The Bitcoin price is ticking up, but I would put my capital into high-growth, high-profit businesses instead. I do own a significant chunk of the world’s largest cryptocurrency but I recognise it will be too speculative for most private investors.
My fundamental research into the FTSE of late points to two good opportunities in particular.
Flight carriers are in the news again because of fears over the spread of coronavirus: on Wednesday 29 January British Airways owner International Consolidated Airlines Group said it was suspending all flights to China indefinitely.
Switzerland’s Wizz Air (LSE:WIZZ) is Europe-focused. It does take passengers as far as Dubai and Kazakhstan but has no exposure to East Asia at the moment. But short-term issues aren’t the point here as long-term potential is what counts.
While the low-cost carrier may not have the visibility of a FTSE 100 travel operator like Easyjet, it has a market cap of over £4bn, and its shares are available for a low P/E of 11.9, which makes it pretty cheap for the profits it produces.
Airlines aren’t usually on my radar because they’re costly to operate, require a lot of inventory and are fragile in the face of unseen geopolitical events. But I’m ready to make an exception for Wizz Air.
It lifted profit guidance on 29 January after strong third-quarter results showed revenues of €637.3m, 24.6% higher than in the same period last year. Passenger numbers are up 23.2% to hit the magic 10 million mark and I like the way that chief executive József Váradi has overseen significant profit reinvestment so that WIZZ will grow even faster in Q4.
A chart of the share price also shows significant 124% growth in the last three years, but I think there’s much further it could go.
Next 15 Communications
The main reason I’m looking for a good buy price for Next 15 Communications (LSE:NFC) is that 28-year veteran chief executive Tim Dyson keeps making sound decisions for growth.
The Bermondsey-based digital marketing group has evolved away from solely running PR campaigns for major multinationals (although this year it has continued to pick up big clients like Microsoft, Intel and recruiting giant Reed) to acquire debt-free, profitable digital marketing businesses. Then it allows those firms in its stable to carry on doing what they do best.
October 2019’s $27.7m cash and shares buyout of global health comms agency Health Unlimited gives NFC the opportunity to “greatly expand our international footprint in the healthcare sector,” Dyson said.
The AIM market can unduly promote companies with patchy financial histories, but I don’t think that’s the case with NFC. It has been operating since 1981 and has grown to a market cap of £441m, adding 252% to its share price in the past five years. Over that time, Dyson has slashed his company’s debt-to-equity ratio from 39% to 22%.
While a dividend yield of 1.5% is nothing special, the trailing P/E ratio is 14 times earnings, and City analysts reckon the London firm will produce 41.1% earnings growth this year alone.
NFC has reported it again expects double-digit profit growth ahead of full-year results out in April 2020, with the added bonus of double-digit revenue growth as well.
And I believe the market has overreacted to Dyson’s statement that profits would be slightly below expectations in those upcoming results.
Tom Rodgers owns Bitcoin but has no position in the shares mentioned. The Motley Fool UK has recommended Next Fifteen Communications and Wizz Air Holdings. 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.