During  the period, the group continued to expand, increasing revenue by 28% year-on-year to just under £46m. This growth came off the back of the opening of 13 Wildwood restaurants during the year. Headline operating profit increased to £4.8m. However, the group reported a pre-tax loss for the period of £88,000 after taking exceptional costs of £3.6m. For the last comparable period, the company reported a pre-tax profit of £3.1m.

The £3.6m impairment charge is a result of management’s decision to reconfigure some of its restaurants in order to bring performance in line with the rest of the estate. Management is also trying to improve staff productivity and reduce staff turnover by conducting training programs, as well as rebranding in certain areas. All of these changes, which should have a positive long term impact on group performance, are holding back short term trading.

Unexpected costs 

As Tasty continues its expansion plan, it goes without saying that the company is going to have to book some exceptional growth charges. However, City analysts hadn’t expected these charges to be so significant and were instead expecting charges to be more spread out.

Indeed, analysts had pencilled in earnings per share growth of 34% for the year ending 31 December 2016, on a pre-tax profit of £4.7m. Further growth was expected for 2017 and 2018, with pre-tax profit estimates of £6m and £7.6m pencilled in. From 4.6p for 2015, earnings per share had been expected to hit 10.1p by 2018. Now that Tasty has stumbled, it looks as if these profit forecasts may be revised significantly lower. 

Unfortunately, the market had awarded Tasty a high growth multiple of 18.5 times forward earnings based on lofty city estimates for growth. Now that it appears that the company will struggle to meet these targets, investors have reacted by dumping shares in Tasty.

Multiple headwinds 

Tasty’s outlook may not improve any time soon. Headwinds for UK retail companies are building, with higher minimum wages, inflation and other rising employment costs all increasing the burden on employers. Meanwhile, higher prices from inflation and a more price conscious consumer are two factors hitting the supply-side. Put simply, doesn’t look as if Tasty’s outlook is going to improve significantly any time soon and this is bad news for the share price.

With headwinds against the business building and Tasty struggling to hit City forecasts for growth, it looks as if this is one falling knife investors should avoid. The shares may have further to fall before they fully reflect the company’s new depressed outlook and it will take some time for the company to prove to the rest of the market that can return to its previous growth trajectory.

The post Is Tasty plc a falling knife to catch after dropping 30% today? appeared first on The Motley Fool UK.

Has the story changed?

Prior to the share-price decline of the last few months, one of the pleasing aspects of Tasty’s progress rolling out a chain of restaurants that are mostly branded Wildwood was the way revenue, profits and cash flow were all rising in proportion together. However, in September with the interim results, Tasty delivered a revenue increase of 28%, adjusted operating profit up 17.5% and a pre-tax loss of £2.3m — something investors hadn’t seen in recent years.

The loss came as a surprise to many, including me, and arose because of an impairment charge against five sites. Suddenly the story looked much less tasty. Instead of annual double-digit increases in new restaurant openings and juicy trading figures, the firm seemed to be owning up to sites not working out as planned. Maybe the whole rollout concept was flawed?

I don’t think so. Despite the setback, the firm is still opening new restaurants at pace and recruiting for senior roles with a view to supporting the ongoing expansion programme. In November, a placing at 145p to help fund further growth raised around £9m before expenses and, in my view, capped the share price for a while at that level.

My faith in the longer-term potential of this stock remains and I see current poor sentiment for the shares as an opportunity for those who believe the story will have a happy ending. I’m expecting trading figures to get back on track and to see a gently rising share price down the line.

Quality, growth and a stagnating share price

Since January 2015 when the shares stood around 830p, specialist healthcare company BTG (LSE: BTG) has been in the doldrums and today the stock trades at 565p or so. Yet, despite the share-price weakness, it’s hard to detect a flaw in the firm’s record of growth in earnings over that period. Including forecasts for the next couple of years, the compound annual growth rate for earnings runs in excess of 25%.

Growth of the top-line revenue figure looks good too. So the best explanation I can come up with for BTG’s slippage is that the share price maybe went too high on elevated expectations for the rollout of the firm’s new varicose vein treatment in the US. In November, BTG said that sales of the varicose veins treatment Varithena were £1.7m in the first half of the firm’s trading year, which compared to £0.4m the year before. Such a gradual increase doesn’t live up to the excitement and froth that seemed to boost BTG’s share price back in 2015.

The delays appear to be more about insurance coverage than faults with the product, but as we wait for the issues to resolve, BTG is roaring ahead with strong growth from its many other offerings. Today’s share price around 565p puts the firm on a forward P/E rating around 17.5 for 2018, which strikes me as reasonable value for a firm with so much potential growth left in the bag.

The post 2 beaten-down growth bargains set to rebound appeared first on The Motley Fool UK.

The problem however, is that rollouts can be pretty expensive. Profits often only kick-off once a rollout story becomes self-funding, or when the cash generated by its operations is greater than the capital required to open new locations. In this article I’m going to reveal three promising rollout stories and take a look at the respective funding situations.

Something Tasty For Everyone

Tasty (LSE: TAST) operates the Wildwood casual dining brand which sells a wide variety of food, though largely Italian. It aims to provide “something for everyone”, with choices that range from steaks to pizzas to risottos. It has 61 locations and expects to open a further 16 by the end of financial year 2017.

The company’s expansion is not yet self-funding, but I expect it to be so by the time it has around 95-100 restaurants. Therefore, it should reach this level in a couple of years. I believe the company could be worth well over double its current market cap in the next three or four years. The management team is top quality too. The Kaye family, the masterminds behind 10-bagger Prezzo, are leading the rollout which helps inspire confidence.

Viva la revolución

The Revolution and Revolución de Cuba bars operated by Revolution Bars Group (LSE: RBG) offer premium cocktails in a Cuban-styled setting. With an estate of 66 bars, the company is already self-funding. It spent £12.8m on rolling out new bars and upgrading old ones last year, but generated £14.2m in cash from its own operations.

The company’s 2% like-for-like sales growth isn’t all that exciting but if you include the four new sites opened last year, sales jumped 12.7%. Better yet, the company’s valuation looks rather undemanding. The PE is only 16 times last year’s earnings. For a debt-free, fast growing, self-funding roll-out with a reputable format, that seems a steal.

A Greek, an Italian and a Grill

The Fulham Shore (LSE: FUL) operates a number of London-based restaurant franchises, including The Real Greek, Bukowski Grill and sour-dough pizza chain Franco Manca. All of these franchises operate in the casual dining market, typically charging between £8 and £16 a head.

Admittedly I’m not as familiar with this company as the other two I’ve mentioned, but the Franco Manca brand is well-regarded in London. Recent financial results imply some success too, with revenue jumping 43% in the first half of this year and operating profit following suit with a 42% increase. The company says it must invest in its central operations, so I wouldn’t be surprised if margins take a little bit of a hit in the short term. The company generated £7.1m in cash last year and spent £9.3m on its estate. I believe the company will likely be self-funding in the next few years, although with a market cap of £119m, this is perhaps the most expensive rollout I’ve mentioned today.

None of these stocks look conventionally cheap, but if they can hit the point of self-funding and maintain success with their formats, I imagine future returns could be attractive.

The post 3 growth stocks I’d buy before it’s too late appeared first on The Motley Fool UK.

Should you shun these 2016 losers or are they primed to rebound during 2017 and beyond?

Challenges ahead, but confident directors

Britvic delivered its full-year results statement at the end of November. Despite challenging conditions, 2016’s trading was good with revenue and profit both up around 10%. In a show of confidence, the directors hiked the dividend by 6.5%.

However, in 2017 the firm will face difficult trading conditions and input cost inflation, the directors say. They point to the UK’s vote to leave the EU and the proposed soft drinks levies in Britain and Ireland from April 2018 as drivers of additional uncertainty.

Yet the directors remain upbeat suggesting the firm’s strong balance sheet and a robust strategic plan will overcome obstacles to deliver results in line with expectations for 2017.

We don’t often have the chance to buy a defensive consumer goods business when it looks out of favour. At today’s share price around 560p Britvic trades on a historic price-to-earnings (P/E) ratio just over 11 and the dividend yield runs around 4.4%. I think it’s a good time to look past short-term concerns at the bigger long-term picture here.

Steady growth

‘Double-digit revenue growth drives strong first-half performance’ trumpets November’s interim report from specialist healthcare company BTG. The firm’s chief executive, Louise Makin, reckons the outlook for the full year is strong.

Indeed, BTG is making great progress growing revenues and profits internationally from several products, so what’s this falling share price all about? It could be that previously the shares moved too far ahead based on expectations surrounding a new varicose vein treatment that the firm is rolling out in the US. Progress is slower than expected by many and political uncertainty surrounding the healthcare sector across the pond won’t be helping investor sentiment around BTG either.

Yet BTG remains a quality enterprise with strong, profit-supporting cash inflows, no debt, and growing revenues capable of generating a decent double-digit profit margin. At today’s share price near 562p, BTG trades on a forward P/E ratio just over 17 for the year to March 2018 but there’s no dividend, suggesting the directors see plenty of opportunity for further growth.

A successful rollout programme

A placing in November at 145p per share raised a gross £9m to help Tasty fund its successful restaurant rollout programme. I suspect that the placing price could act as a cap on the share price for a little while but based on all past performance, rising profits, revenues and cash flow will shine through to push the shares back on their upwards trajectory in due course.

Tasty is adding Wildwood-branded restaurants to its estate at a rate measured in high-single-digits each year at the moment and I’ve been impressed with the consistency of growth in all the right financial measurements. At today’s share price around 143p, you can pick up the shares on a forward P/E rating of just under 18 for 2017.

The post How Britvic plc, BTG plc and Tasty plc look set to resurge in 2017 appeared first on The Motley Fool UK.

The sell-off in shares presents an opportunity to find good value. If we focus on a firm’s underlying growth story and plan to hold shares for years rather than for weeks or months, buying share price weakness now could work out well down the line.

Expansion at home and abroad

FTSE 100 company Whitbread (LSE: WTB) operates hotels, restaurants and the Costa coffee shop chain, and has seen its shares come down around 29% since peaking at the beginning of 2015. The underlying growth story remains strong at Whitbread and the market’s recent cautious response to the shares could have already allowed for short-term economic uncertainties.

After robust expansion in the UK, Whitbread now has its sights on growing abroad and has been refining its strategy. The firm says it aims to concentrate the Premier Inn international growth strategy on a smaller number of specific markets where it can generate good returns and where there’s the greatest opportunity to build scale. That means a push to grow in Germany and the Middle East and a phased withdrawal from India and South East Asia. On top of that, the firm continues to expand Premier Inn in the UK and Costa both at home and abroad.

City analysts following Whitbread predict a 2% uplift in earnings for the year to February 2017 and 7% to February 2018. Meanwhile, at today’s share price of 3,867p, you can pick up the shares on a forward price-to-earnings (P/E) ratio of just under 15 and receive a forward dividend yielding around 2.7%. Those forward earnings should cover the payout 2.5 times. Whitbread’s not a screaming bargain but the recent softness in the share price could be a decent opportunity to hop onto the long-term growth story.

A brisk rollout

An opportunity with a smaller company exists with restaurant chain operator Tasty (LSE: TAST), which you can find on the FTSE AIM market. Like Whitbread, Tasty’s shares are off their peak, down around 22% from highs achieved near the end of 2015. Tasty is rolling out a chain of restaurants mainly branded Wildwood, and I’ve been impressed so far by the consistency of the firm’s financial results as the business grows, with the top line, bottom line and cash flow all expanding steadily over the last few years.

There’s no sign of any slowdown in the firm’s expansion. City analysts predict a 48% ballooning of earnings this year and 29% during 2017. At today’s 155p share price, the shares trade hands on a forward P/E ratio of just below 18 for 2017. That’s a lot cheaper than it was and may be a good opportunity buy into the growth story with Tasty.

The post Why these 2 hospitality firms look set to surge appeared first on The Motley Fool UK.

I don’t believe the companies I’m holding will suffer in the medium-to-long term, and quite possibly not in the short term either. The next couple of days — before the result of the referendum — could prove to be a good time to buy a few shares in well-run, soundly-financed and growing businesses. So let’s look at ARM Holdings (LSE: ARM), BTG (LSE: BTG) and Tasty (LSE: TAST).

Developing new lines of growth

April’s first-quarter results from FTSE 100 microchip designer ARM Holdings showed revenue up 14% year-on-year and earnings per share up 15%. A string of small bolt-on acquisitions should help the firm to create new products to capture opportunities in the Internet of Things (IoT). 

The recent purchase of Apical is a good example. Apical’s advanced imaging products are used in more than 1.5bn smartphones and around 300m other consumer or industrial devices such as IP cameras, digital stills cameras and tablets.

ARM has captured the chip market for smartphones and other mainstream devices and I think the firm’s proactive approach should keep it in the forefront of new technological trends as they develop.

At today’s share price around 1,013p, ARM’s forward price-to-earnings (P/E) rating is just over 25 for 2017. That’s not a cheap valuation but it’s lower than for some time. If the firm develops the new areas of growth it hopes, investors may be glad in the end that they bought shares at today’s levels.

Driving forward on several fronts

Specialist healthcare mid-cap company BTG operates in a defensive sector, has a good record of successful execution and enjoys a strong balance sheet with surplus cash and zero borrowings.

May’s full-year results confirmed strong ongoing progress with underlying revenue growth of 14% year-on-year and earnings per share up 39%. The company is driving forward with several product lines, seeking expansion both organically and with its acquisition programme.

The recent share price of 640p puts BTG on a forward P/E ratio of just over 20 for the year to March 2018. But set against City analysts’ expectations for around 31% growth in earnings that year, the valuation looks fair for such potential.

A fast-growing rollout

UK-focused restaurant rollout proposition Tasty is perhaps the most vulnerable of these three firms to post-referendum shocks (if there are any). Any recession that develops could hurt the company’s operations and shares in the short term. However, I’m optimistic that the strength of the business model and the experience of the company’s management team will drive a positive medium-to-long term outcome for investors from here, whichever way the EU vote goes.

The expansion of Tasty’s restaurants, mostly branded Wildwood, goes from strength to strength, and the shares have done well over the last few years. Today’s 177p share price values the company at just over 16 times the earnings City analysts expect during 2017. That doesn’t look bad when set against likely earnings uplifts of 62% this year and 46% next year. Tasty’s trading formula works and growth looks set to continue.

The post Why ARM Holdings plc, BTG plc and Tasty Plc could soar higher post-EU referendum appeared first on The Motley Fool UK.

If you’re looking for last minute ideas or want to plan for your 2016/17 allowance, let me throw three serious contenders for my own portfolio into the pot for you to chew over.

Down but not out

Iconic brand owner Rolls-Royce (LSE: RR) is trading through a troublesome patch. Earnings were flat during 2014, down 10% in 2015 and look set to tumble almost 60% this year. The share price followed events and, at today’s 691p, sits almost 50% below the peak it achieved at the start of 2014. With the recent full-year results, came news that the directors trimmed the dividend. Ouch! That’s not the dependable performance we tend to expect from one of Britain’s greatest companies.

The Aerospace and Marine engine manufacture’s chief executive expects 2016 to be difficult as the firm “start(s) to transition products and sustain investment in Civil Aerospace and tackle weak offshore markets in Marine.”

Rolls-Royce is something of a recovery play, with the company insisting that the long-term outlook is good. The firm points to a healthy and growing order book, and to its restructuring program, as evidence that a simplified operating structure has potential to deliver decent profit growth down the road.

Judging by the firm’s forward price-to-earnings (P/E) ratio of around 27 for 2016, investors are ‘buying’ the story here. I’m a little more cautious. Rolls-Royce operates in an industry with a fair amount of cyclicality, and it carries chunky pension obligations.

A growth story within

Ex-brewer and pub operator Whitbread (LSE: WTB), which now specialises in hospitality, has a gem within its operations in the form of Britain’s well-loved coffee brand Costa. The growth of the brand continues to be impressive with the firm updating the market at the beginning of March to reveal a 50-week performance of 10.5% total sales growth and like-for-like sales growth of 0.5%, despite lower caffeine-seeking footfall on the high street due to an unusually warm winter. 

Costa keeps me interested in Whitbread. The firm’s other operations, such as Premier Inn and various restaurant brands, are more cyclical, but there is a strong commitment to continue to grow them, too.

At 3,971p, the firm’s shares are off around 27% from the heights achieved last year, although operationally, Whitbread is still firing on all cylinders. The valuation seems more attractive than it has been for a while with a forward P/E rating of just under 16 for year to February 2017.

Accelerating growth

Tasty (LSE: TAST) released its full-year results today, confirming that the firm’s restaurant business is a rollout that’s rolling. Revenues are up 20% for the year, adjusted operating profit up 28% and profit before tax up 20%.

The most encouraging news is that the speed of growth is accelerating. 2015 saw the firm open 13 new locations taking the estate of Wildwood and DimT branded restaurants to 48 by trading year-end, a 37% uplift over 2014.  Two more restaurants opened already since the end of December, and Tasty is targeting 15 new sites altogether for 2016. Just a couple of years ago, we measured annual expansion of new sites in single digits.

One of the great strengths of an investment in Tasty is the firm’s experienced management team. The directors are not cutting their teeth on this rollout — they’ve done it all before, and very successfully.

At today’s 163p share price, Tasty’s historic P/E rating for 2015 is 35, but if growth continues to accelerate, profitably, forward multiples will drop down fast too. That’s why Tasty is my preferred choice for an ISA top-up, followed by Whitbread and then, cautiously, Rolls-Royce Holdings.

The post Should I Put Rolls-Royce Holdings PLC, Whitbread plc Or Tasty Plc In My ISA? appeared first on The Motley Fool UK.

However, rather than trying to get my head around macro-economic forecasting, I like to focus on what individual companies are saying about their own prospects.

It’s a well-worn path, and taking advantage of lower share prices in pessimistic markets can lead to some of the best returns over the long haul.

Ubiquitous intellectual property

What better place to start a search for bargains than in the portfolio of shares I already hold? Today, I’m going to focus on ARM Holdings (LSE: ARM), Marshalls (LSE: MSLH) and Tasty (LSE: TAST).

ARM Holdings’ shares tend to wiggle around a bit at the best of times, but at today’s 969p or so, they are down around 15% from the peak they hit in early December.

I’m used to ARM reporting double-digit growth figures for revenue and profits, which the firm did again with its most recent reporting period back in October. The chip designer occupies a powerful position in its market, and the long-term potential of the business seems undiminished.

The chief executive’s outlook statement in the Autumn could not have been more bullish: “ARM technology is being deployed in an increasingly diverse range of products and markets, from the ubiquitous sensors that will form the Internet of Things, to energy-efficient smart phones, to high-performance servers. With the broadening adoption of ARM technology, we are continuing to invest in developing new products and revenue streams to support long-term growth and returns for shareholders.”

ARM is very far from being a company on its knees. Any share-price weakness now is surely an opportunity to gain a better value entry into the firm’s longer-term growth potential.

Robust demand

At today’s 303p, concrete and landscaping products supplier Marshalls’ shares are around 20% off the peak they achieved in September.

The firm sells around 66% of its output to the commercial and public sector markets and the rest to the domestic market. In December, the firm revised its expectations for full-year trading upwards, saying, “The Group continues to experience robust order intake alongside encouraging sales growth in its main end markets and overall trading momentum continues to be positive.”

It’s true that Marshalls’ business has a large element of cyclicality, but cyclical businesses do not peak and trough all at the same time. Marshalls’ trading cycle is much different from that of a large mining company, for example. Right now, there is no sign of weakening demand for Marshalls’ products; if anything, demand is increasing and that should work well alongside the firm’s self-declared operational gearing to drive investor total returns from here.

Still rolling fast

Tasty’s rollout programme for its successful chain of restaurants — mostly branded Wildwood — goes from strength to strength, and that’s why the shares have done so well over the last few years. However, at today’s 173p, the shares are down about 12% since peaking in December.

With low oil prices putting money into people’s pockets, and improving wage levels, I find it hard to look ahead five years and imagine that the economy will have stuffed up Tasty’s growth programme.

There’s no sign of financial distress here. In October, the firm’s chairman said, “The Group continues to expand its operations through new openings.  Actions are regularly taken to improve profitability at all sites, increasing sales through updated menus and improving food and labour margins”.

Tasty’s trading formula is working well and the firm is set on duplicating it over and over in the years to come. Any share price weakness strikes me as a good opportunity as long as I keep a five-year-plus investment horizon in mind.

The post 3 Beaten-Down Growth Bargains: ARM Holdings plc, Marshalls plc & Tasty Plc appeared first on The Motley Fool UK.

Plunging shares in China, sputtering emerging market growth, flat-lining developed world demand, convulsing European integration — there are many things to keep the shares in our portfolios bouncing around like fleas in a box.

Make hay when the clouds roll in

Jittery investors can cause the shares of good firms to fall despite a robust underlying business story, perhaps a story unaffected by whatever the panic-du-jour happens to be.

Today I’m flagging up three compelling growth shares from my own portfolio that show share-price weakness right now. Times like this could be perfect opportunities to get interested in a company, because we might end up bagging a good-value entry point.

We have a spread of sectors and market capitalisations here with technology firm and FTSE 100 constituent ARM Holdings (LSE: ARM), pharmaceutical company and FTSE 250 constituent BTG (LSE: BTG) and restaurant chain and FTSE AIM constituent Tasty (LSE: TAST).

Trading in line with expectations

Yesterday’s second-quarter results release from ARM Holdings showed the firm trading in line with City analysts’ expectations, yet the technology giant’s shares plunged more than 6% on the day.  That fall meant the shares eased back more than 19% since the 1205p or so they reached earlier in the year.

Investors watch growth numbers closely at ARM, but the firm didn’t slip, and the directors sound bullish on the operational momentum in the business. Revenues are up 15% year-on-year, achieved by posting a 3% gain in processor licensing revenue and a 31% uplift in processor royalty revenue. Earnings per share are up 34% and the dividend rose 25%. These are good growthy numbers, as we’ve come to expect from ARM Holdings.

ARM’s announcement coincided with news from Apple (NASDAQ: AAPL.US), one of ARM’s biggest customers, where fourth-quarter revenue forecast fell short of estimates and it missed some targets for iPhone sales. Yet, to me, that’s just ‘noise’. ARM Holdings still holds its central position supplying much of the intellectual property (IP) that drives the communication and data industry, which is one of the most powerful growth trends of our time.

Growing nicely

BTG specialises in targeting acute care, cancer and vascular diseases, and generates revenues from sales of self-marketed products and from royalties on partnered products. 

Growth numbers are good with City analysts following the firm predicting a 26% earning-per-share uplift during the year to March 2016 and a further 41% improvement the year after that.

However, since peaking around 830p at the beginning of the year BTG’s shares dropped as much as 25% by June. They now seem to be back on the rise.

The firm aims to ramp up sales of a varicose vein treatment called Varithena in the US, but the process is slow. Perhaps some investors were hoping for a faster ramp-up. In an update this month BTG said it expects to take around two years from the first commercial sales in August 2014 to establish a smooth payment process and to achieve widespread adoption and reordering of Varithena by physicians. Despite that, the directors seem upbeat on the product’s potential, and it’s not the only market offering driving the firm’s growth.

On a roll

Tasty shares are down around 15% from the 145p or so they achieved in March. I can see no reason for the drift — perhaps there is none.

Full-year results in March revealed the firm’s restaurant rollout programme going well. The company opened seven new outlets during 2014 and a further three up to the end of March, bringing the total number of outlets to 39.

I don’t think there could be a better time than now to invest in a restaurant rollout programme. Macro-economic conditions seem benign overall, with perhaps a potentially steady increase in disposable income finding its way into consumers’ pockets as we move through the macro-cycle. That’s more and more money for Tasty to attract with its mostly Wildwood-branded eating and drinking venues.  

The firm’s success shows in the numbers with full-year revenue up 28%, gross profit up 26% and pre-tax profit up 46% on the year-ago figures.

The post 3 Attractive Growth Shares: ARM Holdings plc, BTG plc & Tasty plc appeared first on The Motley Fool UK.

It’s common for small-cap share prices to halve or double within just days or weeks.

Some smaller businesses are better than others

Speculative or risky underlying businesses don’t power all small-cap shares, though. Sometimes we find a solid and well-financed business with a good business model and an attractive trading niche or franchise.

We have three such solid small-cap firms in Tasty (LSE: TAST), Bioventix (LSE: BVXP) and Alkane Energy (LSE: ALK), each of which, in my view, looks attractive now in terms of upside potential for investors.

Rolling out a successful concept

Tasty is rolling out a restaurant expansion programme. Recent full-year results revealed the firm added seven new outlets during 2014 and a further three since the end of the year, bringing the total number of outlets to 39 as of 30 March 2015.

After testing the concept mainly in the South and East of the UK, recent openings are farther afield, such as Nottingham and Bristol. The mainly Wildwood-branded pizza, pasta and good-times restaurants seem to be popular, and the rollout programme is gathering pace at a time when the macro-economy is improving in Britain.

An experienced management team with previous successful rollout experience heads the company, and the firm shows every sign that it executes its business well — a focus on getting the basics right seems to be paying off. The numbers tell the story: for 2014 the company posts revenue up 28%, gross profit up 26% and pre-tax profit up 46% over the previous year’s figures.

Financial progress is steady and solid on most important measures:

In my opinion, Tasty’s expansion remains in its infancy, and the pace of expansion may accelerate from here given the favourable economic backdrop and the proven success of the firm’s restaurant concept.

Drivers from here could be:

• Improving like-for-like sales as the economy continues to strengthen;
• Acceleration of the firm’s rollout programme.

Hard to imitate

Bioventix specialises in the development and commercial supply of high-affinity monoclonal antibodies and occupies a profitable niche market. The company’s in-house development programme produces some of the tools scientists need to tackle the diagnosis or monitoring of a broad range of conditions, including heart disease, cancer, fertility, thyroid function and drug abuse.  New start-ups don’t challenge the firm’s profit margins every day, as the company’s operations demand a high degree of specialist knowledge. A small team works to develop ongoing forward revenue and profit streams, which suggests growth potential. Meanwhile, royalties on previously licensed developments drive impressive financial results: 

 Drivers from here could be:

• Newly developed antibodies increase forward royalty earnings;

• The firm might increase its workforce and accelerate development activities. 

Electricity-generation from gas

In a trading update released today, Alkane Energy reports an encouraging step change in performance, driven by acquisitions during 2014. The firm uses methane trapped in abandoned coalmines to drive engines that turn generators. The company then feeds the electrical energy produced to the grid. When methane runs out, Alkane buys in gas to drive the engines for power-response, where the grid needs temporary energy quickly to cover as larger plants start-up or when demand peaks.

Output in the first three months of 2015 has increased by 26% and the share price is heading up, breaking a period in the doldrums. The fallen oil price seemed to pull down Alkane’s strategic investment in Egdon Resources (LSE: EDR), where Alkane transferred its shale rights. A weaker power selling price environment also weighed on Alkane’s shares. However, operational progress remains steady:

 Drivers from here could be:

•  Further growth from acquisitions;

•  Organic efficiency gains;

•  Firming electricity-selling prices;

• A recovering oil price lifting Alkane’s Egdon Resources investment;

• Egdon Resources adds value to the shale licences on Alkane’s operating areas;

• Better forward uptake of Alkane’s power-response offering.

The post 3 Solid Small-Caps Set To Fly? Tasty Plc, Bioventix PLC And Alkane Energy Plc appeared first on The Motley Fool UK.