Today I’m looking at two smaller companies that have exhibited strong share price momentum lately. Could these stocks help you achieve your financial goals sooner?
Liontrust Asset Management
£222m market cap Liontrust Asset Management (LSE:LIO) is an independent fund management business, based in London. The stock has been a top performer over the last five years, rising from around 90p to 440p today, a gain of nearly 400%.
Looking at the company’s financials, it’s not hard to see why the share price has surged higher. Revenue has increased from £13.7m in FY2012 to £51.5m for FY2017, and the company has gone from generating a net loss of £0.2m to a net profit of £6.8m in this time. City analysts forecast revenue and net profit of £69.8m and £18.5m respectively for FY2018, meaning that the impressive growth of the last few years looks set to continue.
Dividend investors might also be interested to hear that Liontrust paid out dividends of 15p per share last year, equating to a healthy yield of 3.4% at the current share price. The dividend payout has been increased significantly in recent years and analysts expect growth of 20% in FY2018.
However, despite the excellent numbers and strong recent momentum in the share price, Liontrust currently trades on a forward looking P/E ratio of just 11.9, which seems very reasonable for a company growing so quickly.
Investors should bear in mind that fund managers’ profitability is generally related to the performance of global stock markets. Therefore if markets were to experience a significant pull-back, profitability could suffer. But for now, the company looks to have strong momentum and as they often say in investment circles, ‘the trend is your friend.’
Also demonstrating strong share price momentum in the last five years is £203m market cap Mattioli Woods (LSE:MTW). The wealth management provider has seen its share price rise from around 180p five years ago, to 790p today, a gain of a formidable 340%.
The company released a trading statement this morning in advance of its full-year numbers due to be announced in September, and the numbers look impressive.
The wealth management specialist achieved the significant milestone of annual revenue greater than £50m, exceeding analysts forecasts of £48.5m. While the company didn’t reveal any details about profitability, it stated that its financial position was strong, with net cash of £23m at year-end and that recent acquisitions were performing and integrating well. Organic growth was robust, with 1,200 new wealth management clients and 100 new corporate clients coming on board during the year. Discretionary assets under management rose to £1.6bn at year end.
Chief Executive Ian Mattioli said: “I am delighted with the performance of our business for the last financial year and believe we remain well-positioned to secure further profitable growth.”
Does the stock offer value at the current share price? On forecast earnings of 33.6p per share, Mattioli Woods currently trades on a P/E ratio of 23.6, and trailing dividend yield of 1.6%. While not in ‘bargain’ territory, that valuation doesn’t look overly expensive for a smaller company growing strongly.
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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Liontrust Asset Management. 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.