On top of that, memories of the 2008 financial crisis still lingered in my mind. How could I be sure I wouldn’t be a victim of the next crash?

Looking back, my only regret is not starting sooner. Sure, I made a few bad picks early on but nothing serious. After a few years of patience and dedication, I’m finally seeing some real results.

So how can you replicate this strategy?

Paving your own way

The truth is, everybody’s investment journey is unique. We all have different financial situations and market conditions change from day to day. 

But there are a few tips and tricks that apply to everybody. One of them is investing via a Stocks and Shares ISA. This allows UK residents to invest up to £20,000 a year without paying any tax on the profits.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

But an ISA alone won’t guarantee success. To improve your chances of earning sustainable income, you need a rock-solid portfolio of dependable dividend payers.

Here’s a few ways to identify companies that have sustainable dividend policies.

Looking further afield

Popular FTSE 100 stocks such as Unilever, National Grid and Legal & General are frequently noted as some of the most reliable dividend stocks in the UK. But I’ve covered all three in depth, so today I’m looking at a lesser-known company.

As you will see, it’s just as impressive as some of those big names and equally worth consideration.

Anglo-Eastern Plantations (LSE: AEP) ticks almost all the boxes when it comes to reliable dividends: a decent yield (4.2%), exceptional cash coverage (20 times) and a 34-year-long track record of payouts.

So there’s almost no reason to fear a dividend cut in the short-to-medium term.

In the last fiscal year, it boosted its dividend by a massive 58.7% and yet still maintains 62% of its profits for day-to-day operations. It has a strong net margin of 20.25% and return on equity (ROE) sits at a more-than-sufficent 16.5%.

And to top it all off, the share price is up 224% in the past 10 years.

So what’s the catch?

First up, it’s still a small company, with a market-cap of only £607.7m. Second, it makes palm oil, an ethically-questionable product that faces increasingly strict environmental regulations. Plus, it operates mainly in Indonesia, a region prone to wild weather that can disrupt operations and decimate profits.

So while it’s an excellent example of what to look for in a top-dividend paying stock, it certainly isn’t risk-free.

The bottom line

When building a portfolio of dividend shares, it’s important to find balance. A stock like AEP Plantations can make a great addition — as long as several more stable, defensive options are included to lessen the risk.

Not for you? That’s okay, each individual has their own risk profile. Fortunatley, it’s only one of many income opportunities I’ve identified lately…

The post Up 224% with a 4.2% yield? Here’s 1 compelling dividend share to consider appeared first on The Motley Fool UK.

That means a £5,000 initial investment is now only worth around £5,369. And yet, for some stock pickers, the story has been quite different.

Take Anglo-Eastern Plantations (LSE:AEP) as a prime example. Shares of the palm oil producer have more than doubled, rising by roughly 110% since the start of the year. In terms of money, a £5,000 investment in January is now worth £10,500. And that’s before counting dividends.

So why is the FTSE 250 as a whole underperforming? And can Anglo-Eastern shares potential double again in 2026?

What’s happening to FTSE 250 shares?

The FTSE 250‘s underwhelming performance as a whole essentially boils down to a lack of investor appetite for UK-focused companies. With uncertainty ravaging the British economy, investors are withdrawing their money from UK equity funds at a record pace, dragging down valuations.

The private equity sector has certainly taken notice, triggering an avalanche of takeover attempts – many of which are proving successful. In total, there have been roughly £28bn worth of completed or pending acquisitions since January. And with very few IPOs to offset this impact, the FTSE 250 shrinks with each takeover.  

A hidden opportunity?

As a global commodities business, Anglo-Eastern hasn’t been plagued by British economist scepticism. Management’s successfully been ramping up production while palm oil prices have simultaneously been rising.

The result? A 39% revenue boost over the first six months of the year, paired with a 78% surge in pre-tax profits. And looking out into 2026, this growth could continue.

Management’s also been expanding its plantation portfolio and begun the construction of a new mill to increase its annual capacity. At the same time, Indonesia’s Biodiesel B50 mandate is on track to be introduced in mid-2026, which is expected to increase crude palm oil consumption considerably.

In other words, demand’s expected to rise, pushing up prices even further, and paving the way for even more impressive margin expansion for Anglo-Eastern. And according to one analyst, this could send the stock price all the way to 1,700p by this time next year.

What to watch

Compared to where the shares are trading today, that translates into a potential capital gain of 27.8% paired with an extra 4.9% dividend yield – enough to turn £5,000 into £6,634.

So while Anglo-Eastern shares may not double next year, they still appear set to generate market-beating returns. Of course, forecasts are not set in stone, and there are critical risks to consider.

Stricter environmental regulations surrounding palm oil production could cause costs to rise. This adverse impact could be compounded even further if Indonesia suffers poor weather conditions that impact crop yields, or if palm oil prices suddenly reverse.

In other words, management could execute perfectly, yet the business could still be disrupted by uncontrollable external forces. Nevertheless, Anglo-Eastern Plantations remains an interesting FTSE 250 opportunity worth exploring further, in my opinion. And it’s not the only stock I’ve got my eye on right now.

The post £5,000 invested in the FTSE 250 at the start of 2025 is now worth… appeared first on The Motley Fool UK.

So you’ll understand my surprise when I came across just that — a relatively small £509m agriculture stock that’s crushing big FTSE 100 names.

I had to dig deeper…

A major oil producer (not that oil)

Anglo-Eastern Plantations (LSE: AEP) has emerged as one of the most remarkable success stories on the London market this year. With dividends, it’s achieved an astonishing 120% in 2025. Such growth would’ve turned a modest £5,000 investment on New Year’s Eve into roughly £11,000 today.

That’s a £6,000 profit in just 10 months — an extraordinary feat for what many investors might once have dismissed as a sleepy agricultural stock.

The company, headquartered in London, operates mainly across Indonesia and Malaysia, where it cultivates and processes palm oil and rubber. Palm oil remains its core business, used in everything from food manufacturing to cosmetics and biofuels.

With global demand for vegetable oils surging and El Niño weather patterns constraining supply across Southeast Asia, palm oil prices have risen sharply. This has been a key driver of Anglo-Eastern’s explosive share price growth.

Will it keep going?

What makes this rally particularly impressive is that it isn’t built on pure speculation. The company’s earnings have actually kept pace with the stock’s performance.

In its latest half-year results, it reported a 70.3% year-on-year increase in earnings, driven largely by surging prices but also disciplined cost management (revenue in the same period only grew 35.3%).

That kind of growth helps justify the low valuation, suggesting the rally reflects real operational strength rather than just market hype. Even if the growth slows, the 5% dividend yield could deliver decent returns in the meantime.

Critically, it’s paid uninterrupted dividends for two decades and increased them every year for the past five. Furthermore, cash flow covers payments an unprecedented 20-fold, so no reason to fear a near-future cut.

A volatile industry 

Naturally, when a company’s profits are driven by external factors, caution is warranted. Palm oil prices are notoriously volatile, and a reversal in commodity trends could quickly squeeze margins.

In the past, the stock has rapidly doubled in price, only to crash back lower in the following months. So investors considering the stock will need to accept that it might be a bumpy ride.

Still, Anglo-Eastern stands as a rare example of a small-cap agricultural stock delivering both growth and value. But more importantly, its soaring share price appears well-supported by solid fundamentals.

The bottom line

For most UK investors, Anglo-Eastern would probably be an unusual choice. It seems hard to find a place for it among the finance giants, tech start-ups and energy stocks of the FTSE 100.

However, I think it’s still worth considering because it ticks a lot of boxes: a strong balance sheet, minimal debt, consistent cash generation and a history of stable and reliable dividends.

Plus, its conservative management approach has capitalised on favourable market conditions without over-extending financially — a combination that many commodity producers struggle to maintain.

But for those looking for something closer to home, the FTSE 100’s recent record high suggests a lot of other opportunities exist on the UK market.

The post Up 120% this year! How is this dividend share still undervalued? appeared first on The Motley Fool UK.

For a relatively small company with a market value of just over £325m, that’s no small feat.

Founded in 1985 and headquartered in London, Anglo-Eastern owns and operates palm oil and rubber plantations across Indonesia and Malaysia. It’s far from a household name on the FTSE 250, yet the business has been drawing attention after a dramatic rally over the past three months.

That kind of momentum naturally makes me wonder: is this a speculative surge, or does the company have real staying power?

Recent performance

The key driver may be a recovery in Crude Palm Oil (CPO) prices. Global prices have surged, and Anglo-Eastern has reaped the benefits. In its results for the six months ended 30 June, the group reported a 39% increase in revenue compared with the same period last year.

That was helped by higher sales volumes, stronger external crop intake and improved selling prices.

Profit before tax rose a hefty 78% year-on-year, with both higher selling prices and increased volumes doing the heavy lifting. That’s a striking improvement, and I think it helps explain why investors have piled in.

Despite the rally, the valuation still looks undemanding. Anglo-Eastern trades on a price-to-earnings (P/E) ratio of just 7.8, while its enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/EBITDA) ratio sits at a modest 3.38. On these numbers, it doesn’t look overstretched.

Risks to consider

Of course, it’s not all good news. Anglo-Eastern operates exclusively in Southeast Asia, which exposes it to foreign exchange volatility. A weakening of local currencies against the dollar or sterling could quickly erode profits. Then there are the political and regulatory risks that come with operating in regions prone to sudden changes in trade or environmental policy.

Perhaps the biggest risk though, is the company’s heavy reliance on palm oil prices. If the stock’s rally loses steam, its earnings could drop sharply, and the share price might follow. It’s a reminder that while recent results look stellar, they’re tied closely to external market conditions the company can’t control.

Dividend potential

Income hunters may not be immediately impressed by Anglo-Eastern’s 2.9% yield. That’s lower than many other FTSE 250 income plays. But the growth in its payouts has been extraordinary. In just five years, the dividend’s risen from 1 cent per share to 51 cents. That 50-fold increase was fuelled by the earnings boom between 2019 and 2022.

If the board continues with this trend, Anglo-Eastern could soon emerge as a more serious dividend stock. Of course, that depends heavily on profits remaining strong.

Final thoughts

For me, Anglo-Eastern Plantations is one of those intriguing FTSE 250 names that investors might want to weigh up carefully. It offers a mix of value and income potential, but with considerable risks attached.

The share price could keep climbing if palm oil prices remain high, yet a reversal could be painful. Personally, I think it’s only worth considering as part of a diversified portfolio.

The post Up 100%, this lesser-known FTSE 250 stock’s soaring! Did I miss the boat? appeared first on The Motley Fool UK.

However, the FTSE 250 has historically produced higher returns compared to the FTSE 100 once share-price appreciation is included. In fact, the FTSE 250 has produced almost twice the returns of its mega-cap counterpart over the past 20 years.

I see a number of undervalued, dividend-paying companies on the FTSE 250 right now that could benefit from big tailwinds.

Therefore, if I had £50,000 to build a dividend portfolio from scratch, I’d spread it between a number of FTSE 250 stocks.

Ageing population boom

First, I’d invest a portion of that £50,000 in Primary Health Properties (LSE:PHP). This real estate investment trust (REIT) owns health centres and GP surgeries in the UK and Ireland. It offers a competitive yield of 6.45%. Furthermore, it has increased its dividend for 27 years consecutively – earning it a spot in the much-revered Dividend Aristocrat club.

According to the ONS, one in four people in the UK will be aged 65 and over by 2050. That compares with just one in four in 2019. Since older people tend to need more healthcare services, that suggests a boom in demand for the kind of facilities that PHP owns.

Of course, a risk that must not be understated when investing in PHP is the company’s dependency on government contracts. A shakeup in healthcare policy could seriously challenge PHP’s business model. As a REIT, PHP also offers some tax advantages.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Kuala Lumpur calling

Next, I’d allocate another portion to Anglo Eastern Plantations (LSE:AEP), which produces 500,000 metric tonnes of crude palm oil a year from its properties in Malaysia and Indonesia. This overlooked FTSE 250 gem yields 3.29%, and its balance sheet is a picture of perfect health, with just £100k of debt compared with £223m of cash.

The global population is set to grow by 2bn over the next 30 years, meaning more demand for basic commodities. Palm oil is a cheap source of fats, and it is used to make recession-proof products like cooking oil, margarine, and soap. Of course, geopolitical instability in Indonesia and Malaysia could be flies in the proverbial palm oil.

Crunching the numbers

Investing across these two stocks would average a yield of approximately 4.87%.

A full £50,000 investment could generate around £2,435 in the first year. However, to minimise risk, I would diversify further across at least 10 different FTSE 250 stocks.

Let’s assume the rest of my FTSE 250 high-yield stock picks average a 5% yield. On the full £50,000, this could provide £2,500 in the first year. Dividend stocks reveal their true benefit over time, especially when dividends are reinvested to buy more shares.

Based on the FTSE 250’s historic annual return (of dividends and share-price growth) of 7.7%, my £50,000 investment could potentially grow to around £462,851 over 30 years​​. At a 7.7% yield, this would generate a passive income of approximately £32,640 a year.

This projection, though based on historical performance, isn’t guaranteed. Stock picks could grow at different rates, and yields might fluctuate. In the event of a market downturn, I’d wait for a recovery and continue investing in more shares at lower prices.

The post How I’d invest £50k to create a lifelong passive income of £32,640 appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Anglo-Eastern Plantations

What it does: Anglo is the owner of 76,100 hectares of palm oil and rubber crops in Indonesia and Malaysia

By Mark Tovey. I think the best value stocks are in the misunderstood and downright disliked industries.

Palm oil – used in cooking, soap production and biofuels – fits the bill.

Anglo-Eastern Plantations (LSE:AEP) churns out around 500,000 metric tonnes of crude palm oil a year, producing £74m of free cash flow in 2022. It has £183m in net cash.

Let’s compare with an in-vogue commodity like lithium.

Nasdaq-listed Piedmont Lithium had negative free cash flow of £52m in 2022 and net cash of just £98m.

Unsurprisingly, the company with ‘lithium’ in its name is worth three times more by market cap than the palm oil maker.

In this tale of two commodities, Anglo is the winner with a rock-bottom price-to-earnings (P/E) ratio of 5.4.

Of course, Anglo is vulnerable to political risks and extreme weather events in Indonesia and Malaysia.

But I bought shares because the global demand for palm oil is growing every year. At the same time, strict zero-deforestation rules are making the industry less damaging.

Mark Tovey owns shares in Anglo-Eastern Plantations.

Antofagasta 

What it does: Antofagasta owns a string of copper mines in Chile and is one of the world’s top-ten red metal producers.

By Royston Wild. Mining shares have been battered as fears over the global economy have grown. But I believe recent price falls across the sector represents a great opportunity for investors to grab a bargain.  

Take Antofagasta (LSE:ANTO) for example. The FTSE 100 copper miner trades on a forward price-to-earnings growth (PEG) ratio of 0.2 following an extreme price drop since February. A reading below 1 indicates that a stock may be undervalued. 

I think the company’s share price could soar over the next decade as copper demand explodes. Consumption is tipped to explode from multiple sectors including renewable energy, construction and electric vehicles. And mega-miners like Antofagasta have the scale and the financial clout to fully capitalise on this opportunity.  

The business is expanding several of its assets like Los Pelambres — considered one of the largest copper resources on the planet — to drive earnings over the next decade. And it owns several exciting exploration projects dotted across The Americas (including two in Chile, which allowed the company to recently hike its stated mineral resources by 900m tonnes). 

Royston Wild does not own shares in Antofagasta. 

Legal & General

What it does: Legal & General provides life insurance, financial, asset management and investment services.

By Alan Oscroft. The insurance sector is down these days, and I think some stocks are great value.

With its various products and services, Legal & General (LSE:LGEN) has a wide portfolio of interests.

It’s different, for example, to firms that focus on motor insurance, or disaster insurance. Legal & General might just be one of the safest.

Forecasts put the stock on a price-to-earnings (P/E) ratio of only a bit over seven. That’s about half the FTSE 100 average. And I think it makes the firm one of the best value investments on the market right now.

There’s a tasty dividend yield on the cards of 8.2%, too.

We face a risk that the economic outlook could put pressure on profits. And that in turn could damage the dividend.

But I rate Legal & General as one of the best managed financial firms on the market. I think it’s a top long-term buy and hold right now.

Alan Oscroft does not own Legal & General shares.

Rio Tinto

What it does: Rio Tinto is a global mining group focused on iron ore, aluminium, copper, lithium, and other commodities.

By Charlie Carman. Rio Tinto (LSE:RIO) shares have underperformed the FTSE 100 this year following a hefty dividend cut and a 38% profit slump in FY22. Rising labour and material costs, coupled with sluggish Chinese demand for iron ore, are ongoing concerns.

However, I think there’s a compelling case that the stock is undervalued with a P/E ratio just above 8. After all, Rio Tinto operates in a cyclical industry, so share price volatility is par for the course.

If China can revive its ailing construction sector, demand for Rio Tinto’s commodities could receive a much-needed boost. Plus, there are further growth opportunities to exploit in emerging markets like India.

I also believe Rio Tinto is likely to benefit from the global transition to net zero. Key metals for renewable technologies, such as copper and lithium, are integral to the company’s expansion plans. Taking a long-term view, the stock looks attractively priced today.

Charlie Carman has positions in Rio Tinto.

The post Best British value stocks to buy in June appeared first on The Motley Fool UK.

Anglo Eastern Plantations (LSE:AEP) is not the kind of stock that gets talked about on the TV or at the pub.

In fact, there’s not a single analyst covering the FTSE 250 company, which owns and operates palm oil plantations in Indonesia and Malaysia.

That might partly explain why the company’s stock seems to be trading at a bargain-basement price.

A well-oiled operation

Let’s take a step back and look at how Anglo makes its money.

The company’s main produce is palm oil, which is used as a cooking oil and a biofuel, as well as an ingredient in margarine and soaps.

Indonesia and Malaysia are the world’s undisputed leaders in palm oil production, accounting for 80% of global production.

Within those two countries, Anglo has 16 estates that churn out close to 500,000 metric tonnes of crude palm oil (CPO) a year.

That is around 0.5% of global production. Let’s be clear: the company is very much a “price-taker” and not a “price-maker”. In other words, it is at the mercy of global supply and demand for palm oil.

Vegetable oil markets have been buoyed by the war in Ukraine disrupting sunflower production. But globally traded commodity markets can turn at any moment for a thousand possible reasons.

So, why did I buy shares in this company?

Palm and prosperity

Here’s where things get interesting.

Anglo’s revenue is up 93% from 2018 to 2022. Its net income, meanwhile, has rocketed 655% over the same time period. The company achieved that feat by beefing up its profit margin, from 4.6% to 17.8% in the last five years.

But the stock’s price has not reflected that phenomenal growth in the company’s fundamentals, notching up only 7% since 2018.

That has resulted in its price-to-earnings (P/E) and price-to-sales (P/S) ratios dropping.  

The company’s P/E ratio of 4.9 is way beneath its five-year average of 13. To revert back to the mean, its share price would need to shoot up by 160%!

Anglo’s coffers are also brimming with £184m in net cash. That’s enough dough for the company to buy back its entire free-float market capitalisation of 18.1m shares.

Fly in the palm oil?

A lot of people will recognise the term “palm oil” from reading packets that boast of not containing the ingredient.

Perhaps the oil’s connection to deforestation explains ESG-conscious investors’ reluctance to touch this dirt-cheap stock. But Anglo sticks to strict zero-deforestation rules, and evidence shows such agreements are working to protect Indonesia and Malaysia’s boundless green horizons.

I can’t overlook the political risks of Anglo being mainly based in Indonesia, however. Corruption in the country has worsened since 2018, according to Transparency International. In addition, the government imposed a shock export ban on palm oil in April 2022 to secure supplies for locals. The ban has since been replaced with a quota system.

Despite that turbulence, I couldn’t resist snapping up shares in Anglo. The rock-bottom valuation and fat cash balance make me confident this palm oil investment could bear some juicy fruit.

The post An unbelievable value stock to buy before it’s too late! appeared first on The Motley Fool UK.

AEP produces crude palm oil and rubber at 15 plantations in Indonesia and Malaysia, while Strix makes kettle components. Both companies feature on the FTSE All-Share financial index of the London Stock Exchange.

The AEP share price is down 1.5% year to date, but has gained over 28% in the past six months. It has earnings per share of 22p and a 0.5% dividend yield.

Unethical investing

You should be aware that AEP could be considered as damaging to the environment as traditional oil and gas company stocks. Palm oil is the world’s most popular vegetable oil, second only to soya in world production, but its production has caused destruction of the world’s most biodiverse forests through deforestation. This has resulted in a loss of wildlife, including already endangered species.

However, its popularity and multiple uses have seen it weave its way into so many everyday products, you’d be hard pushed to avoid it. It’s cheap to produce, stable in processing, slow to smoke, and has a long shelf life. For these reasons, it’s found in food, margarine, soaps, biodiesel, detergents, cosmetics, ice cream, and animal feed.

Ethical investing aside, this is an established business with over 27 years’ experience in the industry and a £221m market cap. However, it’s up against several external challenges, including political and climate, and with a price-to-earnings ratio (P/E) of 25 I think it’s probably now overvalued.

Anyone for a cup of tea?

The Strix Group product statistics are mind-boggling. Its company management estimates consumers use its safety controls over a billion times per day. With a 38% global share of the market, it’s the world’s number one manufacturer of kettle controls.

Strix share price is up 16% in the past year, but down 5.7% year to date. It has a P/E of 16.9, earnings per share are 11p and forward dividend yield is 4%. It has a market cap of £350m, which makes it a more stable AIM stock than many. It also employs over 800 people.

The coronavirus outbreak could directly affect Strix as its manufacturing operations are located in China. The company released a statement this week saying its production experienced a one-week delay, but two-thirds of the workforce have now resumed work. The other side of the coin is that Strix has witnessed a few customers increase order sizes because of disruption somewhere else in their supply chain.

To date, the Strix Group shows minimal impact from the outbreak, but as the future impact of coronavirus remains relatively unpredictable, it would be a factor to remember if you’re considering investing.

Outlook ahead

These companies both produce products that experience high demand globally, that I don’t think this is likely to change anytime soon. However, they each face risks in their manufacturing chain, particularly from external influences and a global economic slowdown.

If you don’t mind a bit of risk in your portfolio, I think these might make a good choice if buying during a declining market. Of the two, I prefer Strix.

2020 has seen a turbulent start to the markets as a result of both Brexit uncertainty and global political ongoings. I imagine this may well continue throughout the year as the true impact of coronavirus comes to light.

The post 2 hot growth stocks with popular products! Will they rise in 2020? appeared first on The Motley Fool UK.

Not heard of it? The company offers discretionary fund management (DFM) and IFA and mortgage support services, and things sound like they’re going well. Funds under management on its DFM platform rose to £4.44bn, from £3.85bn at 31 March — and fund inflows are apparently running at more than £80m per month.

The firm’s IFA services arm, Paradigm Partners, has seen membership rising to 356 firms (from 352 in March), with Paradigm Mortgage Services seeing membership up to 1,143 firms.

Tatton doesn’t have much public history, having only floated on AIM as recently as July 2017, but analysts are already predicting good things.

Attractive valuation

The forward P/E for the end of this year might look a little high at around 21, but forecast rises in earnings per share would drop that to 17 by 2019, and indications of a strongly progressive dividend suggest a 2019 yield of 4.1%.

If that comes off, it will be a cracking start to life on the stock market.

Chief executive and founder Paul Hogarth spoke of “the increasing demand for a low cost DFM service to the mass affluent market place served by the IFA sector“, and that looks to me to be the company’s main attraction — it’s offering a range of closely related services which should feed into and support each other.

Despite the economic uncertainty we currently face (or perhaps even because of it), I reckon Tatton’s services should be in demand from its targeted clientele sector in the coming years.

Cash from rubber

Turning to a wildly different sector, I’m quite taken by the fundamentals exhibited by Anglo-Eastern Plantations (LSE: AEP). The company produces palm oil and rubber from plantations across Indonesia and Malaysia, and both of those commodities are in huge demand — though ethical issues regarding the destruction of rain forest in places like Borneo might put some investors off.

Over the last 12 months, the Anglo-Eastern share price has soared by 85% to 870p, with some of that surely due to impressive interim results. 

Revenue in the half climbed by 70% to $146.9m, with pre-tax profit up 83% to $31.6m and earnings per share (EPS) more than doubling to 46 cents. Total net assets at 30 June stood at $470.6m (approx £357m) — and that’s more than the firm’s market capitalisation of £346m, so the shares are trading at a discount.

Discounted valuation

On the P/E front, the shares are looking attractively valued to me, despite their impressive appreciation over the past year. With EPS expected to grow by 83% this year, we’re looking at a multiple of only 7.2 and a PEG ratio of a mere 0.1 — growth investors usually get excited by anything under 0.7, but we do have to temper this with Anglo-Eastern’s erratic year-on-year earnings.

The business of investing heavily in new plantations and not seeing profit from them until a few years later would account for some lumpiness in earnings, but that really shouldn’t matter to long-term investors.

The company has several biogas plants up and running now which provide electricity that it will sell to the national grid, in Bengkulu, Kalimantan and North Sumatra, and that will add a little to the bottom line.

There could be environmental hurdles ahead, but the shares look good value to me.

The post Two overlooked bargain growth stocks I’d buy today appeared first on The Motley Fool UK.

Low valuation

Reporting on Tuesday was palm oil and rubber producer Anglo-Eastern Plantations (LSE: AEP). It released a statement to coincide with its AGM. In the first five months of the year, the company’s own production of fresh fruit bunches (FFB) was 19% higher than in the same period of the prior year. FFB bought in was 105% higher when compared to the same period of the previous year, with the production of FFB and external crop purchases higher as the effects of drought and haze on the palm trees subsided.

The company’s new planting for the first part of the year was 809 hectares. New plantings remain behind schedule due to delays in finalising settlement of land compensation. The biogas plant in the Kalimantan mill has been completed. At the present time, the trapped biogas is flared while waiting for the final electrical works to be completed for the power generation.

Looking ahead, Anglo-Eastern Plantations is forecast to increase its earnings by 124% in the current financial year. This puts it on a forward price-to-earnings (P/E) ratio of just 5.5, which suggests that it trades on a wide margin of safety. Certainly, there is scope for its outlook to be downgraded. However, in the long run it could prove to be a worthwhile investment.

Growth potential

Also offering upside potential is fellow palm oil and rubber plantation operator MP Evans (LSE: MPE). Unlike Anglo-Eastern, it trades on a relatively high rating. For example, it has a P/E ratio of 27.4, which suggests that there may be limited upside ahead. After all, within the same sector it is possible to buy much lower-rated alternatives.

However, the P/E ratio does not take into account a company’s growth rate. In the case of MP Evans, it is forecast to report a rise in net profit of 52% in the current year, followed by additional growth of 26% next year. Both of these rates of growth are well ahead of the wider index. This could help to improve investor sentiment over the medium term.

Furthermore, when combined with the company’s P/E ratio, it puts the stock on a price-to-earnings growth (PEG) ratio of only 0.7. This suggests that there could be more upside ahead after the company’s 83% share price rise over the last year. Certainly, the production of any commodity can lead to high volatility and uncertainty in terms of the price received. But with a wide margin of safety, MP Evans seems to be a shrewd long-term investment.

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