Adjusted pre-tax profit for the year is now expected to be $11.5m, about 20% below last year’s figure of $14.6m.

This company produces hardware and software for TV set-top boxes, such as those used by cable TV operators. Management had previously expected that 2018 would deliver “sustainable profitable growth”. So what’s gone wrong?

Trump triggers EM wobble

Amino says that orders have been delayed during the second half of the year due to economic instability in “certain emerging markets”. The company says this uncertainty has been made worse by President Trump’s planned trade tariffs. Rising component prices are also expected to hit profits.

This downbeat assessment is a marked contrast to the more upbeat tone taken in the firm’s half-year results on 17 July, less than three months ago. Back then, the company said it was “successfully mitigating pricing pressure on components” and confirmed that “more than 75% of full-year revenues” were already secured.

The group’s financial year ends on 30 November, in less than two months’ time. I’m disappointed by this late change of guidance. I can only assume that several major orders have been delayed at the last minute.

A bargain buy?

One of Amino’s particular attractions is strong cash generation. This has fuelled dividend growth that’s seen the payout rise by 90% since 2013.

The company says this should continue in 2018, with a dividend increase of “no less than 10%”. Cash flow is said to remain strong and net cash is expected to be above the last-reported level of $15m at the end of November.

However, this payout is only expected to be “maintained” over the next two years, which suggests to me that management isn’t very confident about the outlook for 2019 and 2020.

After today’s fall, I estimate that the shares trade on about 10.5 times forecast earnings with a 5% yield. That’s probably about right for now, in my view. Given the company’s cash balance and previously good record, I’d rate the stock as a hold until we know more.

A superior choice?

One business I am more confident about is cloud computing company Iomart Group (LSE: IOM). It operates a number of well-known UK web hosting companies. It’s one of the larger players in this sector in the UK.

The group’s track record of growth is impressive. The shares have 10-bagged over the last 10 years and are up by 40% since I last covered them in 2017.

Sales have risen by 75% to £97.7m since 2014, while profits have climbed 60% to £12.3m over the same period.

This growth could continue

Iomart has expanded through a mix of organic growth and acquisitions. Debt levels are low and management recently confirmed that trading so far this year has been in line with expectations.

Broker consensus forecasts suggest that adjusted earnings will rise by 10% to 19.9p per share this year. This puts the stock on a forecast P/E of 20.7, with a prospective yield of 1.9%.

This isn’t cheap, but this company operates in a fast-growing sector and has an impressive track record of growth. For long-term investors, I think the shares could still be a profitable buy at this level.

The post Amino Technologies crashes 30%: should you load up, or buy this 10-bagger instead? appeared first on The Motley Fool UK.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK owns shares of Iomart Group. 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.

Over the past two years, Miton shares have crushed the FTSE 250, surging 171% compared to the index’s return of just 24%. And I believe there could be plenty more to come over the next few years as the company builds on its success of the past few years. 

Asset growth 

Miton provides fund management services with an array of funds invested in a range of asset classes. These products have struck a chord with investors — that’s not just my personal view as the numbers speak for themselves. 

Today Miton reported asset under management jumped 35% year-on-year for the half year ended 30 June, to £4.5bn across the group. Investors committed a total of £616m in the period, up 216% year-on-year. 

At a time when the rest of the active fund management industry is losing assets to passive investments such as low-cost ETFs and market tracker funds, Miton seems to be winning assets due to what CEO David Barron calls the group’s “genuinely active strategies,” which are beating the rest of the pack. Indeed, during the first half of 2018, two of the group’s funds were even shortlisted for being the best in their sectors. 

City analysts believe Miton’s improving reputation will help the group achieve earnings growth of 12.7% this year, followed by growth of 17.8% next year, putting the stock on a forward P/E of 15.5. This multiple looks pricey at first, but Miton has approximately 12p per share of cash on the balance sheet. After stripping out cash, the shares trade at a much more attractive cash-adjusted P/E of 13. And as well as earnings growth, the firm’s dividend payout has tripled over the past six years, a performance that I believe it’s possible to replicate over the next six years, with payout cover of 2.4, and double-digit earnings growth expected for the next two years. 

Put simply, it is my view that Miton’s growth is only just getting started and it’s well worth considering this stock for your portfolio. 

Cash machine 

Another momentum and dividend stock I believe is worth your research time is Amino Technologies (LSE: AMO). 

Amino is a cash cow and momentum champion. Over the past five years, the shares have produced a total return (including dividends) for investors of 22% per annum. Over the past 10 years, the total annual return is 16%. At this rate of return, it means investors have doubled their money every 4.5 years!

Personally, I believe that it’s not going to take much effort for Amino to continue this performance. The company’s latest trading update reported that the group’s order backlog was up 40% year-on-year for the first half of 2018. City analysts are expecting the firm’s earnings per share to expand 5% for the full-year, which is disappointing, but it’s Amino’s dividend potential that really excites me. 

Analysts believe Amino has scope to increase its dividend 10% for 2018, and 10% for 2019, taking the payout to 8.1p per share, or a dividend yield of 4%. With £13m of net cash on the balance sheet (just under 10% of Amino’s market-cap), it certainly looks to me as if it can afford the higher distribution. 

These two momentum dividend stocks are not the only investments I’m considering right now.

The post This top dividend and momentum stock is crushing the FTSE 250 appeared first on The Motley Fool UK.

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Rupert Hargreaves owns shares in Miton Group. 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.

Still, according to the company’s interim figures, which were published this morning, it looks as if Avation still has plenty of airspace to fly higher. 

Restructuring the portfolio 

According to today’s numbers, for the six months to the end of December, revenue increased 16% year-on-year as the value of the firm’s aircraft fleet rose 35% to just over $1bn. Unfortunately, earnings per share for the period declined 15% year-on-year, which management attributes to the sale of six ATR 72 aircraft in June 2017. These sales reportedly helped de-risk the portfolio by “lowering airline concentration” and unlocking funds for reinvestment into new planes.

Management’s actions to reposition the portfolio throughout the year mean that the average weighted age of the fleet has now decreased to 2.9 years (from 3.3 years) and the weighted average remaining lease term has increased to 7.9 years (from 7.5 years). The firm expects lease revenue to increase substantially in the second half thanks to these changes. So it seems that all in all, even though the sales of aircraft have dented profitability, the company is well positioned to continue to grow and reinvest in the years ahead. 

As I mentioned before, Avation’s main method of value creation is via book value growth. Over the past five years, the company’s book value per share has expanded at a rate of 16% per annum. Growth slowed to just 4% in the period under review, although book value now stands at $3.32 per share or 237p, so today the shares are trading just below book.

City analysts are expecting earnings per share for the year to 30 June to fall by 21% before rebounding 23% to 25p next year. On this basis, the shares are trading at a forward P/E of 9. 

Cash cow 

Another investment that I believe can continue to produce returns for investors year after year is Amino Technologies (LSE: AMO). It produces technology for the pay-TV market, including set-top boxes, a highly lucrative business. Indeed, over the past five years, net profit has surged from £2.8m to £11.1m for fiscal 2017. 

Management has returned the vast majority of this income to investors. The board has hiked Amino’s dividend per share by an average of 17.3% per annum over the past five years, leaving the shares yielding 3.7% today. This might not seem like much, but over the next five years, assuming the payout continues to expand at a rate of 10%, by 2023 the stock will yield just under 6%. 

I have every confidence that the firm can keep up this rate of dividend growth. For the year to 30 November 2017, the distribution was covered 2.2 times by earnings per share and Amino’s balance sheet is stuffed full of cash with a cash balance per share of 13p reported at the end of fiscal 2017. On a valuation basis, the shares trade at a relatively modest forward P/E of 13.2 or 12.5 on a cash-adjusted basis. 

The post Buying these 2 growth stocks today could help you retire with a million appeared first on The Motley Fool UK.

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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.

Both firms have delivered steady growth and rising dividends in recent years, but remain very affordable.

A ‘picks and shovels’ business

During the gold rush, canny entrepreneurs found that it was more profitable to sell essential supplies to would-be gold miners than to mine the gold themselves. Software firm Sanderson Group (LSE: SND) seems to be taking a similar route, with equal success.

It provides a range of software systems used by retailers in their stores, warehouses and online operations. By selling licences upfront and then delivering services, this Coventry-based firm is able to generate enviable free cash flow without having to take on the risks of the retail business, such as long leases, stock and logistics.

Shares in this group rose by more than 5% today after it issued a strong trading statement.  The integration of Anisa, a specialist supply chain software business acquired in November, is proceeding well. Alongside this, Sanderson’s existing businesses are also growing. During the four months to 31 January, like-for-like sales rose by 5% and comparable operating profit climbed 10%.

Why I’d buy

Sanderson’s earnings per share have risen by an average of 12% per year since 2012, while its dividend has risen by an average of 17% per year. Despite this, dividend cover remains at a healthy 2.3 times forecast earnings.

Analysts expect earnings per share to climb 15% to 5.99p this year. A dividend of 2.6p per share is expected for the current year.

These projections give the stock a forecast P/E of 15 with a prospective yield of 3%. In 2018/19, double-digit earnings growth is expected to reduce this P/E rating to 13. I believe the firm’s growth and financial performance mean that it deserves a buy rating.

Solving problems proves profitable

What do you do when you have an ageing cable television network and need to start offering internet-enabled services?

One option is to call Amino Technologies (LSE: AMO), which will provide the software you need to migrate your customers onto a more modern system, often by remotely upgrading their set-top boxes.

This is just one of the television-related services Amino offers its clients, who are happy to pay to avoid a more costly and disruptive rollout of new hardware.

This could be the right time to buy

Last week’s full-year results showed a 12% rise in earnings per share last year, with pre-tax profit 10% higher at £11.2m. The group’s net cash balance doubled to £13m, providing a solid foundation for a 10% dividend increase.

The board expects the company to deliver “sustainable profitable growth” this year and analysts’ forecasts indicate that the stock trades on a P/E of 14, with a prospective yield of 3.7%.

Amino’s performance over the last five years has been impressive. And while past performance is no guide to the future, I think there’s a good chance this company will continue to fire on all cylinders, rewarding loyal shareholders with further gains.

The post 2 high-growth dividend stocks I’d buy and hold for five years appeared first on The Motley Fool UK.

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Roland Head 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.

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?

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.

The post Could these secret growth stocks rise another 100% this year? appeared first on The Motley Fool UK.

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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.

Looking ahead, the company’s dividend payments could rise at a rapid rate. Shareholder payouts are well-covered by profit, while the company’s earnings growth potential remains high.

Another option

However, it’s not the only dividend stock that could be worth buying. Reporting on Tuesday was provider of digital entertainment solutions for Internet TV and in-home multimedia distribution, Amino Technologies (LSE: AMO). It has made good progress in its year to 30 November, with it expecting to report a performance which demonstrates continued customer traction for its products despite industry-wide cost headwinds.

The company’s gross profit and adjusted profit before tax are expected to be in line with market expectations, with revenue expected to be similar to the previous year due to product mix.

With a dividend yield of 3.5%, Amino Technologies offers a real income return right now. It is forecast to raise shareholder payouts by 9% next year as its bottom line is due to rise by around 8%. The latter figure puts it on a price-to-earnings growth (PEG) ratio of 1.6, which suggests that it could deliver improved capital growth potential. Even with such a strong growth in dividend payments, its dividend coverage ratio is expected to remain high at almost 2.

Therefore, even though its cost pressures remain high, it could deliver improving financial performance. For income investors, its mix of dividend growth and a high yield could make it a strong proposition for the long run.

A changing business

Additionally, HSBC could deliver dividend growth to go alongside its inflation-beating dividend yield. The company is in the process of undergoing major change as it seeks to reposition itself for improved earnings growth. It is seeking to become more efficient through cost reductions, with its cost-to-income ratio being high compared to some of its sector peers. It will take some time for it to deliver all of its efficiency savings, but they could help to boost its earnings growth rate in the long run.

As well as cost savings, continued growth in demand for HSBC’s services in Asia could provide a tailwind for its bottom line as well as its dividends in future. With dividends covered 1.3 times by profit, they could increase at a similar rate to profit in the long run. As such, now could be the perfect time to buy the stock ahead of potentially rising profitability and dividends. And since it operates across the globe, it continues to offer a relatively low risk profile compared to some of its sector and index peers.

The post HSBC Holdings plc isn’t the only dividend stock I’d hold for the next decade appeared first on The Motley Fool UK.

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Peter Stephens owns shares of HSBC. The Motley Fool UK has recommended HSBC 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.

It looks as if the trial was a major success, paving the way for further testing and development of the product. Indeed, the study showed that the “positive response rates in key measures reported at three months after treatment in the PISCES II clinical trial were sustained at 12 months after treatment.” 

The trial also revealed that the “CTX treatment was well tolerated in both short and longer term follow-up.” 

According to the company, these findings are “highly encouraging” as they indicate that the CTX therapy has the “potential to produce meaningful and sustained improvements in disability as well as motor function in disabled stroke patients.” No other treatments with a similar goal exist. 

Development takes time

There’s still much work to do before CTX is a commercial success, but so far, findings are pointing to the conclusion that this treatment will not disappoint — great news for investors. 

Getting new treatments from the development to commercial stage is a complex, timely and costly process. Luckily it looks as if Reneuron is making substantial progress, and more importantly, the business is well-funded and supported by stakeholders. To help fund its development the company recently received a grant of £1.2m from the Welsh Government.  

Reneuron isn’t going to make its shareholders rich overnight, although, over the long term, I believe the sky is the limit for the company. 

Figures show that the annual health and social costs of caring for these patients is estimated to be more than £5bn in the UK and over $70bn in the US. If the firm’s treatment can help control these costs and improve patient quality of life, taking just a tiny share of this market could be a multi-billion pound opportunity for the company. 

Slow and steady 

Reneuron could eventually see sales of more than £1bn, but for investors who are looking for a more defensive investment, Amino Technologies (LSE: AMO) might be a better buy. 

Amino is a cash cow and management is committed to returning as much to investors as possible. Over the past five years, the firm has paid out around 22p per share in dividends to investors, which works out at around 44% of the year-end 2012 share price of 50p. Including dividends, over the past five years, the shares have returned 316%, smashing the FTSE 250’s performance over the same period of 70%. 

If Amino can keep up this steady performance, shareholders will get rich slowly. Right now the shares support a dividend yield of 3.6%, the payout is covered 2.3 times by earnings per share and the shares trade at a forward P/E of 13.3. For the fiscal year ending 30 November 2018, analysts have pencilled in a dividend per share of 7.3p giving a dividend yield of 4%. Earnings per share growth of 8% should give a forward P/E of 12.3. 

Overall, if you’re looking for a low-risk income and growth stock to help you make a million, I believe that you can’t go wrong with Amino. 

The post Two easy millionaire-maker stocks? appeared first on The Motley Fool UK.

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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.

Today, I’m looking at two stocks that could potentially provide the winning formula of both capital growth and dividends. Who wouldn’t want that? 

OneSavings Bank

The challenger bank sector is a fantastic hunting ground for stocks that could provide both capital growth and dividends in my opinion. While some of the larger financial institutions such as Barclays and HSBC are struggling to grow profits, many of the smaller banks are thriving.

Take OneSavings Bank (LSE:OSB) for example. Adjusted earnings per share rose from 35p to 42p last year, and City analysts forecast earnings of 47p this year, growth of around 12%.

A trading statement in May was upbeat and the bank stated that its “strong financial and operational performance had continued in the first quarter.” The buy-to-let specialist enjoyed loan book growth of 5% and commented that it was seeing “exceptionally strong levels of new mortgage applications.”

The challenger bank’s share price has pulled back recently, declining from 470p in late May to 375p today, on the back of the political uncertainty within the UK. At that price, I believe the stock offers value, as the forward P/E ratio is now less than eight.

Furthermore, adding weight to the investment case is the bank’s dividend yield and dividend growth prospects. OneSavings Bank paid out 10.5p per share last year, equating to a trailing yield of 2.8% at the current share price. Analysts expect this payout to rise by 30% and 21% this year and next, meaning that the forward FY2018 yield could potentially hit 4.4%.

Of course, as a buy-to-let mortgage specialist, government intervention in the property market could potentially derail profitability going forward. However, after a 20% fall in the share price, I believe the stock now offers value and that its dividend prospects look appealing.

Amino Technologies

While technology stocks are often sought after for capital growth, it’s not every day that you find a tech stock paying an attractive dividend. However one tech company that looks to offer both growth and dividends is £135m market cap Amino Technologies (LSE:AMO).

Based in Cambridge, Amino is a global provider of digital TV entertainment and cloud solutions, and helps broadband network operators deliver entertainment and associated connected home services to the consumer. The company released interim results this morning and the numbers look impressive.

Revenue for the half year rose 21% to £39.9m and profit before tax jumped a huge 64% to £6.9m. Basic earnings per share rose 61% to 9.2p. Cash generated from operations climbed 102% to £13m and this left the company with net cash of over £13m at the end of May. The interim dividend was hiked 10%, representing the sixth consecutive year the interim dividend was increased. Management stated: “Our sales pipeline is robust and we are therefore confident that we will deliver full-year profits in line with market expectations.“

Amino shares have retreated from around 220p to 190p over the last 10 weeks, and at that price, I reckon value is emerging. A forward P/E ratio of 14.3 is undemanding and with the company paying out dividends of 6.05p last year, the trailing yield has been boosted to a healthy 3.2%.  

The post Do these stocks offer the perfect mix of capital growth and dividends? appeared first on The Motley Fool UK.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and HSBC 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.

Amino Technologies (LSE: AMO) has all the hallmarks of a top dividend stock. The company is highly cash generative, has no debt and has a record of returning all extra cash to investors. These are highly desirable qualities for any business, but are especially important for dividend stocks.

Today’s trading update from the company for the six months ended 31 May shows just how much of a cash cow Amino is. During the period the company generated revenue of approximately £40m, up 21% year-on-year. Net cash the end of the period was £13.1m, up from £3.1m at the end of the same period a year ago and up from £6.2m at the end of November 2016. With a market capitalisation of £142m at the time of writing, this means around 10% of Amino’s market value is cash.

Dividend policy

Its cash generation and strong sheet gives it room to pursue an aggressive dividend policy. Over the past five years, the payout has risen 100% as earnings per share have grown by 150%. The dividend is covered twice by earnings per share, and this headroom means management has scope to increase the payout this year despite the fact that City analysts are projecting flat earnings growth. Amino’s per-share payout is expected to rise by a little more than 10% this year to 6.7p giving a dividend yield of 3.2%. The shares currently trade at a forward P/E of 15.2, so the shares are not particularly cheap although if you strip out the 20p per share in cash, the valuation falls to around 13 times forward earnings.

Special dividend?

Acal (LSE: ACL) is another company that has all the hallmarks of a top dividend play. Today the company announced its full-year results for the year ended 31 March 2017 showing strong growth across the board. Earnings per share rose 13% to 19.2p as underlying profit before tax rocketed higher to £17.2m, up from £14.5m in the year-ago period. Revenue grew by 18% or 6% at constant exchange rates. The best performing metric was the group’s cash flow. Cash flow from operations increased 66% from £16.3m to £27.1m and the group’s cash balance at the end of the period hit £22m, up from £20m at the end of the last fiscal year. This cash balance gives the company more than enough headroom to maintain its current dividend payout of 8.6p per share, which is costing around £5.2m per annum.

Unfortunately, this kind of dividend security does not come cheap. Like Amino, shares in Acal trade at a relatively high forward earnings multiple of 15 times, but City analysts have pencilled-in earnings per share growth of 14% for the year ending 31 March 2018, so the high multiple is to some extent justified by growth. The shares support a dividend yield of 3%, and the payout is expected to grow by around 5% per annum for the foreseeable future. With such a healthy balance sheet I wouldn’t rule out special dividends along the way as well.

The post These two cheap dividend stocks look like buys to me appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any 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.

Amino Technologies

The way we watch TV has changed dramatically in the last decade or so, and one company at the heart of this change is £140m market cap Amino Technologies (LSE: AMO).

Based in Cambridge, Amino is a global provider of digital TV entertainment and cloud solutions, and has developed a range of products and solutions designed to help broadband network operators deliver entertainment and associated connected home services to the consumer.

Shares in Amino have been on fire recently, gaining a huge 83% over the last 12 months. Can this share price momentum continue?

Amino reported excellent results in February, announcing that the successful integrations of two recent acquisitions had served to increase the company’s scale and helped to fuel strong revenue and profit growth over the past 12 months. Indeed, for the full year, revenue increased 80% to £75.2m, including organic revenue growth of 7%, adjusted profit before tax rose 96% to £10.2m, and the dividend was increased by 10% to 6.05p per share.

Management was upbeat about the future, stating that with a strong order book and an improved sales pipeline visibility for the first half of 2017, the company is looking forward to “further long-term sustainable profitable growth.”

Small-cap companies are often less researched than larger companies, and in Amino’s case, just three analysts cover the stock. Consensus earnings of 13.2p for FY2017 place the company on a forward looking P/E of just 14.8, an undemanding valuation for a fast-growing company operating in an exciting sector.

Amino also has dividend appeal, with last year’s payout of 6.05p equating to a yield of 3.1% at the current share price. It’s also worth noting that the company has increased its dividend every year for the last five years. 

Overall, Amino Technologies certainly looks like an attractive opportunity in the small-cap space and I believe the stock could offer further gains despite the recent share price momentum.

Alliance Pharmaceuticals

Another small-cap that looks interesting is £223m market cap Alliance Pharmaceuticals (LSE: APH), a company involved in the acquisition, marketing and distribution of pharmaceutical products.

After the acquisition of Sinclair Pharma‘s Healthcare Products business in 2015, sales and profits in 2016 were more than double the previous year, and the company now has significant geographical diversification, with sales being generated in over 100 countries. 

City analysts forecast earnings growth of 6.5% and 12% for the next two years, and management recently stated that “the current year has started well and we look forward to building on our foundations: an attractive, balanced portfolio, an expanded geographic footprint and a strong team.“

The healthcare sector has considerable long-term investment potential to my mind, with ageing populations and on-going medical advances set to underpin the sector’s growth in the years ahead. And on a forward looking P/E ratio of just 11.5, with a dividend yield of 2.6%, Alliance Pharmaceuticals looks like a small-cap stock that warrants closer inspection.

The post Could these two small-caps help you to retire early? appeared first on The Motley Fool UK.

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Edward Sheldon has no position in any 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.