has done a good job of focusing its operations on potentially high-growth sectors.
Acquisitive growth
The company just raised £60m via a share placing and retail offer. And it intends to use the new funds to part finance the acquisition of a company called Murat Ticaret.
The enterprise is a leading manufacturer of complex wire harnesses headquartered in Turkey. And, according to the Volex directors, it’s a highly profitable business with a strong financial track record.
I think the deal demonstrates that Volex has vibrant growth ambitions. And it follows the release of a robust set of full-year results covering the 12 months to 2 April. The directors said the Volex business has a great deal of momentum right now.
Meanwhile, City analysts expect earnings to increase by around 23% in the current trading year to April 2024 and by 10% the year after. And with the share price near 280p, the forward-looking earnings multiple is running at around 10.5.
There’s also a dividend on offer here, but the yield is low at about 1.6% for the year to April 2025.
The valuation looks modest for a growth enterprise. But there is a fair pile of debt on the balance sheet. And it’s possible for the shares to decline if the company’s rate of earnings growth slips.
For example, electric vehicles may not take off in the mass market as many expect in the years to come.
Nevertheless, I’m keen to dig in with further research now with a view to buying some Volex shares to hold long term.
Robust dividends
But I’m also focusing on Moneysupermarket.com Group (LSE: MONY), the price comparison website operator.
The company released a strong set of first-quarter results in April with a positive outlook statement.
And chief executive Peter Duffy said the firm’s strong performance was led by a recovery in the Travel and Insurance categories.
Duffy thinks the business is well placed to help people during the cost-of-living crisis. And I reckon a price comparison routine is a big part of consumer behaviour these days and will likely continue to be so.
City analysts expect earnings to increase by around 20% this year and by more than 11% in in 2024. But despite that robust anticipated growth, the biggest attraction here for me is the dividend.
With the share price near 267p, the forward-looking yield is running at a chunky 4.6% or so.
One risk is that the sector is competitive. But Moneysupermarket.com owns several well-known brands and my assumption is the business will behave like a cash-cow for years to come.
