David Barnes: Begbies Traynor

If you fear a second stock market crash or think the economy will struggle in the short term, I think a good hedge would be to invest in Begbies Traynor (LSE: BEG).

The insolvency and restructuring work specialist should see business demand surge as government support for companies is removed. The company is also a financial advisory and property services consultancy.

The firm has growing revenue and earnings per share, and uses acquisitions alongside organic growth to boost their financial strength.

Begbies Traynor trades at a fair price-to-earnings ratio of 16 and has a progressive 3% dividend that looks to be safely covered.

David Barnes has no position in Begbies Traynor.

Toby Aston: Anglo Pacific

Anglo Pacific Group (LSE:APF) is a global natural resources royalty and streaming company with a fantastic margins (52% profit last year). Its shares are down around 50% since last December, meaning the share price is a just 7 times earnings and at just 93% of book value. Management own around 7% of the shares which is encouraging.

It also pays a solid dividend yielding nearly 7%, which has doubled since 2016. This is all protected by a healthy dividend cover.  At 116p the shares are trading at low end of the 52 week range, despite analysts price target averaging 196p.

Toby Aston has no position in Anglo Pacific Group.

Royston Wild: Sylvania Platinum

Gold’s surge to record highs above $2,000 per ounce has dominated commodities-related chatter recently. But the yellow metal’s ascent due to rising safe-haven interest has dragged platinum group metals (or PGM) prices to significant highs as well.

Platinum has just struck multi-month peaks around $1,000 per ounce. And this has swept micro-cap stock Sylvania Platinum (LSE: SLP)’s share price to its highest since February. 

I’d buy the miner’s shares with the view that continued macroeconomic fears could drive their value even higher in the weeks and months to come. Sylvania’s low forward price-to-earnings (P/E) ratio of 11 times certainly leaves plenty of scope for additional share price gains.

Royston Wild does not own shares in Sylvania Platinum.

Tom Rodgers: Open Orphan

£96m market cap contract research firm Open Orphan (LSE: ORPH) is the world leader in testing vaccines and antivirals through its unique quarantine unit and on-site virology lab. 

Sales have been boosted by biotechs developing Covid-19 vaccines. But ORPH has large, long-term cash flow prospects far beyond coronavirus. 

A £4m contract with an unnamed global giant for a human challenge study into RSV is just the latest win. 2019 revenue was only £3.84m but that is expected to jump tenfold to £35m by 2021. 

Analysts think shares will more than double from today’s 14p price. 

I’m buying big. 

Tom Rodgers owns shares in Open Orphan.

Kirsteen Mackay: Trans-Siberian Gold 

Russian gold producer Trans-Siberian Gold (LSE:TSG) is a micro-cap stock that has caught my eye. With the price of gold ascending at an astounding rate, gold miners are reaping the benefits.  

Since the March market crash, the Trans-Siberian Gold share price has risen 165%. The £113m company has a price-to-earnings ratio of 14 and dividend yield close to 3%. It has maintained operations throughout the pandemic and delivered a positive set of results at the end of July. Its second quarter produced 46.9% higher average gold grades than its previous quarter. With the gold price continuing its ascent, I think the TSG share price will follow suit.  

Kirsteen does not own shares in Trans-Siberian Gold.

Matthew Dumigan: Jubilee Metals Group

Industry-leading metal recovery business Jubilee Metals Group (LSE: JLP) boasts an expanding multi-project portfolio with aims to increase both its geographical and commodity exposure. Operating in a rapidly expanding market, I think Jubilee is perfectly positioned to capitalise on increased demand for a reduction in the global footprint of mine tailings. 

Having become profitable for the first time this year, I’m impressed by the group’s recent financial performance. Moreover, as Jubilee continues to remain largely unnoticed by institutional investors (market cap: £115m), I think there’s a lucrative opportunity here for those willing to hold for the long term.

Matthew Dumigan has no position in Jubilee Metals Group.

Edward Sheldon: Keystone Law

My top micro-cap stock for August is Keystone Law (LSE: KEYS). It’s an innovative UK law firm that is disrupting the market by enabling lawyers to work from home or their own offices.

Keystone Law has grown at a rapid pace in recent years and I think it looks well-placed for growth in a post-Covid-19 world. I say this because its model is designed to service clients remotely.

KEYS isn’t the cheapest stock around. At the time of writing, its forward-looking P/E ratio using next year’s EPS forecast is about 36. However, I think this company deserves a premium valuation as it has a lot of potential for growth. 

Edward Sheldon owns shares in Keystone Law.

Rupert Hargreaves: Inspecs

Manufacturer of eyewear frames Inspecs (LSE: SPEC) is a unique business. The company is one of the few listed eyewear companies in the world, which gives it a defensive nature.

Indeed, the eyewear market is projected to expand at a compound annual rate of 8% for the next few years.  

Based on this growth, analysts reckon the company’s sales will double by 2021. This will leave the stock dealing at a forward P/E of 17.8.

The company’s double-digit profit margins and strong balance sheet also make it a prime dividend candidate.

Rupert Hargreaves does not own shares in Inspecs.

Rachael FitzGerald-Finch: Concurrent Technologies 

Shares in computer product manufacturer Concurrent Technologies (LSE: CNC) are growing nicely, like the company’s underlying financial fundamentals and investment metrics.

In fact, the share price is hovering around its 52-week high price point but is still trading on a price-to-earnings ratio of 22, below the industry average of 30. Given the competitive advantages of the firm, in the form of a growing an innovative product range, I am expecting further stock price growth.

I think Concurrent Technologies is a desirable micro-cap growth stock to hold as part of a balanced portfolio.

Rachael FitzGerald-Finch does not hold shares in Concurrent Technologies.

Anna Sokolidou: Ariana Resources

Ariana Resources (LSE:AAU), a small cap miner, explores silver and gold in Turkey.

Its shares have recently plunged a bit just like the two precious metals. In spite of the several months’ gold rally, the investors seem to be in a risk-on mode right now. However, I don’t really believe it will last for a long time. There are plenty of macroeconomic and geopolitical risks. So, in my view, gold and silver will rise in value pretty soon.

Although I consider small caps to be rather risky, their shares tend to surge more than their larger competitors’.   

Anna Sokolidou has no position in Ariana Resources.

Jonathan Smith: Mattioli Woods

Mattioli Woods (LSE: MTW) is a UK-based wealth manager. Financial performance through to the year end of May 31st was strong, with net inflows of around £200mn, despite the pandemic hampering the final few months. The firm has also been proactive with responding to the pandemic, taking on cost cutting measures with employee compensation, saving over £2.7mn in the process.

I’m also impressed with the drive and pro-activeness around growth aims. Only this month news broke of the successful acquisition of another wealth manager, Hurley Partners. This should aid long term growth via economies of scale.

Jonathan Smith does not own shares in Mattiolo Woods.

Kevin Godbold: Concurrent Technologies

Specialist designer and manufacturer of high-end, embedded computer boards for critical applications, Concurrent Technologies (LSE: CNC) had a ‘good’ coronavirus crisis. We last heard from the company in June. The directors said the order book is “strong” and the company maintained production through the lockdown.

The firm serves the military, aerospace, communications, industrial, transport and scientific sectors. It’s a good business, which shows in the robust multi-year record of rising cash flow and dividends suggesting the enterprise has defensive qualities. As we emerge from recession, I think the firm looks well placed to thrive. I’m backing the micro-cap stock for August and beyond.

Kevin Godbold owns shares in Concurrent Technologies.

G A Chester: Sylvania Platinum 

Sylvania Platinum (LSE: SLP) has built a record of strong operational performance in recent years. This is founded on its low-cost, low-risk extraction of platinum group metals (PGMs) from chrome tailings in the renowned PGM-rich Bushveld Igneous Complex in South Africa. 

The company’s strong operational performance has been matched by a sensible financial strategy. It’s debt-free. It’s strong cash flows fund capital expansion and process optimisation projects. And also support opportunistic share buybacks and shareholder dividends. 

Adding a single-digit earnings multiple to the strong management and focus on shareholder value makes Sylvania my top stock to buy right now. 

G A Chester has no position in Sylvania Platinum.

Roland Head: Somero Enterprises

I’ve been using this year’s market crash to buy shares in high-quality businesses trading at knockdown share prices. One micro-cap stock I think looks very attractive at the moment is Somero Enterprises (LSE: SOM).

This US business makes high-precision equipment for laying perfectly flat concrete floors, such as those required for ecommerce warehouses. The company went into the COVID-19 crash with a strong order book and reported net cash of $28m at the end of June.

Management say it’s too soon to give guidance on current market conditions. But Somero looks cheap to me on just eight times forecast earnings. I rate the shares as a buy.

Roland Head does not own shares in Somero Enterprises.

Andy Ross: Franchise Brands

Franchise Brands (LSE: FRAN) is a franchisor. Its franchises include consumer-facing ones such as ChipsAway and Ovenclean as well as business to business ones such as Metro Plumb and Willow Pumps.

I like that management are experienced operators. The executive chairman spent 21 years at Domino’s, which operates a franchise model. A number of the board and other senior management personnel also worked at Domino’s so know the industry well.

It’s an entrepreneurial company which has made acquisitions and retains talent within the business.

Franchisors can make good margins because it’s an asset light business model and I think that bodes well now and in the future.

Andy Ross does not own shares in Franchise Brands.

Paul Summers: Somero Enterprises

I think laser-guided equipment specialist Somero Enterprises (LSE: SOM) is a great buy for the long term. It’s the clear leader in a niche market and generates consistently high returns on capital employed.

Recent trading has been inevitably tough. However, Somero remains profitable and cash generative and would likely remain so even if revenues were to fall an additional 20%. It also has $28m in net cash to weather the coronavirus storm.

Those looking for a quick return probably won’t find it here. However, anyone intending to stick around for the next infrastructure boom could be richly rewarded. The shares look cheap at just 8 times forecast FY20 earnings.

Paul Summers owns shares in Somero Enterprises.

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Powerful growth  

A glance at Fevertree’s financials reveals an excellent set of numbers. Between 2014 and 2016, sales climbed from £35m to £102m, with net profit surging from £1.3m to £27.5m. That’s some powerful growth. Looking at forecasts for FY2017 and FY2018, analysts expect the party to continue. Revenue and net profit of £168.5m and £45.3m are anticipated for the year just completed, followed by sales of £199.1m and a net profit of £49.2m this year. Fevertree’s growth looks compelling.

Other metrics stand out as attractive too. For example, the group’s operating margin is strong, at 35%, and return on equity is excellent at approximately 43%. Debt is low, with just £6.1m of borrowing on the balance sheet.

Fevertree has consistently revised trading expectations upwards, and is bullish on the outlook for the future. What’s not to like?

Priced for perfection 

Well, the issue that concerns me is the stock’s valuation. With analysts expecting earnings of 42.6p for FY2018, the forward-looking P/E ratio is a high 55. That valuation prices the stock for perfection, and doesn’t leave much room for error.

The PE to growth (PEG) ratio reinforces my view that the stock is expensive. With analysts expecting earnings growth of around 8.7% this year, the PEG ratio is currently a high 6.9. Generally, a ratio of under one is considered strong value.

I also have a few concerns about the company’s competitive advantage. Is the brand truly strong enough to withstand competition from new entrants to the market? What about competition from established players? I’ve noticed that rival Schweppes has had a branding overhaul recently – it’s clearly trying to fight back.

Given these concerns, Fevertree is not a ‘buy’ for me at the current price. I’ll keep the stock on my watchlist for now.

Cheaper growth

One growth stock that does look attractively valued, in my view, is Mattioli Woods (LSE: MTW). The company is a leading provider of wealth management and pension solutions.

This is another small-cap stock that is growing at an impressive pace. For example, over the last three years, revenue has surged 72%, while net profit has climbed 50%. Half-year results released today, demonstrate further momentum.

Indeed, for the six-month period to the end of November, revenue jumped 17% to £28.4m, while adjusted EPS rose 15% to 19.2p. In a signal of confidence from management, the interim dividend was hiked 17% to 5.5p per share. Chief Executive Ian Mattioli was upbeat about the firm’s future, stating: “The outlook for this year remains in line with our expectations and I believe we are very well positioned to meet the ambitious longer-term goals we have set.”

Trading on a forward P/E of 20.6, with a prospective dividend yield of 2%, I believe shares in Mattioli Woods could be worth a closer look.

The post One hot growth stock I’d buy over Fevertree Drinks plc appeared first on The Motley Fool UK.

The company, which provides wealth management and employee benefit services, announced that revenues shot 17.4% higher in the 12 months to May, to £50.5m, while organic revenues increased 11.6%. As a consequence adjusted EBITDA rose 17.2% to £10.9m.

Lauding the results, chief executive Ian Mattioli said: “Sustained demand for advice and the continued development of our investment and asset management proposition have driven strong new business flows, which together with acquisitions completed in the current and prior financial year increased total client assets under management, administration and advice by 17.5% to £7.77bn.”

And Mattioli Woods continues to invest heavily to keep new business rolling in. It boosted the number of advisors on its books to 115 at year-end from 104 a year earlier, and expanded its geographical handprint by moving to new offices in London and Glasgow last year and opening a new base in Manchester.

Meanwhile, the financial giant advised that “acquisitions remain a core part of our growth strategy,” and noted that “the five businesses acquired during the previous financial year have integrated well and all have contributed positively to the group’s trading results since acquisition.”

On the right track

Mattioli Woods has been doling out double-digit earnings increases in recent times and, although City analysts expect growth to dial back a bit in the near term, a predicted 7% advance for the year to May 2018 is still not too shoddy.

And the number crunchers expect profits at the Leicester firm to rev up again from next year onwards — an 11% improvement is pencilled in for fiscal 2019.

Many investors may be put off by the forward P/E ratio of 23.4 times, a figure that sails above the broadly-regarded value benchmark of 15 times. But I reckon the company worthy of such a premium, given its dedication to pursuing acquisitions.

Besides, I reckon the probability of further meaty dividend growth also makes the AIM stock a tantalising proposition right now. Mattioli Woods is expected to raise last year’s 14.1p per share payout to 15.3 in the current year, and again to 16.8p in 2019.

As a consequence, investors can tap into handy yields of 1.7% and 1.9% for this year and next.

Soap star

PZ Cussons (LSE: PZC) is another stock I expect to deliver brilliant shareholder returns thanks to the formidable brand power of products like Imperial Leather soap and shower gel and Morning Fresh washing up liquid, not to mention its vast exposure to lucrative emerging markets.

Trading troubles in regions like Nigeria hav seen earnings disappoint more recently, although Cussons is expected to bounce back in the years to May 2018 and 2019 — rises of 6% are predicted by City analysts for both years.

And the household goods maker is expected to keep dividends growing at a handsome rate too, the 8.28p per share payment of last year projected to advance to 8.9p and 9.4p in 2018 and 2019 respectively. These figures yield 2.6% and 2.7%.

The post 2 top income and growth stocks you must check out today appeared first on The Motley Fool UK.

Liontrust Asset Management

£222m market cap Liontrust Asset Management (LSE:LIO)  is an independent fund management business, based in London. The stock has been a top performer over the last five years, rising from around 90p to 440p today, a gain of nearly 400%.
 
Looking at the company’s financials, it’s not hard to see why the share price has surged higher. Revenue has increased from £13.7m in FY2012 to £51.5m for FY2017, and the company has gone from generating a net loss of £0.2m to a net profit of £6.8m in this time. City analysts forecast revenue and net profit of £69.8m and £18.5m respectively for FY2018, meaning that the impressive growth of the last few years looks set to continue.
 
Dividend investors might also be interested to hear that Liontrust paid out dividends of 15p per share last year, equating to a healthy yield of 3.4% at the current share price. The dividend payout has been increased significantly in recent years and analysts expect growth of 20% in FY2018.
 
However, despite the excellent numbers and strong recent momentum in the share price, Liontrust currently trades on a forward looking P/E ratio of just 11.9, which seems very reasonable for a company growing so quickly.
 
Investors should bear in mind that fund managers’ profitability is generally related to the performance of global stock markets. Therefore if markets were to experience a significant pull-back, profitability could suffer. But for now, the company looks to have strong momentum and as they often say in investment circles, ‘the trend is your friend.’

Mattioli Woods

Also demonstrating strong share price momentum in the last five years is £203m market cap Mattioli Woods (LSE:MTW). The wealth management provider has seen its share price rise from around 180p five years ago, to 790p today, a gain of a formidable 340%. 

The company released a trading statement this morning in advance of its full-year numbers due to be announced in September, and the numbers look impressive.
 
The wealth management specialist achieved the significant milestone of annual revenue greater than £50m, exceeding analysts forecasts of £48.5m. While the company didn’t reveal any details about profitability, it stated that its financial position was strong, with net cash of £23m at year-end and that recent acquisitions were performing and integrating well. Organic growth was robust, with 1,200 new wealth management clients and 100 new corporate clients coming on board during the year. Discretionary assets under management rose to £1.6bn at year end.
 
Chief Executive Ian Mattioli said: “I am delighted with the performance of our business for the last financial year and believe we remain well-positioned to secure further profitable growth.”  
 
Does the stock offer value at the current share price? On forecast earnings of 33.6p per share, Mattioli Woods currently trades on a P/E ratio of 23.6, and trailing dividend yield of 1.6%. While not in ‘bargain’ territory, that valuation doesn’t look overly expensive for a smaller company growing strongly.  

The post 2 momentum growth stocks that could help you retire early appeared first on The Motley Fool UK.

Clearly, though, there are still stocks which could be worth buying. Could now be the right time to buy these two smaller companies?

Uncertain outlook

Reporting on Wednesday was wealth manager WH Ireland (LSE: WHI). The first half of its current financial year has seen progress made with its strategy. Both of its main divisions have reported strong momentum in absolute terms, and also when compared to the same period in the previous year.

Notably, the company’s Corporate and Institutional Broking division has increased its transactional revenue. Its pipeline of new business is at its highest level for several years, which suggests the company’s strategy is performing relatively well. Similarly, the company’s Private Wealth Management division has improved its client proposition, with its assets under management and administration increased to over £3bn.

Looking ahead, WH Ireland faces an uncertain future. The outlook for the UK economy remains difficult to predict, with higher political risk, a volatile currency and rising inflation causing some difficulties for the economy. The potential for a higher interest rate may also hurt economic growth. Therefore, while WH Ireland is making progress with its current strategy, trading conditions may worsen. As such, buying a larger and better-diversified sector peer may be a superior option for investors thinking about their retirement plans.

Fully valued?

Pensions consultancy and administration services provider Mattioli Woods (LSE: MTW) has delivered a relatively robust earnings growth performance in recent years. Its earnings have increased at an annualised rate of almost 10% during the last four years, which shows that the company’s strategy has been working well.

Looking ahead, more growth is forecast. The company is expected to report a rise in its bottom line of 10% in the current financial year, followed by further growth of 9% next year, This could help to keep investor sentiment relatively bullish after a share price gain of 15% in the last year.

However, when it comes to capital growth potential, Mattioli Woods may have somewhat limited appeal. Its shares appear to be fully valued at the present time. For example, they trade on a price-to-earnings growth (PEG) ratio of 2, which suggests they may struggle to perform well on a relative basis over the medium term.

Certainly, the business seems to be performing well. However, with a high valuation the company lacks value appeal. Dividend growth potential could be high, since the company pays out just 42% of profit as a dividend. However, with a dividend yield of just 2%, there may be better options available elsewhere.

The post Can you rely on these 2 small-caps to fund your retirement? appeared first on The Motley Fool UK.