Marketing materials company 4Imprint (LSE: FOUR) has not had the best of it in recent weeks, its share price dropping 10% after a mid-January trading update sent investors packing.
But this represents a fresh buying opportunity, in my opinion, even if the firm deals on a forward P/E ratio of 18.7 times, above the conventional threshold of 15 times widely considered attractive value.
4Imprint — which can print company logos on cups, t-shirts, umbrellas and numrous other items — announced that revenues had shot 12% higher during 2016, to £558.2m, a result that propelled pre-tax profit to £34.2m, up 10% year-on-year.
And there is good reason to expect the top line to keep on surging. Orders grew 12% in 2016, to clock in at more than 1 million for the first time, with 4Imprint bringing in 240,000 orders from new clients last year. And the company has a great record of generating repeat business — sales to existing clients shot 15% higher last year.
Whilst the City expects earnings expansion at 4Imprint to slow from the breakneck performance of recent years, bottom-line growth is anticipated to remain more-than respectable. The printer is expected to generate earnings growth of 10% in 2017 and 5% next year.
Besides, with the US economy continuing to grow at a healthy rate — 97% of 4Imprint’s sales are generated Stateside — I reckon these near-term forecasts could be upgraded in the months ahead. I am convinced the gift guru’s huge exposure to the world’s largest economy should create smashing earnings growth in the years ahead.
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Quite unlike 4Imprint, Costain Group (LSE: COST) has seen appetite for its shares fly through the roof in recent times, the company’s share price striding to record peaks just this week.
Yet despite this strength, the engineering colossus still offers terrific value for money in my opinion. For 2017 Costain is expected to create earnings growth of 7%, resulting in a mega-cheap P/E ratio of 12.2 times. And the firm is anticipated to follow this up with an 8% rise next year.
It is easy to understand the City’s optimism following this month’s bubbly financials. Costain advised that revenues leapt by a quarter in 2016, to £1.57bn, a result which also drove underlying pre-tax profit 25% higher, to £37.5m.
And Costain is set fair to keep on reporting impressive revenues growth in the years ahead, in my opinion, as investment in Britain’s energy, water and transportation clicks through the gears.
Indeed, the engineering giant’s order book remained around record levels of £3.9bn last year. But Costain is not content to sit back, and remains busy on the acquisition front — the company’s purchase of Simulations Systems Limited last summer, for example, already helping it seal important road building contracts in England and Wales.
I reckon Costain’s wide-ranging expertise should deliver brilliant earnings growth, as infrastructure spend moves steadily higher.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.