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2 value stocks for growth and dividend chasers to seek out

Stadium Group (LSE: SDM) ploughed lower on Tuesday following a disappointing reaction to pretty decent half-year trading numbers. It was 6% lower on the day and dealing at levels not seen for four-and-a-half months.

The technology giant declared that group revenues increased 12.7% between January and June, to £27.4m, with sales at its Technology Products arm rising 20.9% to £16.8m.  The result propelled adjusted pre-tax profit 13.6% higher, to £1.8m.

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Revenues from Technology Products now equate to 61% of the group total versus 57% last year, and a record order book suggests that Stadium should continue enjoying blistering revenues growth. This had grown 19% from the end of last year to £30.8m.

On the march

Today’s results prompted a cheery response from chairman Nick Brayshaw, who noted that “we are very pleased with our performance in the first half of the year and the progress that we’ve made in establishing our position as a successful design-led technology business.”

He added: “We believe that our operating model, focused around strategically located regional design centres, manufacturing centres of excellence and regional fulfilment centres, will allow us to deliver further accelerated growth going forward.” And he said the continued positive momentum seen in the first half is further underpinned by its record order book and strengthening pipeline of new design wins which makes it confident for the full year outlook and beyond.

City brokers agree that the earnings picture over at Stadium is looking  pretty rosy, and have pencilled in bottom-line rises of 17% and 21% for 2017 and 2018 respectively.

And these projections make the Reading business brilliant value for money, at least on paper. A forward P/E ratio of 11 times falls below the widely-considered value benchmark of 15 times, while a PEG rating comes in at a bargain-basement 0.6.

Those seeking chunky dividend growth should also give Stadium more than a cursory glance. The company is expected to lift last year’s 2.9p per share dividend to 3.1p this year, and again to 3.3p in 2018. As a consequence, investors can lock onto yields of 2.6% and 2.8%

I reckon dip buyers should take a serious look at Stadium right now, and particularly after today’s share price decline.

Pipe dreams

Polypipe Group (LSE: PLP) is another London-quoted stock expected to deliver handsome earnings and dividend growth in the medium term.

In 2017 the number crunchers have pencilled in profits growth of 8%, and a similar rise is anticipated in the following 12-month period. And these forecasts make the piping and ventilation specialist a decent value bet, Polypipe sporting a prospective P/E ratio of just 14.9 times.

Meanwhile on the income front, the Doncaster business is predicted to lift last year’s 10.1p per share reward to 10.8p in 2017 and to 11.7p in 2018. As a result, share pickers can enjoy yields of 2.6% and 2.8% for 2017 and 2018.

Polypipe continues to outperform the broader market, and saw revenues in the UK soar 6.8% between January and June. And with infrastructure investment predicted to improve in the months ahead, and the domestic new-build market also remaining pretty robust, I expect earnings at the business to keep on booming.

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Royston Wild has no position in any of the 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.

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