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Could these secret growth stocks rise another 100% this year?

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Amino Technologies (LSE: AMO), a global provider of digital TV video solutions to network operators, today reported “strong profit growth and cash generation” for its financial year ended 30 November. It also said its large addressable markets and recent investment, coupled with a strong backlog and sales pipeline, “supports our confidence in 2018 and beyond.”

The upbeat results didn’t prevent the shares falling as the wider market dived this morning. At a current price of 191p (3.5% down on yesterday) this AIM-listed firm is valued at £139m. Its shares doubled between mid-2016 and mid-2017. So, after a breather, could we see another 100% rise this year?

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Growth prospects and undemanding P/E

Despite reporting no top-line growth in its results today — indeed, organic constant currency revenue was down 7% due to a shift in product mix — Amino posted higher profits. This was due to an increased gross margin, reflecting the product mix and improved supply chain management, which was achieved in the face of industry component pricing headwinds.

Earnings per share (EPS) of 15.27p came in 12% ahead of the prior year, which puts the stock on a reasonable-looking price-to-earnings (P/E) ratio of 12.5. In addition, the board hiked the dividend by 10% to 6.655p and this well-covered payout means Amino has an attractive yield of 3.5%.

The company has made a few selective acquisitions in the past (the last in 2015) and management said today that it “continues to review opportunities to further strengthen Amino’s offering and geographical coverage through new product development and value-adding acquisitions.” With no debt and cash of £13m on the balance sheet, it’s in a good position to do so.

The company looks capable to me of continuing to deliver double-digit EPS growth at a strong rather than spectacular level. The growth prospects, the undemanding P/E and the decent dividend yield persuade me to rate the stock a ‘buy’, although I don’t expect to see the shares rise 100% in 2018.

A 13% discount to peak

Technical services provider to the global video games industry Keywords Studios (LSE: KWS) is a rather more spectacular growth stock. Its shares more than doubled in the second half of last year alone and from an IPO price of 123p less than five years ago, they’ve soared to a current 1,480p. The market cap is now £913m, putting it among the top 20 companies on AIM.

Keywords said in an update earlier this month that it anticipates reporting results for the year ended 31 December “comfortably ahead” of market expectations. My Foolish colleague Roland Head is looking for EPS of around €0.33 (29.5p at current exchange rates), giving a P/E of just over 50. Reuters is showing an analyst consensus for 2018 of €0.43 (38.5p), so the forward P/E falls to 38 and with the increase in EPS being 30%, the PEG (P/E growth) ratio is 1.27.

The company has a history of making earnings-enhancing acquisitions and boosted its capabilities with a £75m equity placing last October. However, the PEG ratio remains a bit above the growth-at-a-reasonable-price threshold of one. For this reason, I’m avoiding the stock for the time being, but would hope to see either earnings upgrades or the shares dip a bit more than the current 13% below their recent all-time high.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Keywords Studios. 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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