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A cheap UK share I bought in my ISA to make BIG profits!

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One of the hottest games in town right now is e-commerce. One of the UK shares I’ve bought myself to ride this theme is Clipper Logistics (LSE: CLG). The share price explosion it’s enjoyed since I bought it for my Stocks and Shares ISA last year underlines what a good idea this has been for me.

The online shopping growth rate has famously received a significant boost from Covid-19 lockdowns. This has turbocharged demand for Clipper Logistics’ warehousing and distribution assets. Latest data showed revenues up by around 50% year on year during the final months of 2020.

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Profits at Clipper Logistics could suffer should bad economic conditions in Britain linger and consumer spending come under sustained pressure. That risk can’t be ignored. But I like the long-term growth story here. Technological improvements, changing shopper behaviours, and rising e-commerce investment from retailers and fast-moving consumer goods (or FMCG) companies mean that I think Clipper profits could well keep zooming northwards.

An exciting — and expanding — UK share

Besides, I’m encouraged by the steps Clipper Logistics is making to diversify its geographical footprint and to expand its operations. Last week the business linked up with luxury fashion platform Farfetch to supply e-fulfilment and returns management services across Europe from a new facility in The Netherlands. Farfetch sells products from 1,300 pan-global luxury boutiques and brands. All of its European activities will be supported from this new facility.

Women wearing red sweater shopping online and using credit card at home office

Clipper already operates eight distribution centres spanning Germany and Poland and this latest deal promises a significant boost to revenues. According to the company “the new contract will represent organic growth of nearly 30% in Clipper’s European operations when fully functional.” Operations are due to begin in a few months’ time.

Growth, value, and dividends

City analysts aren’t expecting the challenged domestic economy to stop earnings at Clipper Logistics rising in the medium term. Annual profits at this UK share are anticipated to soar 42% in this fiscal year (ending April 2021). They forecast a 17% year on year rise in fiscal 2022. Consequently the logistics leviathan trades on a forward price-to-earnings growth (PEG) ratio of just 0.7. Any reading below 1 is generally considered to represent stunning value.

I see Clipper as a brilliant bet for me with both my growth and value investing hats on. And it pays me dividends too. Annual shareholder payouts rose a healthy 62% during the three years to financial 2019. It kept the full-year dividend on hold last time out at 9.7p per share following the Covid-19 outbreak. But I think strong trading since then should see the company turbocharge dividends again.

The City expects the full-year dividend to rise to 11.9p per share this financial year. They estimate a 14.2p total reward in fiscal 2022 too. Okay, there are bigger yields out there than Clipper’s 2.1% and 2.5% for this year and next so if my only focus was dividends, it would be less appealing. But the possibility of strong and sustained dividend growth over the next decade still makes this UK share an exciting income stock for me.

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Royston Wild owns shares of Clipper Logistics. The Motley Fool UK has recommended Clipper Logistics. 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.