Of course, Barclays isn’t the only cheap share that could be worth buying today. One company reporting positive results on Monday could also help investors to boost their retirement savings and overcome a meagre State Pension.

Improving outlook

The company in question is communications cloud and managed services specialist Maintel (LSE: MAI). It released interim results on Monday which showed a rise in revenue of 14%, with recurring revenue at 70%. This comes at a time when the company is seeking to transition towards and cloud and managed service business, with positive momentum being recorded during the period. Cloud revenues increased by 33% to £7.7m, while managed services revenue was up 22% to £23.2m.

Looking ahead, the company is expected to post a rise in earnings of 28% in the current year, followed by further growth of 17% next year. Despite an improving financial outlook, the stock trades on a price-to-earnings growth (PEG) ratio of 0.5. This suggests that it has a wide margin of safety and could deliver strong share price growth over the medium term.

Maintel will continue to invest in the higher growth areas of its business, as well as in automation. With new business orders up by 25% and a solid pipeline of opportunities, it seems to be in a strong position to generate growth. As such, now could be the right time to buy it for the long term.

Improving prospects

The growth potential of Barclays also seems to be high, with the bank moving into a new phase under its current management team. After focusing on strengthening its balance sheet through a restructuring, it is now in a position where shareholders could reap the benefits of its improving financial performance.

Over the next two years the bank’s dividend is expected to increase from 3p per share to 7.9p per share. This puts the stock on a forward dividend yield of 4.5% for the 2019 financial year, which is over 10% higher than the FTSE 100’s dividend yield.

With Barclays expected to post a rise in earnings of 13% in the next financial year, its financial prospects seem to be improving. Despite this, it trades on a PEG ratio of just 0.7, which makes it one of the cheapest banking shares in the FTSE 100. As such, it could offer high returns over an extended time period which would help to boost its shareholders’ retirement savings. Given the rising State Pension age, this could make it a worthwhile long-term investment opportunity.

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Built around customers 

Maintel is a cloud and managed services company, which focuses on the provision of digital communications for clients. In plain English, the firm provides cloud-based conference calling software as well as business management software to help streamline companies’ customer communication operations, such as call centres. 

This is just a basic overview of Maintel’s operations. The group also has several partnerships with other cloud-based service providers such as Cisco, Talk Talk Business, BT Wholesale, SSE Telecom and Microsoft, which allows it to build the best package of services around customers’ needs. 

And it certainly looks as if customers are pleased with the offering. Indeed, today the firm reported that its revenue jumped 23% to £133m for the year to 31 December and basic earnings per share leapt 36% to 21.7p. 

Since 2012, revenues have expanded nearly 400%, from £28m to £133m as reported today. Unfortunately, the company has failed to convert this sales rise into bottom-line growth. Earnings per share have hardly budged since 2012 as the firm is having trouble building a sustainable competitive advantage to support profit margins. 

For example, last year management had hoped that a contraction in margins reported during the first half would be reversed by the end of the year thanks to new customer agreements and synergies from acquisitions. However, it was clear this was not going to be the case.  Lower-than-anticipated revenue from two large legacy contracts and the greater-than-expected impact of contract delays prompted management to issue a profit warning at the beginning of December. 

Still, despite Maintel’s problems, there’s no denying that the company is growing rapidly, and right now, it looks as if the market is giving no credit to this growth. Specifically, the shares are currently trading at a forward P/E of 9.6 and support a dividend yield of 4.6%. The payout is covered twice by adjusted earnings per share and today management has announced a 10% increase in the full-year distribution

Growth at a reasonable price

Another tech stock that’s recently caught my eye is IMImobile (LSE: IMO). Like Maintel, this company provides cloud communications software for businesses. However, unlike Maintel, IMImobile has been able to transfer sales growth to the bottom line. Since 2012, net profit has grown at a rate of around 20% per annum as revenue has expanded at a compound annual rate of 15%. 

City analysts are expecting IMI’s profit growth to continue on its current trajectory. Analysts have pencilled in earnings per share growth of 51% for 2018 followed by an increase of 22% for 2019. These projections suggest that the shares offer growth at a reasonable price trading at a PEG ratio of 0.5 for 2018. 

As well as this growth, IMI also supports a cash-rich balance sheet with net cash of £14m at the end of fiscal 2017. Maintel has a net debt position of £28m. With this being the case, I’m inclined to believe that IMI is a better buy than Maintel if you’re looking for a fast-growing small-cap tech stock trading at an attractive valuation. 

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Reporting on Wednesday, however, were two shares which may be worth selling at the present time. Although they have the capacity to deliver turnarounds after worse than expected periods, there may be better risk/reward opportunities available elsewhere.

Tough period

Falling by 13% on Wednesday was systems integrator and managed services provider Maintel (LSE: MAI). It had expected to recover the reduction in gross margin reported in the first half of the year, but its year-end trading update confirmed that this would not be possible. One reason for this is the migration of two legacy contracts following the acquisition of Azzurri Communications. They were higher margin contracts than the company’s other contracts, and their loss is set to mean lower revenue than anticipated.

There have also been delays to customer installations which have affected the company’s Managed Services and Technology performance. This follows the Avaya Chapter 11 process, although ordering activity from Avaya is expected to start to recover in the near term. In addition, the integration of Intrinsic Technology has been as expected. However, gross margins from the business have been lower than anticipated.

Looking ahead, it would be unsurprising for investor sentiment in Maintel to weaken somewhat. Its recent acquisitions have been rather mixed in terms of delivering financial performance as expected. Therefore, while it may be capable of a turnaround in the long run, it could be a stock to avoid or sell in the near term.

Disappointing update

Also releasing a disappointing update on Wednesday was niche manufacturer Plastics Capital (LSE: PLA). Although the company reported growth across its divisions in the first six months of the year, recent delays in the ramp-up of two significant bearings projects have meant that its pre-tax profit for the full year is now set to be below consensus market expectations. This caused the company’s share price to decline by around 3% following the update.

Clearly, the company’s full-year performance is set to be well ahead of the previous year. In the first half of the year, organic revenue growth was an impressive 13.5%, while it continues to invest in development and capacity expansion projects. They could help it to deliver sustainable growth, while project wins show that it is capable of continuing to generate high sales growth. Furthermore, its equity placing of £3.54m could provide additional capital through which to invest for future growth.

With Plastics Capital trading on a price-to-earnings (P/E) ratio of around 10.5, it seems to offer good value for money at the present time. However, with its performance being worse than expected, it seems prudent to await more positive updates before buying it.

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With that in mind, here are two stocks which appear to have strong income prospects as well as the scope for improved income returns in the long run. Could they be of interest to Neil Woodford?

Improving performance

Reporting on Monday was telecommunications specialist Maintel (LSE: MAI). The provider of managed services and systems integration reported a rise in revenue in its interim results of 68%, with gross profit moving 50% higher. The company benefitted from the integration of Azzurri, which is now almost complete. Annualised synergies in the period were moderately ahead of those anticipated at the time of the transaction.

The business was also able to invest in its ICON cloud platforms. They generated strong growth and could prove to be a major growth path for the company in future years. Its managed services and technology performance was negatively affected by delays to customer installations. However, with the recent acquisition of Intrinsic Technology, it seems to have clear catalysts for growth.

Maintel currently yields 3.8% from a dividend which is covered 2.6 times by profit. This suggests that the company has the potential to post high dividend growth rates in future. And since it trades on a price-to-earnings growth (PEG) ratio of just 0.7, it appears to have a sufficiently wide margin of safety to record a turnaround following its 13% share price fall over the last three months.

Major changes

Also offering turnaround potential after a falling share price in the last three months is global software specialist Micro Focus (LSE: MCRO). It has recorded a share price decline of 4% in the last month, but its recent acquisition of HPE could be the catalyst to boost its profitability in the long run. Recent figures released by HPE show that the business is making progress and could prove to be a good fit with Micro Focus.

One area where the company may be able to add real value for investors is through dividends. It currently yields 3.5% from a payout of 45% of net profit. This suggests that dividends are highly affordable, and with the company having earnings growth potential, it could become a strong income play in the long run.

With a price-to-earnings (P/E) ratio of 14.2, it appears to be fairly priced given its long-term potential. A lack of large-cap technology stocks also means that there could be a scarcity value which translates into a higher valuation over the long run. As such, it appears to be a strong investment opportunity at the present time.

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Maintel Holdings

Communications specialist Maintel Holdings (LSE: MAI) is growing at a phenomenal rate. It specialises in the sale and installation of telecommunications systems and services to the enterprise business sector, delivering complete end-to-end solutions delivered on-premises or via the cloud.

Through a combination of organic growth, and key acquisitions, Maintel has enjoyed revenue growth of a stunning 49% per year over the last five years, and earnings have increased from 23p per share to 47p per share in this time. And with earnings set to soar 89% in FY2017 to 89p per share according to analysts’ estimates, the stock trades on a forward looking P/E ratio of just 10.4 at present, an undemanding multiple given the company’s growth history.  

Recent results were impressive, with revenue surging 114% after the “transformational” acquisition of Azzuri, although investors should note that organic revenue growth was only 1%. Adjusted profit before tax rose 52% and the dividend was increased 5%, taking the yield to 3.3% at the current share price.  

Bears will point out that debt has increased significantly after the Azzuri acquisition, with the debt-to-equity ratio now standing at 109%. However management recently stated that debt of 1.6 times adjusted EBITDA is “comfortably ahead of board expectations.”

CEO Eddie Buxton was upbeat about the company’s prospects for 2017 in March, stating that “the combination of an enlarged customer base and the broader technological platform positions Maintel well for an exciting growth trajectory in the cloud environment and we look forward to 2017 with cautious optimism.”

As a result, with the company’s market cap still a small £131m, it appears that Maintel offers value for a company well-placed to continue growing.

Cambria Automobiles

Another smaller company that looks to offer compelling value right now is Cambria Automobiles (LSE: CAMB), the owner of 50 car dealer franchises across the UK. Its business strategy is based around acquiring underperforming dealers, and management has a strong track record of improving these dealers’ profitability. The company also enjoys multiple revenue streams, as not only does it sell cars, but it also services them. 

Cambria has enjoyed robust growth in recent years, with revenue and earnings growing 12% and 25% per year over the last five years. The company also sports a high return on equity of around 24%. However, despite these impressive numbers, it trades cheaply on a forward P/E ratio of a low 8.1, and an enterprise value-to-sales ratio of just 0.11.

The shares spent most of 2016 trending down, which is not surprising given the Brexit-related uncertainty surrounding UK-focused companies. But more recently, the stock has formed a series of ‘higher lows’ and appears to be breaking out of the downtrend.

A trading update for the five months to the end of February was positive, with management stating that trading in the period had been “substantially ahead” of a year before. With the stock up 12% year-to-date, perhaps investors are finally catching on to the fact that Cambria is a fast-growing company trading at a dirt-cheap valuation.

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