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2 terrific value stocks I’d buy today

Alliance Pharma (LSE: APH) was dancing higher in Tuesday trading thanks to a positive reception to half-year numbers. The stock was last 2% higher on the day and a whisker off June’s 15-month peaks around 55p per share.

The business, which is engaged in the acquisition, licensing and delivery of pharmaceuticals and healthcare products, advised that sales rose 8% between January and June, to £50.3m, coming in line with expectations.

Alliance Pharma made a point of highlighting its strong performance in the first half. Sales of its scar-reduction treatment Kelo-Cote jumped 52% year-on-year to £6.2m. Meanwhile, sales of MacuShield, used for age-related macular degeneration, surged 67% to £3.4m.

The medicines play also benefitted from sterling’s weakness in the period — currency movements boosted the top line by £2.6m.

The right treatment

I believe that Alliance Pharma is a great bet for those seeking reliable earnings growth year after year. Medication remains one of life’s essential purchases regardless of broader economic pressures, after all. And Britain’s ageing population should underpin demand growth in the years ahead.

In addition to this, earnings at the Chippenham-based business could receive a further boost should the company’s Diclectin treatment, used to address morning sickness, receive regulatory approval in the UK later in the year.

The City certainly expects Alliance Pharma to keep earnings trekking higher for some time yet, and has forecast advances of 5% and 11% in 2017 and 2018 respectively.

These figures make the stock very decent value for money, in my opinion, its forward P/E ratio of 13.3 times falling within the widely-accepted value benchmark of 15 times and below.

In addition, those seeking handsome dividend growth shares also need to give the drugs dynamo a close look. Helped by stunning cash generation (underlying free cash flow leapt to £11.1m in the first half from £2.1m a year earlier), Alliance Pharma is anticipated to lift the dividend from 1.21p per share in 2016 to 1.28p this year, and again to 1.43p in the following period.

As a result, a yield of 2.4% for the present period leaps to 2.7% for 2018. And I expect dividends to keep marching northwards along with earnings.

Screen idol

Entertainment One (LSE: ETO) is another stock expected to report chunky earnings expansion this year and next.

Following on from last year’s stunning 85% revenues rise, analysts expect sales at its TV division to keep roaring higher as production ramps up at eOne TV as well as at its Mark Gordon Company hit-making machine. And the City has also identified the firm’s PJ Masks franchise as a massive earnings driver for its Family arm as viewership ignites across the globe.

The Peppa Pig play is predicted to report a 9% bottom-line advance in the year to March 2018, and to follow this up with an 11% rise in the following year.

And these numbers make Entertainment One a brilliant value stock, I reckon. Not only does the FTSE 250 share sport a prospective P/E ratio of 10.5 times, but its forward PEG multiple of 1.1 sits just above the broadly-considered bargain benchmark of 1.

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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. 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.