Finding good value shares at the present time may be more challenging than usual. The FTSE 100 has soared to a record high, and the valuations of some companies seem to have risen to high levels. However, there are still a number of opportunities to help investors on their way to making a million. With that in mind, here are two shares that could be worth a closer look.
Reporting on Tuesday was provider of intuitive software as a service (SaaS) and managed services Dotdigital (LSE: DOTD). It has seen the positive trading momentum in its 2017 results continue into the first half of the new financial year. Its progress has been driven by international sales and growing demand for its dotmailer platform in the e-commerce market. It is progressing in line with expectations and has been able to strengthen its relationships with a number of key partners.
The company is continuing to execute its strategy to become a fully integrated omnichannel and conversational commerce service provider. The integration of the recently acquired Comapi group of companies is under way, while a significant contract win has been achieved recently that helps to underpin its 2018 revenue expectations.
With Dotdigital trading on a price-to-earnings (P/E) ratio of 39, it may appear to be overvalued at first glance. However, the company is expected to record a rise in its bottom line of 22% in the next financial year. This puts it on a price-to-earnings growth (PEG) ratio of around 1.8, which suggests that it is not overvalued at the present time. With its business model seemingly sound and its progress continuing to be upbeat, the stock could be a strong performer in the long run.
Credit check specialist Experian (LSE: EXPN) could also deliver impressive total returns in the long run. Its most recent update showed that the business continues to perform well, while it expects its organic revenue growth to improve as the year goes by. In fact, it is forecast to post a rise in earnings of 8% in the current year, followed by growth of 9% next year.
The company appears to offer a relatively consistent growth outlook. It has been able to grow its bottom line in four of the last five years. While it trades on a P/E ratio of 22.4, its consistent performance means it could offer a lower risk profile than many of its FTSE 100 peers. Dividend growth could also be strong in future, since the company’s shareholder payouts are currently covered 2.2 times by profit. This suggests that in time, its 2.1% dividend yield could increase significantly.
Although there may not be the scope for exceptionally high earnings growth from Experian, the stock could deliver dependable returns over a long period. With the impact of compounding, its total returns in the long run could be high.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Experian. 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.