At the top of the month I tipped PageGroup (LSE: PAGE) ahead of its third-quarter trading numbers. Its share price may have failed to detonate following the release, but there was still plenty of positive information for us to get our teeth into. For example, group gross profit boomed 19.7% (at stable exchange rates) to £207.7m between July and September, the highest quarterly rate of growth for seven years.
Outstanding profits growth
In the article mentioned at the start of this piece, I specifically outlined the impressive progress that PageGroup is making in overseas territories. And I’m delighted to say in its core Europe, Middle East and Africa (EMEA) region — responsible for around 46% of group gross profits — the recruiter’s bottom line swelled by 20.9% at constant currencies in Q3.
Growth on a comparable basis in the Americas swelled by a jaw-dropping 30.1% year-on-year, while performance in its second-largest region of Asia Pacific couldn’t be described as sluggish either, profits here having jumped 27.7%. It even continues to perform resiliently at home despite continued uncertainty related to Brexit, and its UK division actually returned to growth during July-September with gross profits rising 0.8%.
And as a result of its all-round strength, PageGroup said that it expects operating profit for the full year “to be marginally ahead of consensus.”
While broker estimates have remained unchanged in the immediate aftermath of these fresh trading numbers, with earnings rises of 17% predicted for both 2018 and 2019, these forecasts are likely to receive a shot in the arm. PageGroup’s a hot buy right now and a low forward PEG reading bang on the bargain benchmark of 1 adds extra appeal.
5% dividend yields
It wouldn’t be a stretch to expect dividend predictions to be upgraded either, given the strength of PageGroup’s balance sheet (net cash, pre-dividends, bubbled to £122m as of September from £87m a year earlier). But at the moment the number crunchers are anticipating payouts of 26.3p and 29.2p per share for this year and next respectively, projections that still create monster yields of 4.8% and 5.4%.
Needless to say, I believe buying PageGroup is a better investment decision than sticking your money in a cash ISA given the paltry interest rates on offer from such products.
Another top FTSE 250 share that would be a better bet than a cash account is Unite Group (LSE: UTG), as Britain’s resilience as a go-to destination for students across the world makes the business a likely cert to deliver strong profits growth to shareholders too. Just last week the firm lauded the “continued strong demand for high quality student accommodation” here in the UK.
Dividends have ballooned at Unite in recent years and, supported by predictions of profits growth of 15% and 13% in 2018 and 2019 respectively, City brokers expect payouts to keep climbing. The 28.6p per share payment predicted for this year would mark a significant upgrade from last year’s 22.7p, and it yields a chunky 3.3%. The dial moves to 3.9% for 2019 thanks to an expected 33.3p dividend too.
At current prices, Unite sports a prospective P/E ratio of 24.8 times. Toppy on paper, no doubt. But given the chances of strong and sustained profits, and thus dividend, growth, it’s still a terrific pick in my opinion.
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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.