Is this an opportunity to buy the stock at a discounted price? And should I be adding the business to my portfolio? Let’s take a look.

An engineering research house

Versarien is an engineering materials business. It owns and operates eight subsidiaries specialising in developing and commercialising new materials. Its combined expertise lies primarily in graphene, plastics, and metals. Its proprietary technologies and developed products have proven to be essential across many sectors, including electronics, aerospace, energy, and industrial engineering.

Covid-19 has caused multiple disruptions across all these sectors as well as Versarien’s own research projects. Consequently, the firm reported its biggest loss since its IPO in 2013, which likely triggered the drop in the share price.

In January this year, Versarien’s share price looked like it was on the road to recovery. Unfortunately, the rise was short-lived. And once again, it began to fall following the publication of another report. Losses have continued to expand while revenues decline.

However, there were some promising trends. Graphene product sales significantly increased thanks to the successful launch of its specialised facemasks. And it also began working on a new engineering project with Rolls-Royce. Could this be a sign that the worse has passed?

Risks to consider

Covid-19 has undoubtedly wreaked havoc on the business. However, from what I can tell, the collapsing share price appears to be due to over-valuation rather than any underlying problems with the company. The increasing losses are bad, but the cause is temporary. And with plenty of cash on the balance sheet, I don’t think it’s in any immediate financial danger. 

Meanwhile, in 2019, the Versarien share price was trading as high as 132.5p. That’s roughly a market capitalisation of £205m despite being unprofitable and only generating £9m in revenue that year. Today’s the company is valued closer to £70m, which still seems expensive but not as ludicrous. At least that’s what I think.

It’s also worth noting that it is currently unclear when Versarien will become profitable. And so the firm is and will remain dependent on outsiders to raise additional capital. So far, this has been achieved through a mixture of debt and equity issues. However, these may not be available in the future, and the latter appears to be creating a dilution effect. After all, the shares outstanding have increased by 60% over the past five years.

Versarien share price: time to buy?

Operating within the engineering industry is tough. The constant technological innovation and vast competition can often lead to companies becoming obsolete or superseded by rivals. However, Versarien’s ability to attract and retain industry veterans partners like Rolls-Royce, as well as expand its offerings into the Chinese markets, is encouraging.

Personally, I think it’s still too soon to invest. Therefore I’m not going to buy any Versarien shares for my portfolio today. But I will be keeping a close eye on how it performs in the future.

The post Will the Versarien share price recover in 2021? appeared first on The Motley Fool UK.

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Zaven Boyrazian does not own shares in Versarien. 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.

Back then, the share price was at 84p. You could say I made a duff call because the stock went as high as 185p by September 2018 and now sits at 115p as I write. However, I was worried about the firm’s finances back then, and I still am. On top of that, even if City analysts’ predictions come true for profits down the road, we could be looking at an eye-wateringly high valuation at the current level of the share price.

A great story, naturally

Naturally, the company has a great story. How else would it have attracted such speculation from investors? It operates with the two divisions of Graphene & Plastics, and Hard Wear & Metallic Products. Graphene, in particular, is known for its potential to disrupt a number of established industries, and a series of collaboration agreements appear to have whipped up speculation about the firm’s future into a froth of exuberance that has driven the share price skywards.

But the financial reality tends to knock off the old rose-tinted spectacles. Today’s full-year results report to 31 March reveals that revenue came in essentially flat compared to the year before at just over £9m. I find that worrying. The firm has spent a whole year investing, trading and presumably selling its story and products, only to stand still with the revenue result.

And it gets worse. The loss before tax increased by 75% to £2.8m. In terms of building a financially viable business, Versarien appears to be going backwards. Meanwhile, we get a sense of the way the stock market is over-valuing the company by comparing the circa £9m revenue figure with the firm’s market capitalisation, which runs close to £179m.

A nose-bleed valuation

Looking forward, City analysts following the firm are optimistic that Versarien can swing from loss to profit. Some have pencilled in earnings of around 1p per share for the current trading year to March 2020. But even if the firm achieves that, the current share price puts the forward-looking earnings multiple at about 115. If you are buying the shares now, you must be expecting a rapid acceleration in earnings in the years ahead.

And Versarien is making all the right noises. Chief executive Neill Ricketts said in today’s report that the year had been one of “great progress… particularly in our emerging technologies businesses, globally and in the UK.” He explained that the firm’s graphene businesses have expanded into global markets “and progress is being seen in our existing collaborations, as well as new collaborations being entered into.”

But I’m sceptical. Before we see a rapid escalation of revenue and earnings, I reckon we are likely to see a rapid contraction of the share price and valuation to adjust to the slow realities of building up new businesses from scratch. I’m avoiding the stock for the time being.

The post This hot stock could shoot the lights out. Here’s why I’m avoiding it like the plague appeared first on The Motley Fool UK.

More reading

• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?
• 5 years ago, £5,000 bought 354 Shell shares. But how many would it buy now?
• I asked ChatGPT if I should buy Aviva, Diageo or BAE Systems stock and it said…
• SpaceX’s IPO threatens to leave the Tesla share price on the forecourt
• A once-in-a-decade chance to buy software stocks?

Kevin Godbold has no position in any 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.

One company that has served early investors — including myself — particularly well over the last year or so has been advanced materials engineer Versarien (LSE: VRS).

Based on today’s interim report, I’m in no hurry to sell just yet.

Collaboration crazy

Befitting its high-growth credentials and need for ongoing investment, Versarien reported a pre-tax loss of £0.7m over the six months to the end of September, despite revenue increasing 19% to £5.22m. Nevertheless, it’s the operational progress made by the company that’s of more interest to the market right now. 

Continuing a trend that began roughly one year ago, Versarien inked nine new collaboration agreements over the reporting period, as well as capturing the services of Matt Walker and Pete Jay from the Department of International Trade to spearhead the company’s international ambitions.

Highlights since September include the purchase of a controlling stake in Spanish company Gnanomat and the Memorandum of Understanding signings with three Chinese firms — one of which relates to plans to build a manufacturing centre in Shandong Province.

Reflecting on the latter, CEO Neill Ricketts stated that the company’s expansion into China has “attracted a large number of suitors” and that Versarien intended to replicate the process “in other Asian territories“.  These developments, when combined with the £5.15m raised back in September, leaves the company “extremely well positioned for the future“, Mr Ricketts added. 

And Versarien is very much about the future. To be clear, a substantial proportion of the company’s current valuation is based on the potential for graphene to revolutionise our world. As such, it’s therefore absolutely vital that at least some of the firm’s many ongoing collaborations lead to substantial orders to justify the already-lofty market capitalisation of £175m. On this front, things are looking positive. 

Last month, it received an order for 1kg of Nanene — its patented graphene nano platelets — from a major global airline with the intention of using the product in fire-retardant aircraft interior parts. Encouragingly, more orders are “anticipated“.

But there’s more. Today, Versarien also announced that US engineering giant AECOM had placed an order for 50kg of graphene-enhanced polymer material with another 200kg order likely in early January. Should final testing be successful, the next bit of news relating to this project could be very significant indeed. 

Bottom line

Clearly, there’s still a long way to go for the Cheltenham-based business to silence its doubters. Nevertheless, if you believe (as I do) that the mass-market adoption of graphene is only a matter of time, then it is arguably the best horse to back. The fact that its stock still trading almost 40% below the high of 187p achieved almost three months ago suggests that now might be as good a time as any to begin building a position.

If — and it is a sizeable ‘if’ — Versarien is able to capitalise on its pole position in the commercialisation of the wonder material, then I maintain it could help some investors reach financial independence far earlier than they ever imagined.

The post Why I think small-cap growth stock Versarien could still help you achieve financial independence appeared first on The Motley Fool UK.

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• 5 years ago, £5,000 bought 354 Shell shares. But how many would it buy now?
• I asked ChatGPT if I should buy Aviva, Diageo or BAE Systems stock and it said…
• SpaceX’s IPO threatens to leave the Tesla share price on the forecourt
• A once-in-a-decade chance to buy software stocks?

Paul Summers owns shares in Versarien. 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.

Shares such as Aviva (LSE: AV) have come under pressure, with the FTSE 100 insurer recording a decline in its market valuation of 23% since May. Could this mean that it’s heading back to the 300p level last seen in 2013? Or could it be worth buying alongside a relatively risky small-cap which released an update on Monday?

Uncertain prospects?

The smaller company in question is advanced materials engineering group Versarien (LSE: VRS). It reported an update on its activities in China, where it’s seeking to develop its relationships within the world’s second-largest economy. It has made progress in establishing the ‘China-UK Jinan Graphene Industrial Park’, where detailed discussions with the various parties in Jinan are progressing.

It has also signed a Framework Agreement with the Qingdao Municipal Bureau of Commerce. It covers cooperation between the parties in the fields of graphene research, development and industrialisation. The company remains conscious of the need to protect its intellectual property, while also seeking to establish formal relationships with the appropriate parties.

With the Versarien share price having fallen by around 27% in less than two months, it’s clearly a highly-volatile share with an uncertain outlook. However, with the potential to deliver strong financial performance in the long term, I feel it may be of interest to less risk-averse investors.

Recovery potential?

The fall in the Aviva share price is, of course, disappointing for investors in the stock. With the business now without a permanent CEO following the recent resignation of Mark Wilson, its near-term prospects may be relatively uncertain. However, the company is in a much stronger position than it was in 2013, which means that a decline to 300p from its current share price of 430p seems unlikely.

The insurer has been able to strengthen its asset base in recent years so that it’s now highly profitable, efficient and has exposure to a wide range of markets where the risk/reward opportunity seems to be favourable. And since the stock has a price-to-earnings (P/E) ratio of around 7.5, it seems to already include a margin of safety, given its earnings growth outlook over the next couple of years.

In terms of Aviva’s growth prospects, the company is due to report a rise in net profit of 8% next year. Its financial strength was highlighted recently by its decision to utilise up to £3bn of excess capital to make acquisitions, reduce leverage, and commence a share buyback. As such, it seems to be in a strong position to deliver further growth under a new CEO. In fact, further share price falls in the near term could make it even more appealing from a long-term investment perspective, I believe.

The post Is FTSE 100-member Aviva’s share price heading back to 300p? appeared first on The Motley Fool UK.

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Peter Stephens owns shares of Aviva. 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 want to take a closer look at Versarien and another hot growth stock, North Sea oil driller Hurricane Energy (LSE: HUR). Both are trading close to record highs. But do they still deserve a buy rating?

High hopes for graphene

Like most investors, I don’t have the technical knowledge needed to reach an expert verdict on Nanene, Versarien’s graphene-based material.

It sounds impressive, but the company hasn’t yet made any money from it. Although the Cheltenham firm is working on a number of R&D projects, it admitted in July that these collaborations “have yet to produce revenues of any material amount”.

However, I do know something about the firm’s financial situation and its valuation, both of which are key considerations for equity investors.

Is the price right?

Versarien is made up of a mix of mature and early stage businesses. Last year, the group generated total sales of £9m, with a pre-tax loss of £1.6m. According to results for the year to 31 March, the group had net assets of £8m at that time.

Given this performance, the £180m market cap looks very high to me. Paying 20 times sales and 22 times net asset value for a lossmaking company isn’t my idea of a good investment.

Even if growth is explosive, I think it would take several years to justify the current share price. In my view, this business is seriously overvalued. I’d take profits and sell.

Like a Hurricane

I don’t generally invest in oil explorers which don’t also have substantial production revenues. But I might make an exception for Hurricane Energy.

This North Sea firm specialises in extracting oil from naturally fractured basement reservoirs — a type of rock formation. It’s less than a year away from starting production at its Lancaster field.

Planned production of 17,000 barrels of oil per day should provide some useful cash flow. But what’s really exciting is that this development is expected to provide the evidence needed to support large-scale development of the company’s Rona Ridge assets.

A triple bagger?

Hurricane only has 62.1m barrels of proven and probable (2P) commercial reserves at the moment. But the group has almost 2.6bn barrels of so-called 2C resources. These represent oil resources that have been discovered, but aren’t yet ready for commercial production.

The Lancaster Early Production System is intended to provide some of the information that’s needed to convert these resources into commercial reserves. Founder Dr Robert Trice expects a much larger partner to get involved in the business when this happens. For shareholders, the result could be a tidy takeover offer.

For example, an offer valuing 1bn barrels of oil at $4 per barrel would be worth about £3.1bn, or 157p per share. That’s three times today’s 50p share price.

Buy and forget

There’s no guarantee of success. But Dr Trice has delivered exactly what he promised so far. He’s also maintained 100% ownership of Hurricane’s oil fields, to preserve the potential upside for shareholders.

In my view, this stock could deliver impressive profits for investors. I’d view this as a stock to buy today and tuck away for a few years.

The post Why I’d shun the Versarien share price and buy Hurricane Energy 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.

Digital economy

Ascential’s shares opened 2.3% lower at 449p this mornings after the £1.8bn mid-cap released its half-year results. Nevertheless, they’re up a healthy 33% over the last 12 months. Management said first-half trading was in line with its expectations and that it “remains confident in our overall 2018 performance and our prospects for continued success.”

Closing net debt at 30 June was £285m but the group has since received a net £284m cash from the disposal of its exhibitions business to ITE. This provides Ascential with headroom to develop its other businesses via organic growth and acquisitions. These businesses are focused on information and analytics, and provide customers with the means “to win in the digital economy by excelling at product design, marketing and sales.”

When I looked at Ascential last summer, the share price was 374p and the forward price-to-earnings (P/E) ratio was 21.4. At today’s share price and on City earnings forecasts of 17p a share, the forward P/E is 26.4. This looks too rich to me for a company expected to grow earnings by 15% from 2018 to 2019 and with it also offering a fairly meagre dividend yield of 1.4%, I rate the stock a ‘sell’ at the current level.

Multiple collaborations

Versarien is currently lossmaking but is a hugely popular stock with private investors. Indeed, the three biggest holdings in the company are represented by the pooled investments of retail clients of Hargreaves Lansdown, Interactive Investor and Halifax Share Dealing.

The group has made five acquisitions since floating on AIM at 12.25p a share in 2013, three of which were revenue-generating at the time. The total acquisition cost for the three was £4.2m and in the year before Versarien bought them their revenues added up to £11.7m. Versarien reported total group revenue of £9m in its latest annual results, released last week. Therefore, I find it hard to value these businesses at much more than the £4.2m Versarien paid for them.

The company’s shares are trading a little down from their recent high of 141p, valuing the group at £210m. As such, I’d say the other two businesses Versarien acquired are being valued at over £200m. It bought 85% of each company, paying £440,000 in one case and £170,000 in the other. These businesses are focused on advanced material graphene and Versarien has announced multiple collaborations and trials with partners in a variety of sectors. However, the agreements are short on detail at this stage, particularly financial detail.

It’s reckoned the industry could be worth $1bn globally by 2025 and my Foolish colleague Rupert Hargreaves believes now could be a good time to buy into Versarien’s growth story. I’ve previously been bullish on the company myself, when the shares could be bought at 10 times current revenue (my upper limit for this kind of stock). However, with the valuation now up to well over 20 times revenue, I see the risk/reward trade-off as having turned unattractive and I’m inclined to rate the stock a ‘sell’.

The post Is the Versarien share price still cheap or could it cost you dearly? appeared first on The Motley Fool UK.

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• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?
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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

Indeed, given the momentum exhibited over the last few weeks (not to mention the likely newsflow still to come), I’m beginning to think that Versarien’s stock could continue to rocket over the remainder of 2018.

Lift off!

The first announcement made this morning related to the launch of Graphinks — the brand name for Versarien’s proprietary graphene inks. These non-toxic, “high performance, electrically conductive” inks can be used in a variety of applications, according to the company, including the production of “flexible electronics and antennas“.

Developed at the University of Cambridge, Graphinks now joins Versarien’s Nanane (graphene) and Hexotene (hexagonal boron nitride nanoplatelet powder) in the company’s growing list of 2D materials.

According to CEO Neill Ricketts, there are “numerous potential applications” for the new product which can be modified based on the requirements of the customer. He added that the small-cap anticipates “substantial commercial demand” for Graphinks. 

You can’t really get more bullish than that.

Yet another agreement

The second of today’s two announcements was arguably more along the lines of what investors have come to expect from the firm, namely news of a new collaboration.

Having signed up with consumer goods businesses, an apparel manufacturer, and a major tyre producer (to mention just a few), today Versarien revealed the signing of a deal with Indian firm Arrow GreenTech. According to the announcement, the latter is “a leading global manufacturer of cast water-soluble film, providing solutions and applications for sectors including agrochemicals, construction, chemical, embroidery, health & hygiene and 3D printing”. 

Broken down, the agreement involves the £150m cap providing Arrow GreenTech with its graphene inks for the latter to supply the global water-soluble film market. In addition to this, the companies will collaborate on how graphene could be used within banknotes and passports — another pie that Arrow Green Tech has its finger in — with the new partner also acting as Versarien’s “exclusive agent” when it comes to supplying the super-strong product to India’s tyre sector. Rounding things off, the UK business stated that Arrow GreenTech would have “first refusal” regarding any discussions on the creation of a manufacturing facility in India. 

Commenting on the deal, Arrow Greentech’s Chairman and Managing Director Shilpan Patel reflected that “environmentally friendly” graphene was “the new wonder material of this century” and his company sees “a large number of potential end uses in various industries”. 

Perhaps you can be more bullish, after all. 

More news to come?

Having climbed over 75% in value since mid-May (including today’s 10% rise), many market participants may suspect that Versarien’s shares might lose a bit of momentum after today as traders bank profits. While some volatility is only to be expected after such a significant rise, I suspect any drop might be both relatively minor and temporary. Here’s why.

Reflecting on the company’s latest agreement, Versarien’s top man reassured investors that further updates on this new relationship would be forthcoming, “alongside the others we are establishing globally“. That last comment is key.

Back in January, Versarien revealed that it had signed a letter of intent to build a China-UK graphene manufacturing centre in the Jinan Innovation Zone with the long-term goal for this to be the heart of the Jinan Graphene Valley. While nothing can be guaranteed, a positive update on this would surely be lapped up by the market. 

Versarien’s recent appointment as “the inaugural Industry Council member and Corporate Partner” to the National Graphene Association — which promotes the commercialisation of the super-strong material — will likely mean that deals with the US-based businesses could also follow in the near future, underlining the former’s massive growth potential and growing geographical diversification.

With graphene finally beginning its move from research labs and into the commercial world and the strong possibility of at least some (if not all) of the company’s many collaborations evolving into orders, it’s almost inevitable that more institutional investors will decide to jump on board too.  

In sum, I remain very encouraged by Versarien’s progress. If only some of the above comes to fruition, it seems feasible that many of those holders who purchased the company’s shares in bulk towards the end of last year will be realising financial independence earlier than they ever dreamed. 

The post The Versarien share price continues to soar. Time to buy? appeared first on The Motley Fool UK.

More reading

• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?
• 5 years ago, £5,000 bought 354 Shell shares. But how many would it buy now?
• I asked ChatGPT if I should buy Aviva, Diageo or BAE Systems stock and it said…
• SpaceX’s IPO threatens to leave the Tesla share price on the forecourt
• A once-in-a-decade chance to buy software stocks?

Paul Summers owns shares in Versarien. 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.

Revenue lifted 8% during 2017, diluted earnings per share rose 15% and cash flow from operations went up 16%. The directors expressed their confidence in the outlook by pushing up the total ordinary dividend for the year by 40% to 15.5 US cents and by announcing a special dividend of 3.6 US cents – tasty!

Financial strength from a well-defended niche

One of the things I like about the company is its debt-free balance sheet. At the end of the trading year, the firm had $19m of free cash and chief executive Jack Cooney said it is “financially stronger than ever and well positioned to capture growth across our broad global footprint.” The company looks set to achieve its target of $90m revenue in 2018, an increase of around 5% on the figure for 2017, which City analysts think will drive up earnings by around 30%.

The company’s niche in the concrete-levelling equipment business drives its progress.  As well as supplying the equipment to construction firms, Somero also delivers training, education and support to customers in more than 90 countries. The firm’s technology enables its customers to install high-quality horizontal concrete floors “faster, flatter and with fewer people.” Judging by the numbers, I think it enjoys an economic moat in the industry. The company pioneered the Laser Screed market in 1986 and maintains its market-leading position by focusing on research and development to introduce new products with patent-protected proprietary designs and top-notch customer support following initial sales.

At today’s share price around 377p, you can pick up some of the shares on a forward P/E ratio of just under 10 for 2018, and the forward dividend yield sits at 3.2%. There’s bound to be an element of cyclicality in the business, but no sign of trading weakness at the moment. On that basis, I think the valuation looks reasonable. and I’d rather buy the stock than graphene technology-focused Versarien (LSE: VRS).

Great expectations

So far, the firm has yet to generate any profits and there’s no immediate prospect of it doing so, but it does have a good story. In December, the company signed an agreement with a US-headquartered global chemical supplier to “begin collaborating across a number of projects.” Then in January, it signed a collaboration agreement with “a global textiles and apparel manufacturer” to collaborate on the “incorporation of graphene into fabrics and assess its suitability for inclusion in high-performance sportswear.” The firm also signed a Letter of Intent to establish a graphene manufacturing centre in China.

Such agreements suggest the possibility of ‘jam tomorrow’ but leave the firm a long way from the kind of financial performance we are seeing from Somero. Those agreements look like catalysts for the consumption of cash rather than the generation of cash, at least for now. Meanwhile, the market capitalisation sits close to £127m with a lot of clear blue sky below it.

The post Why I’d avoid Versarien plc and buy this superstock instead appeared first on The Motley Fool UK.

More reading

• 5 years ago, £5,000 bought 2,645 Barclays shares. But how many would it buy now?
• 5 years ago, £5,000 bought 354 Shell shares. But how many would it buy now?
• I asked ChatGPT if I should buy Aviva, Diageo or BAE Systems stock and it said…
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• A once-in-a-decade chance to buy software stocks?

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Somero Enterprises, Inc. 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.

Strong underlying growth

Tarsus is growing strongly, both organically and through carefully targeted acquisitions, intent on maximising the scale of its exhibitions and conferences and deepening its presence in higher-growth markets. A record year in 2017 saw revenue of £118m — 72% ahead of 2016 — and an 82% rise in underlying earnings per share (EPS) to 27.7p.

The current share price is 306p (little changed on the day), valuing this FTSE SmallCap-listed company at £346m. The price-to-sales (P/S) ratio is 2.9, the price-to-earnings (P/E) ratio is 11 and there’s also a 3.3% dividend yield, with the board having declared a 10p a share payout.

Tarsus has an up-and-down annual EPS profile, which is off-putting at first sight. However, this cycle is because not all its events are annual. The table below, showing EPS growth year-on-year and year-on-year-after, gives an understanding of the progress the company’s making.

I’m not concerned by Tarsus’s lumpy year-on-year earnings. The bottom line of the table shows the strong underlying growth and I rate the stock a ‘buy’.

Price to sales

I had a close look at Versarien just before Christmas. I found no glaring ‘red flags’ in this AIM-listed company’s accounts or in its directors’ backgrounds. Its history of acquisitions wasn’t altogether impressive but I concluded that two key acquisitions in the graphene space represented a genuinely significant commercial opportunity.

My personal rule of thumb is that however promising a company may be, the maximum P/S I’d be willing to buy at is 10. In Versarien’s case this resulted in a buy price of up to 59p, based on annualising its £4.38m revenue in the six months to 30 September.

Progress

Having missed a chance when the shares dipped into my ‘buy’ territory early in the New Year and with a good bit of news flow from the company since, how does the land lie today?

So far this year, Versarien has announced an agreement with an unnamed Asia-headquartered global textiles and apparel manufacturer, a medical technology collaboration and another with minimalist footwear maker Vivobarefoot. As with similar announcements in the latter part of last year, it has given no indication of future revenues. Nor have we had an update on actual revenue booked since the 30 September half-year-end.

Price target

I can still find no broker forecasts, which leaves me with my valuation based on annualised H1 revenue. However, with the news flow and the year-end approaching, I’m now inclined to calculate revenue more generously by applying the H1 growth rate to the full year. This results in a figure of £9.95m.

So on my maximum P/S of 10, I’d only rate Versarien a ‘buy’ with its market capitalisation at up to £99.5m — currently represented by a share price of 67p. With the shares trading at 85p as I’m writing, I may live to rue missing that sub-59p opportunity at the start of the year.

The post Versarien plc isn’t the only growth stock that could make you a million 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 Tarsus 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.

However, investor sentiment appears to be buoyant due to the potential for graphene’s use in a wide range of applications. This could mean that demand increases significantly in future years, which could boost the company’s profitability.

Of course, there are other growth stocks that have doubled in recent years. One such company that reported on Monday could be a strong performer over the medium term.

High growth

Step forward data and insights specialist GlobalData (LSE: DATA). It reported strong revenue growth across all of its regions, with revenue visibility also improving. The company has been able to strengthen its business infrastructure and commercial scale, while also continuing an acquisition programme that has enabled it to grow in recent years. And with new committed banking facilities of £75m, it appears to have the financial capacity to engage in further M&A activity.

GlobalData also announced that it’s in advanced discussions regarding the potential acquisition of data and analytics provider Research Views. While there’s no certainty that the deal will go through, it shows that the company remains bullish about its future prospects. And having grown revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) by 22% and 14% respectively in the 2017 financial year, it appears to be performing well.

The stock has risen by 140% in the last five years. With its forecast to grow its bottom line by 21% this year, followed by further growth of 20% next year, it appears to be in a strong position to generate further capital growth. As such, now could be the right time to buy while it has a price-to-earnings growth (PEG) ratio of just 1.2.

Risk/reward

Of course, Versarien could continue to post high share price growth over the medium term. Investor appetite for riskier, yet more rewarding shares appears to be high. The recent stock market correction is unlikely to change this stance, which could mean that the company’s valuation continues to rise even though it already trades on supremely high metrics.

Furthermore, there is the potential for success in the trials being run Versarien. Ultimately, it’s not yet known whether graphene can be used in a wide variety of applications but its potential appears to be high. There seems to be a good chance that it will become a more widely-used material over the medium term. As such, for investors who are less risk averse and comfortable with a volatile share price, Versarien could be a worthwhile investment for the long run.

The post Why Versarien plc isn’t the only growth stock that could double again appeared first on The Motley Fool UK.

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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.