I’ve recently turned positive on oil group Tullow Oil (LSE: TLW), as I’ll explain later in this piece. But I’m not sure if today’s second stock — information management software group Idox (LSE: IDOX) — has reached the end of the troubles which caused its shares to crash last year.

The market likes it

The market has given a warm reception to today’s delayed full-year figures from Idox. At the time of writing, the shares are up 10% to 37p.

Today’s gains have come despite news that the firm’s adjusted profits for the year missed the revised guidance provided in December’s profit warning. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 14% to £18.3m last year, below December’s revised forecast of £20m.

The group originally expected to report EBITDA of £27.2m last year. A cocktail of problems prevented this, including delayed contracts, incorrect revenue recognition and complications arising from last year’s acquisition of healthcare software firm 6PM.

Look forward, not back

Investors appear to be comfortable that interim chief executive (and former CEO) Richard Kellett-Clarke has resolved these issues. To some extent I agree. But I’m not completely convinced.

Although the group announced several contract wins today, Mr Kellett-Clarke warned that plans for “a change in product pricing” and “a focus on cash conversion” will initially depress revenue. He plans £7m of cost-cutting to help rebuild margins, but it’s not clear to me how quickly these benefits will come through.

I’m also concerned that the 6PM acquisition could cause further problems. The group’s auditors issued what’s known as a qualified opinion on today’s results. Their view appears to be that 6PM’s record-keeping prior to the Idox acquisition was so poor, they couldn’t be sure that some of its figures were correct.

Although Idox looks cheap on about 7 times 2018 forecast earnings, I think these forecasts are likely to be revised following today’s results. I also think the 6PM acquisition could cause further headaches. I will be staying clear for now.

I was impressed by these figures

As a contrast, the recent 2017 results from Tullow Oil were strong enough to persuade me to take a positive view on this stock.

The group’s net debt fell from $4.8bn to $3.5bn, thanks to $721m of proceeds from a rights issue, lower spending and improved cash flow. The group also managed to refinance much of its debt, providing security about future repayment schedules.

All of these factors were largely predictable, but I wanted to see concrete evidence of progress before considering an investment. Luckily the stock is now on sale at a price that’s 22% lower than one year ago, when the risks were considerably higher in my view.

Why I’d buy

Although Tullow’s remaining net debt of $3.5bn is still equivalent to a chunky 2.6 times EBITDA, last year’s free cash flow of $543m gives me confidence that this figure should continue to fall in 2018.

This free cash flow gives the stock a trailing price/free cash flow ratio of 6.5, which is very cheap. Although spending will be higher this year, reducing surplus cash, I still expect the firm to be strongly cash generative.

As net debt continues to fall and profits gradually recover, I’d believe Tullow shares could deliver attractive gains.

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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.

Growing reputation

The company designs, develops and produces x-ray and gamma ray imaging and radiation detection products for the medical, security screening and nuclear markets. The period under review saw higher product sales across these key markets, as well as the continued winning of new high-value contracts.

Its D3S product, which it describes as “the world’s most advanced, portable, nuclear radiation detection device,” was successfully deployed in high-profile situations for safeguarding against nuclear terrorism, including the NATO Security Summit and Donald Trump’s visit to Brussels in May. And the company also enjoyed reputation-enhancing successes in its other key markets.

Attractive valuation?

Analysts are forecasting revenue of £12.5m for the full year (almost 40% ahead of last year) and Kromek appears to have substantial commercial opportunities in the medium and long term, including from an $8.2bn US Department of Defence security programme.

The shares have fallen quite heavily on today’s results — down 8% at 25p, as I’m writing. This values the AIM-listed firm at £65m, which is 5.2 times forecast revenue. Personally, I view this as an attractive multiple and rate the stock a ‘buy’, albeit a risky one, due to it being an early-growth and currently lossmaking business. Risk-averse investors may want to monitor progress from the sidelines for the time being.

I put today’s share price fall partly down to the inherent volatility of small-caps and partly down to the fact that, while Kromek is moving rapidly towards EBITDA breakeven, cash burn in the first half was £5.3m. However, I note that £3.7m of this was investment in development and working capital and that the company is well funded for the year ahead with net cash on the balance sheet of £12m.

Terrific buy?

Fellow AIM-listed firm Idox (LSE: IDOX) is already profitable, and has been for a good number of years. However, recent problems have seen its shares collapse 58% from 65p to 27p in the space of just over five weeks.

On 14 November, in a trading update for its financial year ended 31 October, the software provider, which counts over 90% of UK local authorities among its customers, said sign-off on some contract wins had been delayed beyond the end of the financial year due to customer disruption in the wake of June’s General Election.

This was hardly the end of the world, as the board’s lowered EBITDA expectation of £23m was still above the prior year’s £21.5m. However, in a further trading update on 13 December, it lowered its expectation to £20m. This was due to an internal review in preparation for the full-year audit identifying “a small number of revenue items that it does not consider should be recognised in the FY2017 results.” It added that “clarification of these issues has been complicated by the sudden absence of Andrew Riley, Idox’s CEO, due to illness.”

The stock could prove a terrific buy at the current level but the nature of the news is disconcerting enough to persuade me to wait for the company’s final results in February.

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G A Chester 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.

Investor confidence in the stock won’t be helped by news that today’s warning appears to be the result of accounting errors. These have now been reported to the group’s auditors and will delay the publication of full-year results — due in December — until February.

What’s gone wrong?

The firm says that staff have identified some revenue items “that it does not consider should be recognised in the FY2017 results”. Removing these items from the 2016/17 accounts is expected to reduce earnings before interest, tax, depreciation and amortisation (EBITDA) from £23m to £20m.

The company says that sorting out these issues has been “complicated” by the “sudden absence” due to illness of the group’s chief executive Andrew Riley.

No information has been provided about the nature of the accounting problems, but one possibility is that revenue from multi-year contracts has been recognised too early. This is an area that’s caused problems for other service companies in recent years.

Buy, sell or hold?

Today’s news is a reminder of the old stock market adage that profit warnings usually come in threes. We’ve now had two warnings from the firm, leaving a number of questions unanswered.

Using the information in today’s statement, I estimate that full-year adjusted earnings could be around 3.1p per share. That would put the stock on a forecast P/E of 13, at current levels.

In my view this is still too expensive. I plan to review this stock again when management provides a full set of accounts and updated guidance for 2018/19. In the meantime, I’d rate it as a sell.

A value trap?

Earlier this year, I was bullish about African miner Petra Diamonds (LSE: PDL). But the firm’s situation has worsened considerably since then. I now believe this stock is in danger of becoming a value trap.

Petra Diamonds has been spending heavily on expanding its Cullinan and Finsch mines. This work is now largely complete and both mines are ramping up production. The problem is that spending on Cullinan has left the company with raised debt levels, just as its operations are being disrupted elsewhere.

Double whammy

In South Africa, Petra has experienced disruption from strike action at a number of its mines. Meanwhile sales of diamonds from Tanzania have been disrupted by a government crackdown on exports. This has affected several London-listed miners.

As a result, the group reported net debt of $613.8m at the end of September. That’s nearly four times last year’s adjusted EBITDA of $157.2m and has left the group at risk of breaching some of its banking covenants.

Brighter outlook for 2018?

Problems in Tanzania are receding and performance is expected to improve in 2017/18. Debt levels may fall without the firm needing fresh funding.

But Petra has already warned that industrial unrest and “the uncertain outlook” for its Williamson mine in Tanzania could hit performance over the coming year.

The stock currently trades on a 2017/18 forecast P/E of 7.7. In my view this modest valuation is high enough, given the financial risks facing shareholders. If Petra’s debt problems persist and cash runs short, these shares could have further to fall.

The post Should we now pile into IDOX plc after crashing 25% today? 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 Sheffield-based land development, property investment, and construction firm had already lifted its targets back in May, but now tells us it anticipates 2017 performance to be “materially ahead of the board’s existing expectations.“

In these times when we seem to be getting profit warnings almost every day, this is a welcome change.

Saying that “2017 has proved to be an outstanding year where almost every deal we hoped to complete has done so,” the company told us that trading has been strong across its range of businesses, and that accelerated completions and deliveries in the second half lie behind the day’s good news.

Some projects previously scheduled for next year will be brought forward now and some may be completed before year-end, so the firm is cautiously leaving its 2018 expectations unchanged. But with presumably free capacity next year on the cards, I’d be hoping more work can be found to fill any gap.

Terrific record

Henry Boot shares are now up 150% over the past five years, to 330p, and it’s not hard to see why. Since 2012, earnings per share (EPS) have more than trebled from 7p to 21.5p last year. And over the same period the dividend has been lifted by 49% to 2016’s 7p — and that was three times covered by earnings.

The yield has remained fairly flat due to the rising share price, but effective yields based on buying price have accelerated nicely.

We’re looking at a forward P/E multiple of around 11 now, and that looks cheap to me.

Information is key

Idox (LSE: IDOX) is another small-cap growth stock I like the look of. The information management company has seen its shares climb 63% over five years, and they’ve five-bagged over the last decade.

That, unsurprisingly, is on the back of steadily rising EPS. Although there were modest dips in 2013 and 2014, and since 2012 we’ve seen growth of only around 7%, forecasts for this year and next indicate a further rise of 23% by the end of 2018, and that would put the shares on a P/E of 12 — which looks low to me for a stock with growth potential.

The dividend might not look great with yields of only around 2%, but it was hiked by 47% between 2012 and 2016, and analysts predict a further 28% uplift by 2018.

Future cash

That’s strongly progressive and it makes Idox look like my favourite kind of long-term dividend candidate. The annual payment is around four times covered by earnings, which suggests that once the company matures from its early growth phase (and presumably pulls back on acquisitions), it has the potential to turn into a very nice cash cow with attractive dividend yields.

The company offers its services to the public sector and also to highly regulated businesses in the corporate sector, and the latter can be a hard nut to crack as it really does require expertise for strict adherence to the rules — I see that as a defensive aspect.

Over the past year, the share price has been flat, leading to what I see as an under-rated stock on P/E measures. Debt was fairly modest at £28.2m at the interim stage, and I see Idox as a long-term buy.

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Alan Oscroft 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.

A very thin slice

We all know that when you buy shares in a company you are effectively buying a slice of that business, albeit a very thin slice. The overall size of the business is determined by multiplying the share price by the total number of shares available to give the current market value of the firm. Using the example above, Tesco currently has 8,189m shares issued and held by its shareholders, whereas Randgold has only 94m shares issued, thereby making each share that much more expensive.

That said, many novice investors will still view shares as ‘cheap’ or ‘expensive’ based on their absolute prices. Even if this were the case, seasoned investors will tell you there is a world of difference between shares that are cheap and those that are good value. Investors on the hunt for genuine bargains should be seeking out the latter. With this is mind, I’ve picked out two AIM-listed stocks that are not only cheap to buy at less than £1, but in my view also offer great value given their prospects.

A healthy Alliance

Alliance Pharma (LSE: APH) is an international speciality pharmaceutical company based in Chippenham, Wiltshire. The AIM-listed business has a strong track record of acquiring the rights to established niche products and it currently owns or licenses the rights to around 90 pharmaceutical and consumer healthcare products worldwide.

Interim results announced this morning revealed that sales for the six months ended June rose 8% year-on-year to £50.3m, with underlying pre-tax profits edging higher to £11.9m. There was strong growth from the company’s top-selling scar-diminishing product, Kelo-cote, as well as its MacuShield brand, a dietary supplement used to treat age-related vision loss.

Alliance trades on an undemanding P/E rating of 13 for the full year to December, falling to 11 for 2018. The company continues to explore opportunities to expand its product portfolio, and I rate the shares a buy given the potential for further growth.

Idox gets my vote

Public sector information management firm Idox (LSE: IDOX) is another AIM-listed business whose shares are available for less than a £1. Last month the Reading-based group acquired electoral back office software firm Halarose for £5m, in line with its strategy to focus on the public sector.

It’s hoped that the acquisition of the Oxfordshire-based firm will create a larger, more effective, and focused Idox elections business, capable of accelerating its growth and increasing its market share through cross selling initiatives to both existing and new customers in the UK and in Europe.

Idox’s share price has suffered a sharp decline since hitting all-time highs in May, and I believe this presents growth-focused investors with a great opportunity to buy the shares on a relatively modest P/E rating of 14.

The post 2 cheap stocks I’d buy today appeared first on The Motley Fool UK.

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Bilaal Mohamed 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.

Today I’m looking at two small-cap dividend stocks which I believe could be profitable buys after recent news.

Rock star

Rock-drilling specialist Mincon Group (LSE: MCON) provides the specialist equipment needed for companies to drill deep holes in the ground. Typical customers include miners, oil and gas firms and water companies.

This 40-year-old company has emerged from the downturn with net cash of €32m, and is poised for growth.

According to figures published today, Mincon’s sales rose by 29% to €47m during the first half of the year. Pre-tax profit rose by 26% to €6.3m, while earnings for the six-month period rose 26% to 2.4 cents per share. This provides a healthy level of cover for the interim dividend of 1 cent per share.

This payout is in line with last year’s interim dividend. If the final dividend is also unchanged, it will give the stock a yield of 2%. However, I think there’s scope for the payout to grow.

Mining companies have transformed their financial performance over the last 18 months, but investment in new projects has remained limited. If commodity prices maintain their current strength, I’d expect to see an upturn in spending on exploration and growth projects.

This could create booming market conditions for Mincon, enabling the firm to increase its profit margins, and boost dividends.

The stock has risen by 11% following today’s news. With a forecast P/E of 21, it isn’t obviously cheap. But I think this business could beat expectations over the next few years. In my view, Mincon remain a buy.

1,900% dividend growth

Would be you be interested in a company whose dividend has risen by 1,900% since 2007? The company in question is software group Idox (LSE: IDOX), which provides “specialist information management solutions” to public sector and regulated businesses.

The firm’s spectacular dividend growth has been accompanied by a 500% increase in the value of the group’s shares. Idox has been a super growth story. But what does it offer new investors today?

The firm said this morning that it will spend £5m to acquire a company called Halarose, which will extend Idox’s existing election software business. This valuation equates to a multiple of 4.5 times Halarose’s earnings before interest, tax, depreciation and amortisation (EBITDA) which seems reasonable to me.

Idox shares have performed poorly this year, falling 5% since January. The main reason for this seems to be a disappointing set of interim results in June, when first-half profits fell by 30%.

However, much of this decline was due to acquisition-related items. Second-half performance should be better, and the board has maintained its full-year guidance. It’s worth noting that this business benefits from a lot of ‘sticky’ recurring revenues, so profits should generally be quite stable.

According to the latest broker forecasts, Idox is expected to generate adjusted earnings pf 4.22p per share this year, giving a forecast P/E of 14.6. The dividend is expected to rise by 5% in 2017 and by 13% in 2018, giving a forecast yield of 1.7%, rising to 2%.

At current levels, Idox looks potentially interesting to me.

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Roland Head 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.

Improving performance

Reporting on Monday was cloud-based portfolio analysis and asset pricing specialist StatPro (LSE: SOG). It stated that trading in the first quarter of the current year has been in line with expectations. It has recorded impressive sales growth of StatPro Revolution and StatPro Seven, while the pipeline for the rest of the year remains solid.

The recent acquisition of UBS Delta could provide the business with a boost over the medium term. It may offer the company a stronger presence in portfolio analytics. Given the company’s strong track record in M&A activity (it has acquired 13 businesses in the last 17 years), the integration should progress relatively well.

Looking ahead, StatPro is forecast to record a rise in its bottom line of 41% in the current year, followed by additional growth of 45% next year. This puts its shares on a price-to-earnings growth (PEG) ratio of just 0.4, which suggests upside potential is high.

Certainly, the asset management industry faces a number of threats to its future. For example, the attraction of passive investing, higher regulation and a low return environment. However, with a strong position within cloud-based services, StatPro seems to be a sound long-term buy at the present time.

Growth potential

Also offering the potential for relatively high returns within the technology sector is IDOX (LSE: IDOX). The information management solutions specialist is expected to record a rise in its bottom line of 12% in the current year, followed by further growth of 13% next year. This puts the company’s shares on a PEG ratio of 1.1, which suggests they could deliver further capital gains after their 14% rise since the start of the year.

Looking ahead, IDOX could also become a relatively attractive income stock over the medium term. It currently pays out only 25% of its profit as a dividend each year. This could easily rise significantly in future years, while also ensuring the business has sufficient capital for reinvestment. When combined with a rising bottom line, this could lead to a higher dividend in future.

In fact, in the next financial year IDOX is forecast to grow its shareholder payout by around 12%. This puts its shares on a forward dividend yield of 1.7%, which could increase further over the medium term. With inflation moving higher, IDOX could have a potent mix of income, value and growth appeal for the long run. As such, even though the FTSE 100 is at record levels, it could be worth buying.

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Peter Stephens 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.

£100m target

AIM-listed Idox (LSE: IDOX) has a market cap of £269m at a share price of 66.5p. This supplier of software solutions and services to the UK public sector (and also to the wider corporate sector) has recently completed an £18.5m acquisition that will significantly expand its presence in the health and social care market.

The company is targetting £100m revenue “in the short-to-medium term” and I believe it could hit this target in 12-18 months. Based on an improving pre-tax profit margin and standard tax rate, I think we could see earnings per share (EPS) approaching 5p — 20% ahead of 2016’s 4.11p — for which growth you’re currently paying a price-to-earnings (P/E) multiple of 13.5.

Idox’s strategy is to supplement organic growth with acquisitions and, while acquisitions are never without risk, such a strategy can provide lucrative returns for investors if pursued in a disciplined manner. I believe the potential growth here is appealing enough to rate the shares a ‘buy’.

Double benefit

Severfield (LSE: SFR) is a main market company — listed in the FTSE SmallCap index — and has a market cap of £241m at a share price of 81p. It’s the largest structural steel business in the UK, supplying office buildings (such as the Shard), stadia (such as Liverpool’s Anfield), tunnels, bridges and so on.

European firms have become less competitive in bidding for UK work, thanks to the slump in sterling, and Severfield is enjoying the double benefit of seeing “more opportunities” in Europe.

For its financial year ending 31 March, I’m expecting the company to post EPS of a little over 5p — 37% ahead of last year’s 3.67p — for which growth you’re currently paying a P/E multiple of 16. This is another stock that looks very buyable to me.

Packing a punch

Macfarlane (LSE: MACF) is a constituent of the FTSE Fledgling index (main market companies that are too small to be included in the FTSE All-Share). Its market cap is £85m at a share price of 62p.

The Glasgow-based firm is engaged in designing, manufacturing and distributing protective packaging materials in the UK, as well as adhesive and resealable labels for fast-moving-consumer-goods customers in the UK, Europe and the US.

Like Idox, Macfarlane is pursuing a strategy to supplement organic growth with acquisitions, further cementing its packaging materials UK distribution leadership in what is a highly fragmented market. I’m expecting EPS of 5.5p (26% ahead of the previous year’s 4.37p) when the company posts its 2016 results a week on Thursday. For this growth you’re currently paying a P/E multiple of just 11.3. As you might have guessed, I rate this stock a ‘buy’ too.

The post 3 hot growth stocks for under £1 appeared first on The Motley Fool UK.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Sales beat forecasts

Rail and traffic management software firm Tracsis (LSE: TRCS) says it expects to report sales of more than £32m for the year ending 31 July. That’s significantly above City forecasts of £27.6m.

Tracsis says it has had a strong year.  The group’s core divisions have made good progress and acquisitions have boosted growth elsewhere. Net cash was £11m at the end of the year, despite a £7m net outflow of cash spent on acquisitions.

Earnings are expected to be in line with forecasts of 19.9p per share for last year. Forecasts suggest they will rise by 10% to 22p during the current year.

This puts the stock on a 2016/17 forecast P/E of 23. This may seem expensive, but Tracsis shares rose by 20% last week, after the group announced a breakthrough contract in the US.

If Tracsis can become a major player in the US market, then today’s share price could look cheap within a few years.

These shares could fly

Aircraft leasing specialist Avation (LSE: AVAP) has leased a new Airbus A321-200 to Vietnamese carrier Vietjet. It’s the latest in a series of deals that has seen the group’s profits rise from $0.098 per share in 2010 to $0.24 per share last year.

However, while Avation’s earnings per share have risen by 145% since 2010, the firm’s share price has risen by just 88% since its flotation in October 2010. This means that Avation now trades on a trailing P/E of just 7.3.

One concern among investors is that the group’s net debt of $409.5m is quite high relative to the $518m valuation of the firm’s aircraft fleet.

A second risk is that airline growth may be starting to slow. A fall in fleet utilisation or a rise in interest costs could cause problems for Avation.

City analysts have trimmed their forecasts recently, but still expect earnings per share to rise by 39% to $0.32 this year. This puts Avation on a forecast P/E of just 5.6. If you remain confident about the outlook for air travel, these shares could be worth a closer look.

Rapid sales growth?

Information management group Idox (LSE: IDOX) reported its second acquisition in two months this morning. The firm spent £2m on a digital marketing agency called Rippleffect Studio, whose customers include JD Wetherspoon and Liverpool Football Club.

Idox is hoping to increase annual revenues from £62.6m to £100m over the next few years. Progress so far has been good. Revenue rose by 27% to £37.2m during the first half of this year, while pre-tax profits climbed 110%, to £6.5m.

However, while Rippleffect generated £6.3m of revenue last year, its net profit was just £34,934. Private companies usually try to minimise profits for tax reasons, but Idox shareholders need to make sure their company isn’t boosting sales figures while diluting the group’s profit margins.

Idox shares currently trade on about 19 times 2016 forecast earnings. I’d say that’s about right for now, and would rate the shares as a hold.

The post 3 top small-cap growth buys for today? appeared first on The Motley Fool UK.

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

Very buyable #1

Carclo reported a 10.7% increase in revenue to £119m, with underlying pre-tax profit rising 22.9% to £8.8m and earnings per share (EPS) up 27.8% to 10.1p.

This excellent performance was driven by the company’s two main divisions: Technical Plastics, which specialises in injection-moulded plastic components for medical products; and LED Technologies, which designs and supplies injection-moulded lighting systems for luxury cars and supercars. Meanwhile, there was a one-off non-cash charge of £4.9m as a result of the group’s previously announced decision to discontinue its smaller Diagnostics Solutions business.

Ahead of today’s results, analysts had been forecasting earnings growth of around 20% for each of the next two years. EPS of 12p, followed by 14p, looks perfectly doable to me, and gives attractive price-to-earnings (P/E) ratios of 13.1 and 11.2. A price-to-earnings growth (PEG) ratio of 0.7 for both years underlines Carclo’s credentials as a very buyable growth share at an appealing price.

Very buyable #2

Shares of Idox (LSE: IDOX) were also in demand this morning, rising 2.7% to 66.25p following the release of the company’s half-year results. This firm — which supplies software solutions and services to the UK public sector and increasingly to the wider corporate sector — is one of the larger companies on London’s junior AIM market, valued at £238m.

Organic revenue growth reported this morning was 5% but, following two acquisitions during 2015, the actual top-line increase was 28% to £37.2m. This revenue growth, coupled with margin improvements, saw adjusted pre-tax profit motor higher by 36% to £7.9m, with EPS soaring 56% to 1.97p.

The board expressed its confidence in “at least” meeting market expectations for the full-year. If we annualise the first-half EPS of 1.97p we get 3.94p (a little ahead of the market expectations referred to). This looks a reasonable projection, and gives 20% EPS growth year-on-year, a P/E of 16.8 and a PEG of 0.8. On this basis, Idox’s shares also look very buyable at their current level.

Very buyable #3

The FTSE SmallCap index and AIM market are the natural places to look for high-growth companies, but some larger companies also have terrific growth credentials. Chip designer ARM (LSE: ARM) may be a £14bn FTSE 100 giant, but it has a growth record many smaller companies would envy. Furthermore, its growth is set to continue.

ARM’s super-efficient chip designs have become ubiquitous in smartphones, and the company continues to expand into other lucrative markets that will drive future growth, including connected vehicles, robotics, smart cities and Internet of Things devices. A recent $350m acquisition of a global leader in imaging and embedded computer vision technology will further accelerate ARM’s expansion into these new markets.

ARM’s shares are currently trading at 1,010p, and with analysts having pencilled in EPS growth of 43% to 34.5p for 2016, the P/E is 29.3 and the PEG is 0.7. While the P/E is more elevated than that of Carclo and Idox, it’s a little below ARM’s own historical level, and the FTSE 100 firm also appears worth buying with growth on offer at a reasonable price.

The post 3 unmissable growth bargains? ARM Holdings plc, Carclo plc & Idox plc appeared first on The Motley Fool UK.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.