The Motley Fool

These promising small-caps could help you retire early

Planning for retirement is never an easy task. It’s difficult to obtain the right balance between risk and reward, while also seeking to diversify. Given that share prices have generally risen in recent months, finding stocks with a sufficiently wide margin of safety may now also make retirement planning even more difficult. However, here are two shares which could help you to achieve an improved retirement from a financial perspective.

Results announcement

Reporting on Monday was building services company Bilby (LSE: BILB). The company announced full-year results which showed that it has made progress when compared to the prior year. As part of its growth strategy, the company acquired DCB for a maximum consideration of £4m, as well as Spokemead for a maximum consideration of £8.7m. They have enabled the company to expand its range of services, which may help it to broaden its customer base and geographical reach.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Furthermore, the company achieved significant contract momentum in the second half of the year. This should help to underpin additional growth in future years, while investment in operational systems and efficiencies during 2017 enabled it to increase its cash reserves to £1.9m by the end of the year. This should provide additional capital which could be used for more growth over the medium term.

In terms of its growth potential, Bilby seems to have a bright future. It is expected to report a rise in its bottom line of 10% in the current year. This puts it on a price-to-earnings growth (PEG) ratio of 0.9, which indicates that its share price could see a recovery following a 45% fall in the last year. Certainly, it is a smaller company which, by its very nature may be high risk. However, the returns on offer may also be impressive.

Low valuation

Also offering strong earnings growth potential is strategic planning and management services provider Impellam (LSE: IPEL). It is forecast to increase its bottom line by 8% in the current year, followed by further growth of 10% next year. Despite this above-average growth rate, the company trades on a discount valuation. For example, it has a price-to-earnings (P/E) ratio of just 7.7, which suggests its share price could rise significantly even after gaining 127% in the last five years.

As well as high growth potential, Impellam also has a relatively sound income outlook. It currently yields 2.8% from a dividend which is covered around 4.5 times by profit. This indicates that it could increase shareholder payouts at a much faster pace than profit growth, while maintaining high investment in the business for long-term growth. With inflation moving higher, this could prove to be a fillip for the company’s investors. As such, buying the stock now for the long run could be a shrewd move owing to its potent mix of income, value and growth appeal.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Peter Stephens has no position in any 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

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.