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2 knockout stocks for growth and dividend chasers

Nexus Infrastructure (LSE: NEXS) has seen its share price flatline in Wednesday trade despite the release of pretty upbeat trading details.

The business, which provides essential infrastructure services to the British housebuilding and commercial sectors, announced that it expects results for the 12 months ending September to meet its prior estimates. This is clearly not something to set pulses racing, although news that demand for Nexus’s services continues to swell probably should.

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The AIM-quoted firm said that its order book for the last fiscal year clocked out at £202.7m, up 25% year-on-year, providing the company with terrific revenues visibility for the new period.

Chief executive Mike Morris certainly struck an upbeat tone, commenting: “We are pleased to report that the full-year results will be in line with our expectations and the significant improvement in the order book provides us with confidence for our future growth plans.”

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Many cautious investors may be reluctant to invest, however, owing to the question marks hanging over the UK construction sector. Indeed, latest PMI numbers showed the segment contracting in size in September, slipping to 48.1 from 51.1 the prior month.

And this concern is reflected in some part by Nexus’s ultra low valuations — it deals on a forward P/E ratio of 8.9 times for fiscal 2018, well below the widely-accepted bargain yardstick of 10 times. It also trots up with a sub-1 PEG reading of 0.5.

Having said that, the range of specialist and essential services that Nexus provides, from constructing drainage systems and  building highways to creating reinforced concrete frames,  should remain in strong demand even in the current difficult climate. Besides, the company’s weighty exposure to the still-expanding housebuilding sector should provide earnings with an extra layer of protection.

Accordingly, City brokers are expecting earnings to charge 18% higher in the current fiscal period, and this is predicted to translate into brilliant divided growth too. An anticipated 5.8p per share reward for the last year is expected to rise to 7.6p in the present period, creating a chunky 3.9% yield.

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Investors on the lookout for splendid profits and dividend rises should also give Pagegroup (LSE: PAGE) serious attention, in my opinion.

While the impact of a slowing UK economy may be denting business at home (UK gross profit slumped 7.6% during the last quarter), the recruitment giant can rely on its foreign territories — regions from which it sources four-fifths of total profits — to keep delivering the goods.

Indeed, gross profits taken from the Americas stomped 20.1% higher in quarter three, while at its EMEA and Asia Pacific units, these jumped 18.7% and 14.6% respectively from the same 2016 period.

So, like Nexus Infrastructure, the number crunchers are also expecting earnings to trek higher over at Pagegroup right now and beyond. A 14% bottom-line improvement is predicted in 2017, and an extra 8% rise is forecast for next year.

A subsequent forward P/E rating of 17.6 times may not be much to write home about, but dividend yields for this year and next really are. These clock in at 4.1% and 4.2% for 2017 and 2018, respectively, because of expected corresponding payments of 19.1p and 19.7p per share.

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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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