2 cheap growth stocks I’d buy in July

With the FTSE 100 trading close to an all-time high, finding cheap shares has arguably become much tougher than it was just a year ago. That’s natural when a stock market has experienced a bull run over a period of many months. However, it does not mean there is a fundamental lack of supply of undervalued shares. Perhaps they are harder to find, but for value investors even a bull market can offer buying opportunities for the long term.

With that in mind, here are two stocks which could be worth a closer look. While relatively high risk due in part to their size, their return potential could be significant.

Strong performance

Reporting on Tuesday was Value Cycle solutions provider for the US healthcare market, Craneware (LSE: CRW). It announced a trading update for its most recent financial year, with the company continuing its strong performance throughout the year. It expects to report revenue growth for the full year of 16%, with EBITDA (earnings before interest, tax, depreciation and amortisation) set to rise by over 13%.

The company reported its first product sales on its new cloud-based platform called Trisus. This could provide innovation to a healthcare industry which is striving to lower costs and improve efficiencies. Therefore, its growth potential may be significant over the long run, which is why Craneware is continuing to invest heavily in the platform. As well as this, its Cost Analytics solutions continue to bolster margins for customers, which in turn leads to improved patient outcomes.

Looking ahead, Craneware is expected to report a rise in its bottom line of 17% in its current financial year. This puts its shares on a price-to-earnings growth (PEG) ratio of 1.8, which suggests it could offer upside potential. With a relatively visible revenue outlook and improving financial performance, it would be unsurprising for its share price to perform well in the long run.

Improving business

Also offering upside potential is global domain name registry services provider CentralNic (LSE: CNIC). It has experienced a somewhat mixed recent period, with its bottom line being highly volatile. However, in the current year it is forecast to post a significant rise in profitability which is due to put its shares on a price-to-earnings (P/E) ratio of just 11.7. This could indicate they offer good value for money, which suggests they could benefit from an upward re-rating.

In recent years, CentralNic has sought to diversify its business model. This has helped to reduce its overall risk profile, while allowing it to access growth potential in a wider range of markets. The acquisition of Instra Group also helped to bolster its financial outlook at a time when a number of changes are taking place with regard to the domain industry. The business appears to be well-placed to capitalise on this evolution, which could make it a good time to buy it for the long term.

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Peter Stephens owns shares of Craneware. The Motley Fool UK has recommended Craneware. 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.