Look at Cambian Group (LSE: CMBN), which describes itself as “one of the largest providers of specialist behavioural health services for children in the UK“.

The shares haves been erratic over the past few years, but that’s not surprising as we’ve been seeing growing pre-tax losses for four years in a row now. But the company has decided to sell off its non-core adult services division and focus on its key children’s services, and that strategy looks like it’s paying off. 

Pre-tax profit this year is forecast to come in at £15.9m, rising to £18.8m for next year, with earnings per share predicted at 5.8p and 7.4p for the two years respectively.

Cash to come

The balance sheet is stronger after the adult services disposal raised £379m in cash, which enabled the settlement of all bank debt. At the end of 2016, net cash stood at £116m, and Cambian announced its intention to return £50m in excess capital to shareholders.

That’s going to be in the form of a special dividend, and while there’s been no ordinary dividend for a few years, at full-year results time we heard that the company “intends to resume its progressive dividend policy this year and expects to pay an interim dividend for the first six months.“

The 171p shares are now on a forward P/E of 25, dropping to 22 for 2018, but with PEG multiples of 0.2 and 0.8, and looking at Cambian’s impressive turnaround, I think that’s cheap.

Share price dip

The RPC Group (LSE: RPC) share price has been falling back this year, from a peak of around 1,075p to today’s 766p — but that still represents a very nice 178% gain over the past five years.

The manufacturer of plastic packaging and containers has grown its EPS from 34.4p in 2013 to an impressive 62.2p last year, and with rises of 10% and 8% forecast for the years to March 2018 and 2019 respectively, we should see that grow to around 74p — and that’s a tempting growth prospect.

Surprisingly, RPC shares are on undemanding forward P/E ratios, of just 11 for the current year and dropping to 10.2 next — and that’s with above average dividend yields of 3.4% and 3.8% pencilled-in.

Debt

There is some significant debt on the books, amounting to £1,049m at the last year-end — though the company did describe its balance sheet as strong, after a year in which it raised new equity to cover two acquisitions. Debt stood at 1.8 times EBIDTA for the prior year, and the firm reckoned it had total finance facilities of £2,245m available at 31 March.

I’d like to see debt reduced (simply because it can place a company at risk in the event of any downturn in business), but that level seems fine from a liquidity standpoint and I don’t see any immediate problem.

The firm’s acquisitions, which include including British Polythene Industries and Global Closure Systems, appear to be integrating well, and the global future for the plastics business is surely strong.

With last year’s results looking good and analysts buoyant over RPC’s future, I see the price fall since January as providing a nice buying opportunity.

The post 2 undervalued growth stocks that could make you a million appeared first on The Motley Fool UK.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended RPC 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.

Paving the way for plump returns

Landscaping play Marshalls (LSE: MSLH) has emerged as one of the FTSE’s strongest performers in end-of-week trading, after releasing excellent full-year financials.

The company was last dealing 11% higher following news that revenues advanced 8% in 2015, to £382.6m, a result that helped propel pre-tax profit 57% higher to £35.3m. As a consequence Marshalls hiked the full-year dividend by almost a fifth, to 4.75p per share, and agreed to pay a 2p special dividend.

On top of this, Marshalls advised that the strength of the construction sector has underpinned a strong start to 2016 — orders are currently up 6% year-on-year despite tough comparatives.

The City expects Marshalls to enjoy earnings advances of 25% and 16% in 2016 and 2017 respectively, meaning a P/E rating of 16.5 times for this year, falling to just 13.8 times for 2017. I reckon this is exceptional value given the firm’s strong upward momentum.

Financial fevers?

Shares in health services provider Cambian Group (LSE: CMBN) collapsed on Friday, following the publication of a disastrous market update. The stock was last dealing 15% lower from the previous close.

Cambian advised that “it is likely that, in light of the ongoing finalisation of costs and the completion of its audit in respect of [fiscal 2015], results for the year will be slightly lower than previous guidance.”

As a result Cambian has breached financial covenants on its loans, it said, although the firm has been granted a temporary waiver while it enters into discussions with lenders. The firm hopes to conclude these talks before its full-year results announcement, scheduled for late April.

With Cambian having already warned of problems in its cost management processes — an issue that is expected to have “significantly impacted the second half of the year” — I believe investors should steer well clear until the picture becomes clearer.

Jumbo contract news

Oil services provider Petrofac (LSE: PFC) furnished the market with news of a massive contract win in Friday trade, although investors have refused to pile in and the stock was last 1.5% lower on the day.

Petrofac announced it had won a five-year, $250m contract to act as duty holder to support Anasuria Operating Company, a joint venture between Hibiscus and Ping Petroleum in the North Sea. The services play “will assume responsibility for the FPSO operations as well as for monitoring and managing the pipelines and wells with the exception of the Cook well,” it announced.

Of course new contract wins should be cause for fanfare. But despite today’s developments, I believe Petrofac remains a risk too far for investors, as the prospect of prolonged crude price weakness could lead to further project scalebacks across the oil and gas industries.

It could be argued that Petrofac’s P/E rating of 11 times for 2016 — based on predicted earnings of 128 US cents per share — reflects the company’s high risk profile. But I believe the potential for colossal bottom-line downgrades still renders the services giant an unattractive growth pick.

The post Should You Buy Friday Newsmakers Petrofac Limited, Marshalls plc & Cambian Group PLC? appeared first on The Motley Fool UK.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Petrofac. The Motley Fool UK has recommended Marshalls. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.