The Motley Fool

2 opportunities to make a million which won’t last for long

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Growth
Image: Public domain

If you want to make a million from shares, the best way to do so is to buy stocks that have a robust business model, competitive advantage and record of achieving excellent returns for investors.

With this in mind, I’ve picked out Microgen (LSE: MCGN) and Avation (LSE: AVAP) as two stocks that I believe could generate enormous returns for investors in the years ahead. 

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Increasing shareholder returns

Avation leases planes to airlines, a business which has grown tremendously in recent years. 

Leasing companies like this can achieve a lower cost of financing than larger carriers, and their size means that they can buy planes at lower prices from manufacturers. Because airlines sign multi-year leases, income is stable and predictable. Meanwhile, cash generated from operations can be used to grow the business, as well as being returned to investors. 

According to a pre-AGM statement published by Avation today, at the end of 2017, the group’s fleet will contain 37 aircraft worth over $1bn. The average aircraft age is 2.9 years and the average weighted lease duration is 7.9 years. For the 2017 financial year, management is forecasting total lease revenue growth of 32% to $94.2m and pre-tax profit growth of 18% to $21.4m.

Over the past five years, reinvestment of lease income into its operations has seen its book value per share grow at a rate of 16% per annum. Over the same period, the shares have continually traded at a discount to book, but the discount has closed in recent months. 

If the firm can continue to reinvest at this rate, and the shares continue to trade at a price-to-book ratio of 0.9, the shares could return 16% or more per annum going forward. Add in the company’s 2.1% dividend yield, and you get a total return of 18% per annum. At this rate, you could double your money every four years. 

Specialist provider 

Microgen provides financial management software applications, which is a highly lucrative business. As more regulations are placed on the financial services industry, companies that can help enterprises to make sense of all the requirements, are seeing sales boom

Indeed, for 2015 and 2016 Microgen’s earnings exploded by 28% and 34% respectively and City analysts are expecting growth of 24% for 2017, followed by 20% for 2018. 

If the company can hit these targets, I believe that there could be further gains ahead for the stock. While the shares might seem expensive, trading at a forward P/E of 30, this value does not seem to be too demanding considering the growth on offer here. What’s more, due to the specialist nature of the service Microgen provides, clients tend to be sticky, so the likelihood that sales will vanish overnight is low. 

And just like Avation, to help complement growth, Microgen is reinvesting earnings into the business. Bolt-on acquisitions are helping the firm expand its existing offering and expand into new areas. The latest deal was the £10m acquisition of US-based RevStream, a provider of revenue management enterprise software.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Rupert Hargreaves owns no share 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.