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2 growth bargains that could make you a million

News of solid first-half trading  numbers has firmed up my already-bullish take on ULS Technology (LSE: ULS) in Tuesday business.

In a spritely announcement ULS declared that, despite a more recent slowdown in the housing market, revenues boomed 56% during the six months to September, to £15.3m, and organic revenues jumped 22% in the period.

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As a consequence, underlying operating profit at the firm grew 44% year-on-year, to £2.81m, and this encouraged a 5% hike in the interim dividend to 3.48p per share.

Adding colour to the results chief executive Ben Thompson commented: “This has been a strong first half for ULS. Once again, we have increased our market share and financial results against the backdrop of a housing market that has become quiet, relative to longer-term averages.”

Building a legacy

News that ULS — which provides online business platforms used across the conveyancing and financial intermediary market — is defying current difficulties in the homes market should soothe any jitters that investors may have had.

The company is proving adept at beating these difficulties by claiming business from its competitors, and it has doubled the number of lenders it carries out conveyancing work for (it now works for eight lenders versus four just a couple of years ago).

And there is still plenty of business for ULS to win (it estimates that it commands just 5% of the total conveyancing market).

The impressive performance of niche operator CAL, which ULS snapped up late last year, is a particular cause for celebration. The unit has “built up some good momentum with estate agents,” it said, with CLS “continuing to build up [its] portfolio of smaller mortgage brokers… with highly competitive technology, pricing and good service.” The number of completions here jumped 44% year-on-year in the first half to more than 10,000.

ULS has long proved a dependable growth generator, and City analysts expect the tech giant to keep providing plenty of jam to investors. In the year to March 2018 a 44% earnings leap is currently predicted, and a 6% advance is forecast for fiscal 2019.

And current projections make ULS a bit of a bargain. While a forward P/E ratio of 22.9 times isn’t much to shout about, a corresponding PEG of 0.5 comes in comfortably below the bargain watermark of 1 or below.

Supply shortage

Those seeking great-value growth heroes also need to take a look at Redrow (LSE: RDW) today.

Sure, homebuyer demand may be slowing at the moment as wider economic pressures and increased uncertainty rises. But put simply, there are still not enough new-build houses to go around, and particularly as these same troubles are encouraging existing homeowners to keep their properties off the market.

Like ULS, Redrow also has a strong record of earnings generation (the bottom line has swelled at a compound annual growth rate of 35.1% during the past five years). And City brokers are expecting further excellent growth, a rise of 11% in the year to June 2018 currently being anticipated.

With Redrow subsequently sporting a forward P/E ratio of 7.5 times and a PEG reading of 0.7, I think it is difficult to overlook the construction giant today.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow. 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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