Let’s take a closer look at three examples of stocks that investors can’t seem to get enough of.

Fewer claims, higher profits 

Shares in insurer Admiral (LSE: ADM) are up 14% in the last month alone. If you’d bought back in the middle of a miserable March, you’d now be sitting on an even bigger gain of around 43%. 

This popularity isn’t a complete surprise. Last week’s interim results revealed a 31% rise in statutory pre-tax profit to £286.1m. At least some of this is due to the company receiving fewer motor claims in March and April as the UK was forced into lockdown.

Another attraction has been the company’s decision to reinstate its special dividend. The 20.7p per share payout will now be distributed in addition to a half-year dividend of 70.5p. 

Despite its high margins and income credentials, Admiral now trades on a forecast price-to-earnings (P/E) ratio of 20. This makes it significantly more expensive than top-tier peer Direct Line Insurance (13 times earnings).

After such a strong performance, I think the share price might soon pause for breath. 

Lockdown beneficiary

A second stock from the FTSE 100 that’s been doing very well is B&Q and Screwfix owner Kingfisher (LSE: KGF).

A beneficiary of people having (a lot) more time on their hands lately, Kingfisher recently reported a 21.6% jump in like-for-like sales in the second quarter of its financial year (to 18 July).

As a result of this and cost-cutting measures, the company now believes that half-year adjusted pre-tax profit will come in ahead of that achieved last year. 

Unsurprisingly, investors have reacted positively. Over the last month alone, Kingfisher’s stock has climbed 19% in value. If you’d bought when the world was going to hell in a handcart back in March, you would have doubled your money by now. That’s a much better return than the 22% achieved by the index. 

Whether this momentum can last, however, is debatable. With restrictions lifted and people slowly returning to work, the shares may begin to lose steam.

A forecast price-to-earnings ratio of 14 is far from excessive, but with a lot of debt still on the balance sheet, I wouldn’t go chasing the stock from here.

Pride before the fall?

A third FTSE 100 company that’s been doing very well is Ocado (LSE: OCDO). Up 10% in the last month and well over 100% since early March, the online grocery retailer continues to attract momentum-chasing investors. 

Since betting with the trend can often prove a winning strategy, I don’t doubt there’s a chance to still make money with Ocado. Once again, however, I would caution that this company is far from a risk-free bet.

Lockdown helped retail revenue soar by 27% year-on-year in the six months to the end of May but the company is still making a loss. That’s concerning when, at nearly £18bn, Ocado’s valuation is approaching that of FTSE 100 peer Tesco. After all, the latter boasts a near-27% share of the grocery market. There’s also Amazon to worry about. 

The Hatfield-based business will surely benefit from the shift to online grocery shopping. At this price, however, it simply must deliver. 

The post Investors can’t stop buying these FTSE 100 stocks. Should you follow the money? appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Admiral Group and Tesco and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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.

Here are three that investors can’t stop buying. 

Top UK stock

Like nearly all stocks, IT specialist Computacenter (LSE: CCC) was hit hard by the market crash in March. Since then however, the share price has doubled. When you consider just how bullish last week’s trading statement was, it’s not hard to see why.

As a result of people needing to work from home during lockdown, Computacenter said it has seen huge demand for equipment and services. Adjusted pre-tax profit in the first six months of 2020 was consequently “substantially ahead” of that achieved over the same period in 2019.

Looking ahead, the firm now believes that adjusted profits in H2 will be “much improved” on the forecast given in April and that 2020 will turn out to be “a year of material progress“.

Of course, the usual caveats apply: no investment is ever ‘safe’ and there’s the possibility that a lot of this good news is already priced in.

Then again, concerns over a second coronavirus wave could force the share price even higher. Regardless, the growing trend of companies allowing their employees to work from home more often can surely only be a good thing for Computacenter.

At 21 times forecast earnings, this UK stock isn’t cheap. Nevertheless, I think there’s potential for more gains ahead. 

Gold price beneficiary

Back in May, I suggested that £2bn cap gold miner Centamin (LSE: CEY) could be a good hedge against a looming recession. After all, gold has historically been a great store of value in troubled times. 

Since then, of course, the precious metal’s price has rocketed to a record high. Centamin has followed suit, rising 20%. If you’d bought this UK stock in the dark days of March, you’d have pretty much doubled your capital. 

I suspect this momentum will continue for a while yet. This is especially likely if the US Federal Reserve orders another bout of money-printing. Such a move further increases the risk of inflation — something gold helps to protect investors from. 

Centamin’s shares currently trade on 16 times forecast earnings. Considering the precarious state of the global economy and the company is debt-free and still paying dividends, that still doesn’t feel excessive.

In demand

A final UK stock that investors can’t get enough of is online wine-seller Naked Wines (LSE:WINE). Again, the share price has almost doubled since mid-March. That’s a seriously good result considering most small-cap companies haven’t rallied as strongly as those in the FTSE 350. 

Then again, this shouldn’t come as a complete surprise. Like Computacenter, Naked Wines has been a huge beneficiary of people spending more time at home. Last week’s trading update revealed a 67% jump in total sales in June compared to the same month in 2019. For Q1 as a whole, sales were 77% higher.

With numbers like these, it’s becoming increasingly difficult to challenge management’s belief that Naked is “ideally positioned to be a long-term winner from the inflection in consumer demand for online wine”. 

As the potential for more local lockdowns in the UK grows, Naked’s purple patch could well be extended.  

The post Looking to protect your portfolio from coronavirus? I’d buy these 3 UK stocks appeared first on The Motley Fool UK.

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Paul Summers 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.

Should markets quickly give up the positive momentum seen over the last couple of days, however, there’s one stock I definitely won’t be interested in buying, regardless of how cheap it becomes.  

Off-screen drama

Since a trip to the movies involves sitting for hours in an enclosed space with popcorn-munching strangers, it’s no surprise the share price of cinema operator Cineworld (LSE: CINE) has been hit hard following the coronavirus outbreak. Yesterday, the stock closed at 140p — roughly 20% less than a month ago.

It’s certainly possible things could get worse before they get better. A decision by the UK government to restrict ‘public gatherings’ in the event of a huge rise in those testing positive would be extremely negative for the company. Closing cinemas would surely be required, as it was in China.  

Even if it doesn’t come to this, the ongoing disruption to the cinematic calendar is likely to impact earnings in the short term. Yesterday, it was announced the release date for the new James Bond film (No Time to Die) has now been put back from April to November. A couple of weeks ago, filming of the latest Mission Impossible installment was brought to an abrupt halt in Italy.

Temporary or otherwise, I’d still be reluctant to snap up Cineworld’s shares for another three reasons.

Loaded with debt

First, the amount of debt the company now carries as a result of its decision to buy US operator Regal and Canadian business Cineplex remains significantly more than the current value of Cineworld itself! Bar a few exceptions, I’m not a fan of debt-laden companies at the best of times, let alone when markets are this fragile. 

Second, the popularity of streaming services, such as Netflix and Amazon Prime, shows no signs of falling (and is likely to soar if we’re all forced into self-isolation).  The arrival of Disney’s ‘Plus’ offering later this month will mean yet more competition for consumers’ eyeballs. Monthly subscriptions costing far less than a single trip to the cinema and offering a huge variety of content leave the FTSE 250 company looking very vulnerable, at least in my opinion.

Third — and arguably as a result everything mentioned so far — Cineworld continues to attract significant attention from short sellers (those who bet on a company’s share price falling). Right now, it’s the third most shorted stock on the London Stock Exchange, according to shorttracker.co.uk.

Highly-researched short sellers aren’t always right, but anyone owning stocks they target must be very sure of their reasons for staying positive. 

Worth a punt?

Full-year numbers from Cineworld are expected on 12 March. Since these will relate to trading in 2019 only, it’s inevitable investors will be more focused on comments from management regarding the company’s outlook, in light of the coronavirus crisis.

At a little less than six times forecast earnings, you might argue a lot of negativity is already priced in. With everything so up in the air, however, I think Cineworld looks a classic value trap.

The post Fear a ‘dead cat bounce’? I’d avoid this dirt-cheap FTSE 250 stock appeared first on The Motley Fool UK.

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• How much do you need an ISA for a £31,352 second income?
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• How I plan to lock in sustainable growth on the FTSE 100 in the coming years

Paul Summers 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.

According to a study that looked at returns between 1900 and 2016, UK stocks that had outpaced the market in the previous year returned an average of 14.1% over the next 12 months.

With this in mind, here’s a selection of stocks from the FTSE 100 that are currently doing very well indeed.

Rapidly rising

Accountancy software provider Sage (LSE: SGE) is a great example of just how profitable taking a contrarian stance can be. Its shares have climbed 50% in value since October, having previously fallen 35% from the beginning of 2018.

Some of this can probably be attributed to the general return in positive sentiment to markets but, as my Foolish colleague Kevin Godbold explained last month, Sage’s recent results have been decent, including a 9.9% increase in recurring revenue.

It’s certainly quite a turnaround for a company whose former CEO departed in 2018 amid disappointing trading and problems relating to the execution of a new business model.

Today Sage looks in much better shape and — at 26 times forecast earnings — boasts a high valuation to match. 

Another stock that has performed admirably for holders lately has been medical technology business Smith & Nephew (LSE: SN). It’s up 36% since last October, comparing favourably to the 6% odd increase seen in the index over the same period. 

May’s trading update has helped keep this momentum going with the £15bn cap reporting a 4.4% rise in underlying revenue over Q1. Management now believes that growth will now be “in the upper half of guidance range of 2.5% to 3.5%” for the full year. 

This news, combined with a series of acquisitions to “strengthen leadership positions across the business,” should give investors confidence that the good times can continue. The shares are available on 22 times forward earnings. 

It won’t come as a surprise that my last example is one the newest additions to the FTSE 100 — sportswear specialist JD Sports Fashion (LSE: JD).

Bucking the trend seen elsewhere on the high street, JD’s revenue jumped almost 50% in the 52 weeks to 2 February with pre-tax profit also rising 15.5% to just under £340m.

Naturally, this form hasn’t been ignored with the shares galloping 70% higher since the beginning of 2019. They now change hands for 18 times expected earnings, compared to the five-year average of 15.

The company’s growth strategy, part of which has involved a spate of acquisitions, including menswear brand Pretty Green and footwear retailer Footasylum (although the latter still needs to be approved by the Competition and Markets Authority) has clearly gone down well with investors. 

Last year’s capture of US firm Finish Line also serves to increase JD’s geographical diversification — a prudent move with Brexit somewhere on the horizon.  

Don’t get too comfortable

Based on recent trading, I think there’s a good chance that all three of these stocks will keep rising, at least in the near term.

There can be no guarantees though. Popular companies can fall hard when their purple patches end and/or external events dictate otherwise. Don’t expect a gong to signal the optimal time to sell. 

If all that doesn’t sit well, then the Fool’s general philosophy of buying quality companies and holding on through thick and thin for many years may have more appeal. 

The post These FTSE 100 stocks have been on a tear. Can the good times continue? appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage 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.

The FTSE 100, considered to be the a leading indicator of UK stocks, hasn’t had the best starts to 2018 either — it’s broadly unchanged since the start of the year. That’s because, besides ongoing uncertainty about the UK’s long-term relationship with the EU, worries over global trade and the prospect of an interest rate hike later this year have weighed heavily on the share index.

Outperforming the FTSE 100

Still, there may be some value to knowing which funds have been significantly outperforming the FTSE 100 so far this year. This short period is significant because, whether you’re a trader or a long-term investor, the first six months can give some meaningful clues about where the market could be headed next.

For example, sector funds which are leading the market right now can tell us about investible themes and help us to identify bullish trends. Meanwhile, country-specific or regional funds can inform us about which markets are holding up better than the rest.

With this in mind, here’s a look at three investment trusts that have been outpacing the FTSE 100 so far this year. These may not the absolute top performers of the year, but I reckon they are among the most outstanding and insightful of the top-performing investment trusts in 2018.

Technology

Technology has, once again, been the standout sector in the market this year. And one fund in particular which has really taken off is the Allianz Technology Trust (LSE: ATT).

Driven by stocks such as Amazon and Netflix, which have gained 50% and 118%, respectively, since the start of the year, the Allianz Technology Trust is up by just under 30% so far. This performance compares favourably not only against the FTSE 100, but also against its benchmark index, the Dow Jones World Technology Index, which returned only 15% over the same period.

Strong earnings expectations

Despite a wobbly start in the first quarter of 2018, the technology sector has picked up some steam in the second quarter. Buoyed by strong earnings expectations, technology stocks have shaken off much of the regulatory and protectionist concerns that had been holding them back earlier in the year.

Still, not everyone is enthused. Analysts from Morgan Stanley reckon that already priced into tech valuations is an expected strong earnings season, while sector valuations trade at a significant premium to the market even as uncertainty created by US tariffs (and the threat of retaliatory tariffs) looms large.

Track record

With the FTSE 100 having so few technology stock constituents, the Allianz Technology Trust is a particularly good choice for domestically-exposed investors to get more exposure to the technology sector. The fund has an impressive long-term track record of delivering attractive capital growth, with a five-year cumulative share price return of 260%.

Emerging markets

Surprisingly, another fund which also did particularly well since the start of the year was one which invested in emerging markets. Even as trade war anxiety ruffled on emerging equity markets, the Gulf Investment Fund (LSE: GIF) was one of the best performing funds after having delivered total shareholder return of 14% since the start of the year.

The fund, which seeks exposure to emerging investment opportunities in the Gulf Cooperation Council, or the GCC region, has no doubt benefited from the region’s much-improved economic prospects, which look a lot brighter thanks to rising oil prices.

Financial sector

But although the region is heavily exposed to the oil and gas sector, the fund manager is more keenly invested in the financial stocks, which account for 48.9% of its total assets. The utilities sector is its next biggest exposure, representing 9.6% of assets. This is followed by the energy sector, which represents a further 8.6%.

The fund’s investment adviser believes the GCC banking sector enjoys strong capitalisation and is well placed to benefit from increased infrastructure spending, improving economic growth, and favourable demographic trends. Banking stocks are also attractive due to strong government support for the sector and the recent string of rate hikes by the region’s central banks, which is expected to improve their profitability.

Certainly, the Gulf Investment Fund may not be suitable for all investors as the value of its investments can experience high levels of volatility. That said, as shares in the trust trade at a 15% discount to its net asset value (NAV), it may be worth a closer look for those with a bigger risk appetite seeking an undervalued opportunity.

UK smaller companies

Meanwhile, the BlackRock Throgmorton Trust (LSE: THRG) is a fund to consider for investors seeking to invest closer to home. Shares in the UK smaller companies investment trust have gained 18% year-to-date, making it one of the best-performing funds in the UK small- and mid-cap space.

Fund manager Dan Whitestone reckons there isn’t an industry that’s not facing some form of disruption and that this new wave of disrupters is changing consumer behaviour. As such, his strategy rests on identifying those companies that are disrupting established industries.

Holy trinity

Whitestone has a preference towards companies that have in place the “holy trinity” of a strong management team, a great product, and one that is operating in an attractive sector. The fund’s top five holdings at the end of May included Ascential, Dechra Pharmaceuticals, Integrafin, Robert Walters and Fevertree Drinks.

Fees for the BlackRock Throgmorton Trust are moderate, with an ongoing charges ratio (including performance fees) of 2.2% for its last financial year.

The post 3 investment trusts that have been smashing the FTSE 100 so far this year appeared first on The Motley Fool UK.

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Jack Tang 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.

Private equity

Private equity has been one of the best-performing alternative asset classes in recent years, and that’s helped to attract billions in flows from sovereign wealth funds, pension companies and other institutions. It’s an area that’s largely closed off to direct retail investors, but there are a few investment companies, such as the HarbourVest Global Private Equity Limited (LSE: HVPE), which give them indirect access to this market.

What’s unique about private equity funds is that they typically invest in unquoted companies that are in the developing stage or have under-tapped potential. This means there’s the potential to generate higher returns than in the stock market, while improving portfolio diversification at the same time.

HarbourVest invests in a wide range of private equity funds which, in turn, gives it exposure to a broad-ranging portfolio of equity investments diversified by geography, stage of investment, vintage year, and industry.

And with a share price of 1,290p, HarbourVest trades at a 15% discount to its NAV, meaning prospective investors can effectively purchase shares in the fund for significantly less than the sum of its parts.

A healthcare fund poised for growth

Sector investing offers targeted exposure to company stocks in individual industries which can help you to pursue opportunities which affect specific parts of the economy.

One sector which I’m particularly keen on is healthcare. The sector offers huge potential, as it benefits from a number of long-term structural tailwinds, which include an ageing global population, a growing middle class in emerging markets, and innovation in new drug development. Of course, not every company will perform well in a sector that is benefiting from long-term trends, which means it’s important to diversify and spread your capital over a reasonable number of companies.

But instead of just buying the likes of GlaxoSmithKline and AstraZeneca, why not diversify geographically to potentially boost returns and reduce risk? After all, healthcare is a global business, so you’re getting foreign exposure from domestically-based businesses anyway. What’s more, the US has many more publicly-listed healthcare companies than the UK, particularly in the biotech sector, which means avoiding international companies drastically narrowing your investment universe.

That’s why most funds investing in the healthcare sector typically have a global outlook. And one fund which has caught my eye recently is the Worldwide Healthcare Trust (LSE: WWH), which I reckon to be a smart bet on the sector.

Since its inception in 1995, the fund has proven leadership, having been continuously run by two specialist investment veterans, Samuel Isaly and Sven Borho. Performance figures for the past five years show the trust earns a total share price return of 211%, easily beating its benchmark MSCI World Health Care Index’s performance of just 131% over the same period.

The post 2 top-performing investment trusts for long-term investors appeared first on The Motley Fool UK.

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Jack Tang 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.

Micro cap stocks

The River and Mercantile UK Micro Cap Investment Company (LSE: RMMC) is one of only a few funds which primarily focuses on some of the smallest UK companies on the stock market. It aims to achieve long-term capital growth by investing in companies with a market capitalisation of less than £100m at the time of purchase.

Although the fund is relatively new, launched less than three years ago in December 2014, it has so far performed well. The investment company was one of the top-performing small-cap funds over the past year with a 12-month net asset value (NAV) return of 47.8%, which compared favourably against the Morningstar UK Smaller Companies category performance of 26.2%.

Greater scope for growth

Portfolio manager Philip Rodrigs reckons the smaller the initial size of the company at the point of investment, the greater the scope for growth. Micro caps are one of the less-researched areas of the market, meaning diligent investors may earn big returns from finding small, quality companies that have been undervalued for a long time before being discovered.

The fund’s outsized exposure to the technology sector, which accounts for 29.7% of its portfolio allocation (against just 8.9% in the benchmark index), has no doubt played a big role in the fund’s performance. However, looking ahead, it’s important to be wary of the fund’s concentration risks. Although the UK technology sector is in good health at present, high valuation multiples among many tech stocks may limit further upside potential.

The fund is also meaningfully overweight in the oil and gas sector, which represents 11.5% of its assets — compared to the benchmark weight of 4.5%. And as a result, the fund is underweight in a number of other sectors, most notably industrials and financials. Top holdings include Microgen (5.9%), Taptica (5.4%), Blue Prism (5.2%), MaxCyte (4.8%) and Ideagen (4.4%).

European small-caps

For investors looking to diversify away from UK stocks, the TR European Growth Trust (LSE: TRG) is perhaps a better pick. The Janus Henderson trust invests primarily in smaller and medium-sized European companies, with the same aim: to achieve long-term capital growth.

The top three country exposures are Germany, France, and Italy, which represent 19.4%, 12.3%, and 11.5% of its portfolio, respectively. The trust also invests most heavily in the industrial goods sector, carrying a hefty 23.6% exposure to it. Top holdings include Van Lanschot Kempen (2.3%), Brainlab (2.2%), FinecoBank (1.7%), Anima (1.3%) and Lenzing (1.3%).

Further to run

Ollie Beckett, who has run the fund since 2011, reckons the European recovery story has further to run. Despite the narrowing valuation gap between US and European stocks over the past year, he believes there are still undervalued growth opportunities in the market.

The TR European Growth Trust is a top-quartile performer, with a five-year cumulative NAV performance of 230.8%. Its stock performance is even more impressive, with a total share price return of 320.9% over the same period, thanks to a narrowing of its discount to NAV from roughly 20% in 2012, to currently less than 1%.

The post 2 top-performing investment trusts for momentum investors appeared first on The Motley Fool UK.

More reading

• How to invest £125 a month in UK shares to target a £39,039 annual passive income
• These white-hot FTSE 250 growth shares are on sale today!
• How much do you need an ISA for a £31,352 second income?
• With the Aston Martin share price in pennies, is it in bargain territory?
• How I plan to lock in sustainable growth on the FTSE 100 in the coming years

Jack Tang 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.

Resilient

First up is River and Mercantile Group (LSE: RIV), an advisory and asset management company which is doing well amid challenging market conditions.

Steady fund inflows reflect the asset manager’s resilient business model and the robustness of the appeal of its investment solutions. Net inflows in the three months to 30 June were £0.4bn, with net sales of £0.2bn and positive rebalancing flows in Derivative Solutions of £0.2bn. This marked its 13th consecutive quarter of positive fund flows since its IPO back in 2014.

For the 12 months to 30 June, fee-earning assets under management increased by 22% to £31bn, while performance fees are estimated to have risen to £12.5m, up from £1.5m last year.

Looking ahead, CEO Mike Faulkner said: “We remain well positioned to continue this growth and will continue to invest in our operating platform, international capabilities and new product launches.”

The question for investors is whether earnings and dividends will rise fast enough to meet the market’s demanding expectations — shares in River and Mercantile Group have already gained 63% year-to-date.

Personally, I reckon there could still be more upside to come as the company’s steady growth in assets under management reflects its sector-leading performance. Valuations aren’t necessarily cheap, with the shares trading at 19.3 times expected earnings in 2018, but quality companies with good growth prospects always come at a price.

The dividend outlook is attractive too, with shares in River and Mercantile Group forecast to yield 4.2% this year at current prices — and that’s up from its trailing dividend yield of 2.5%.

Strong growth

Another stock worth a closer look is CVS Group (LSE: CVSG). In a trading update on Monday, the veterinary services provider said it saw like-for-like growth of 6.3% for the year to 30 June, with full-year revenue and earnings likely to be in line with expectations.

CVS is seeing strong growth as it continues to invest heavily in its existing services and in organic growth, amid growing demand for veterinary services in the UK and the Netherlands. Acquisition-led expansion continues apace too, with a total of 62 surgeries acquired over the past year.

Looking ahead, CVS continues to see a significant number of acquisition opportunities and expects further like-for-like growth in the coming year. In addition to generating top-line growth, this could lead to improved scale, which could benefit future margins.

Moreover, City analysts seem sanguine on its growth prospects. They expect underlying earnings to climb 27% this year, with further growth of 9% in 2018, which gives it a forward P/E of 28.1.

Shares in CVS are up 17% year-to-date.

The post 2 fast-rising growth stocks with lots of upside appeared first on The Motley Fool UK.

More reading

• How to invest £125 a month in UK shares to target a £39,039 annual passive income
• These white-hot FTSE 250 growth shares are on sale today!
• How much do you need an ISA for a £31,352 second income?
• With the Aston Martin share price in pennies, is it in bargain territory?
• How I plan to lock in sustainable growth on the FTSE 100 in the coming years

Jack Tang 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.

With this in mind, has the time come to sell leisure stocks Cineworld (LSE: CINE) and Rank (LSE: RNK), both of which have seen their share prices lose momentum over recent weeks? Here are my thoughts.

Stay the course

Since reaching a high of 740p a couple of months ago, shares in £1.9bn cinema operator Cineworld have come off the boil. That’s despite the company’s last trading update being uniformly positive.

From January to May, Cineworld managed to grow revenue by 15.8% on a constant currency basis, driven largely by a strong film slate that included Beauty and the Beast, The Lego Batman Movie and Guardians of the Galaxy Vol 2.

The company saw strong admissions growth across its estate, with the UK, Israel, Romania and Slovakia markets doing particularly well. A near 20% rise in retail revenue was also seen, thanks in part to the company’s decision to open more Starbucks outlets and VIP sites at its cinemas. 

So, why the dip?  

In addition to some investors deciding to take profits after such a stellar run, there’s also the possibility that August’s interim results won’t quite be as good as expected thanks to the recent warm weather and a spate of poorly-received recent releases (including the latest Pirates of the Caribbean and Transformers instalments). 

As a medium-term holding however, Cineworld remains attractive. Operating margins and returns on capital are consistently decent and levels of free cashflow look healthy. There’s also a forecast 3% yield available, safely covered by profits. Moreover, the schedule of film releases over the remainder of 2017 looks promising, with Star Wars: The Last Jedi, Thor: Ragnarok and Justice League likely to be big draws.

At 18 times earnings for 2017, Cineworld isn’t cheap. Nevertheless, I’m not sure taking profits at the current time would be wise.

Still bearish

As an investor, it’s always a good idea to admit one’s mistakes. My negative call on Mecca Bingo owner Rank following a fairly uninspiring set of interim results in January was way off the mark. Despite falling back slightly over recent weeks, the stock has still managed to climb 14% since voicing my concern over its poorly performing (but significantly large) retail division.

At a risk of sounding stubborn however, my thoughts on the company’s prospects haven’t changed. Based on its most recent trading statement, the physical casinos and bingo sites continue to be a burden, with like-for-like revenue declining by 1% and 2% respectively over the 46 weeks to mid-May. In complete contrast, digital revenue at the mid-cap grew by 13%.  

To be clear, Rank isn’t the worst investment out there. At 14 times earnings, the shares aren’t particularly expensive and there’s a fairly tempting 3.3% yield on offer to entice investors. Debt levels have shrunk noticeably over the last few years and, like Cineworld, Rank should also be able to survive the prevailing economic uncertainty thanks to the relatively lost-cost nature of the activities it promotes.

Nevertheless, with earnings unlikely to rocket anytime soon and a sizeable estate to maintain, I’d be tempted to take at least some money off the table.

The post Time to dump these high-flying stocks? appeared first on The Motley Fool UK.

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Paul Summers 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.

Don’t kick yourself if you didn’t make that purchase. Based on today’s final results (and despite the market’s initial reaction to them), I still think the shares have further to climb. 

Over the year to the end of March, group revenue jumped 23% to £1.73bn. Thanks to strong demand last summer and heavier price discounting in H2, overall revenue at its leisure travel business rose 24% to £1.57bn. Dart’s airline, Jet2.com, carried over 7m passengers to holiday destinations in 2016 — a 17% increase on the previous year. There was also a 42% rise in the number of customers buying package holidays from the company. Revenue at its Distribution and Logistics arm rose 14% to £163.5m. 

So, why on earth are shares trading 12% lower this morning?

A lot of this will be down to the fall in pre-tax profits. These flew 14% lower to just over £90m following “considerable investment” in the company’s two new Jet2.com operating bases at Birmingham and London Stansted Airports and a £10.9m charge for foreign exchange revaluation losses. The £900,000 fall in profit at its Logistics arm (to £4.5m) was blamed on a hugely competitive market and a £400,000 bad debt write-off after one customer went into administration.

Despite all this, Dart stated that both of its businesses had made “satisfactory starts” to the 2017/18 financial year and that it was confident of meeting profit expectations, particularly as the new bases should allow it to strengthen its position in the Midlands and attract new customers from London and the East of England. Concerns over Brexit aside, the additional investment undertaken by the company (which also includes the purchase of new and mid-life aircraft and an extension to its Teynham distribution centre) should also pay off over the longer term.

At 13 times trailing earnings, boasting a huge net cash position (£168.5m) and excellent levels of free cashflow, Dart still looks worthy of investment. Today’s sell-off smacks of market impatience, a degree of profit-taking and unchecked expectations. 

Whizzing higher

For evidence that it might be best for private investors to ignore any short-term reaction from the market, look no further than Wizz Air (LSE: WIZZ). After dropping as low as 1,560p following February’s Q3 profit warning, shares have rebounded strongly to now trade at 2,553p. That’s a 44% return in just five months. 

At 14 times forecast earnings and despite recent gains, shares in Wizz still offer reasonable value, in my opinion. The company’s recent decision to set up camp at Luton Airport (also home to sector peer and FTSE 100 constituent, easyJet) can be taken as a clear statement of intent by management that it won’t be held back by concerns over the impact of Brexit on the European aviation industry.

Elsewhere, the £1.9bn cap’s finances continue to look in excellent shape. It’s got stacks of cash and no debt. What’s more, the returns Wizz manages to generate on the money it invests tend to be far higher than most of its peers.

With Q1 results expected next Wednesday, I wouldn’t be surprised if the stock climbs further over the next month or so, assuming there are no nasty surprises awaiting investors.

The post These high-flying growth stocks could soar even higher appeared first on The Motley Fool UK.

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Paul Summers 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.