Tragically, this means a lot of quality dividend shares outside the Footsie slip through the cracks. The FTSE 250 carries exceptional income opportunities for share pickers, too. There are also many robust small-cap shares on the UK stock market with excellent dividend credentials.

Huddle in close, and let me reveal two ‘secret’ income stocks grabbing my attention right now: BRCK Group (LSE:BRCK) and YouGov (LSE:YOU). Want to know what makes them great dividend stocks to consider?

8.5% dividend yield

BRCK Group went by the name of Brickability until last month. You’ll probably now have a good idea of what it does — it makes and sells bricks, though recent acquisitions have boosted its presence in markets for other construction materials.

The firm has a great dividend track record, raising annual payouts even though market conditions have been less than ideal due to higher interest rates. The business has its exceptional cash generation to thank for this.

However, BRCK has had to bite the bullet and chose to freeze the interim dividend in November. The reason? It’s focusing more closely on debt reduction following some acquisitions.

On the plus side, trading remains extremely robust — both revenues and adjusted gross profit increased in the six months to September, driving cash flows higher. There’s no guarantee this resilience will continue as the Middle East conflict drags on, raising the prospect of Bank of England rate hikes.

But will this mean this year’s annual dividend slumps? City analysts don’t think so. They expect a full-year dividend of 3.5p per share, matching that paid in financial 2025. This produces a healthy 8.5% dividend yield.

Another top income stock

You may have heard of YouGov when reading or watching the latest political news. It’s best known for opinion polling, including projecting outcomes like who will be the next party in UK government.

What attracts less attention is its strong performance as a dividend stock. Shareholder payouts have risen every financial year since 2013, a record that’s tipped to continue. So YouGov shares yield a tasty 6%.

Dividends are never guaranteed, but in my view analysts’ dividend forecasts look pretty strong. A predicted 9.68p per share for this year is covered 2.9 times by anticipated earnings. A reminder: a reading of two or more provides a wide margin for error.

So what are the risks attached to YouGov shares? Last week, the company warned on profits due to heavy investment at its shopping data unit. Higher capital expenditure could remain a problem as AI disrupts traditional market research.

But this shouldn’t impact dividends, at least in the immediate future. Over the longer term, I’m confident its push into AI and automation can fuel strong earnings and dividend growth.

The post Whisper it: these SECRET dividend stocks could supercharge your passive income appeared first on The Motley Fool UK.

Lloyds shareholders have been handsomely rewarded recently, with the stock up nearly 50% year to date. And that’s before dividends!

However, according to the average price target among City brokers (89p), Lloyds might be almost fully valued at just over 80p.

But that’s certainly not the case with YouGov (LSE:YOU), which carries a 557p price target. That’s 56% higher than its current 358p.

So, while analysts could always be wrong, they see far more potential growth in YouGov stock than Lloyds.

Back on the road

Readers will probably know YouGov as the polling company often cited in the media. In June, for instance, it released a model projecting what would happen if a snap general election was held (a hung parliament, with Reform UK as the largest party).

However, the AIM-listed company actually operates across three divisions. Its Data Products segment offers subscription-based tools like BrandIndex, while Research focuses on bespoke client projects, including custom surveys. And finally, YouGov Shopper offers shopping behaviour data and insights from households across 18 European countries. 

The stock has been out of favour since a profit warning in June 2024. At the time, CEO Stephan Shakespeare admitted that YouGov had “departed from the road of growth“. That was a poetic turn of phrase for slowing sales (perhaps fitting from someone sharing the Bard’s name).

But this may have just been a pitstop. Because a full-year trading update released yesterday (5 July) showed the firm is back on the growth road. Management expects strong reported revenue and adjusted operating profit for FY25 (which ended 31 July), driven by its acquisition of Consumer Panel Services (rebranded as YouGov Shopper).

Further, the group is on track to deliver annualised cost savings of £20m, with 70% already delivered for this financial year. And more good news came when it said that “the current visibility into FY26 is encouraging“.

Investors cheered this update yesterday, sending the share price up 19%.

Dirt-cheap valuation

Despite this, YouGov stock is still down 14% this year, and 77% off a peak of 1,600p reached back in December 2021.

The forward price-to-earnings (P/E) ratio is just 9.2, while there’s a 2.9% forecast dividend yield on offer. The payout has more than doubled in five years.

Medium term

What could send YouGov skidding back off the road of growth? Potentially strained client budgets amid ongoing economic uncertainty.

Also, weak organic growth is worth highlighting here. Stripping out the acquisition, the firm said that it delivered “modest” underlying revenue growth last year. And its Research division suffered from “weak performance” in its EMEA (Europe, Middle East, and Africa) region and Government sector.

Fair to say, then, the firm is not currently firing on all cylinders. But the medium term still looks bright to me, with artificial intelligence almost certain to improve its data-driven predictive insights and product offerings.

YouGov is a profitable data/tech company with a strong brand. I think a move to the main market (and possibly FTSE 250) at some point would boost its valuation.

Pairing this potential with its cheap valuation, I think the stock is worth considering at 356p.

The post Meet the £3.56 dividend stock that’s forecast to smash Lloyds over the next 12 months  appeared first on The Motley Fool UK.

Bioventix

What it does: Bioventix specialises in the supply of high-affinity monoclonal antibodies for applications in clinical diagnostics

By Paul Summers. There’s not an abundance of quality AIM-listed companies. One exception is arguably Bioventix (LSE: BVXP). The Farnham-based developer and commercial supplier of monoclonal antibodies consistently posts some of the highest operating margins in the entire UK stock market! 

All that said, investor confidence has been knocked after the company disclosed it had overstated revenues. Even though the miscalculation appears to be due to an error on the part of one of its customers, this has pushed the shares down significantly in value as a result of the company now failing to hit analyst expectations.

However, I reckon now is a great time to consider loading up. Bioventix remains a leader in its niche market. The current valuation is also significantly below the firm’s five-year average. While never guaranteed, the dividend yield currently stands at 5.8% and the balance sheet looks very healthy indeed. 

Paul Summers has no position in Bioventix.

dotDigital

What it does: A digital marketing enterprise helping businesse monetise their audiences and improve customer experience.

By Zaven Boyrazian. When it comes to digital marketing, dotDigital (LSE:DOTD) isn’t short on competition. Yet, as economic conditions have improved, the firm has continuously maintained double-digit revenue and profit growth that seems to have gone ignored by investors.

The small-cap enterprise now generates an average of £1,916 per month from each of its customers, almost double the amount compared to five years ago. And a big part of the rising spending trends is courtesy of management’s investments into its technology, including an AI prediction engine to maximise customer conversion through personalisation.

It’s a powerful tool that few of its competitors provide. And with new marketing channels like WhatsApp being added into the mix, dotDigital is slowly becoming a one-stop-shop for everything that is marketing.

Larger rivals like Hubspot remain a serious threat. However, with larger customers like Mountain Warehouse and British Airways joining the client list, this AIM-listed enterprise seems to be taking the right steps.

Zaven Boyrazian owns shares in dotDigital.

Serabi Gold

What it does: Serabi Gold owns a series of mining projects in Brazil, including the Palito and Coringa complexes.

By Royston Wild. Precious metal stocks like Serabi Gold (LSE:SRB) continue to go from strength to strength. This yellow metal miner is up a stunning 39% in the year to date, propelled by gold prices rising through the $3,000 per ounce marker for the first time.

With this key psychological and technical level taken out, metal values — and with them the prices of Serabi and its peers — could strengthen further.

The African miner’s low valuation certainly leaves room for further gains. Today it trades on a forward price-to-earnings (P/E) ratio of just 3.4 times.

I don’t just believe Serabi Gold is a great stock to consider buying for the current bull run, however. Through a blend of organic growth and acquisitions, the business has plans to turbocharge earnings by lifting production to 200,000 ounces a year over the next few years.

That’s up from the 60,000 ounces planned for 2026. Remember, though, that mining is risky business, and any setbacks at the exploration, production or mine development phases could prove disastrous for profits projections, and with it the share price.

Royston Wild does not own shares in Serabi Gold.

Tristel

What it does: Tristel makes and distributes chlorine dioxide wipes that are used for disinfecting hospital environments.

By Stephen Wright. Shares in Tristel (LSE:TSTL) have fallen almost 30% since the start of the year. I think that’s a lot for a company that still has a lot of potential. 

Tristel is in the process of expanding to start selling its (patented) chlorine dioxide wipes across the Atlantic. But getting into the US has proved challenging.

With a premium product, there’s always a danger of customers being unwilling to move away from established practices. And that’s the risk with the stock.

I think, however, the potential rewards are worth it. Tristel has been following up its ultrasound disinfectant system with a product for ophthalmic devices and this looks promising to me.

If the company can make a breakthrough on this front, I think there could be huge growth ahead. If not, there’s a dividend with a 4.6% yield to fall back on.

Stephen Wright owns shares in Tristel.

YouGov

What it does: YouGov is a market research and data analytics company.

By Alan Oscroft. In a first-half update on 31 March, YouGov (LSE: YOU) said it only “expects modest revenue growth for the rest of the financial year as trading conditions remain challenging reflecting the current macro-economic backdrop.“

The company is still searching for a new permanent CEO after Steve Hatch left by mutual agreement in February. And when interim CEO Stephan Shakespeare talks about a “resilient” performance, and he mentions “considerable change” and “execution challenges,” then we can tell things have been a bit tough.

But the company still says it should meet market expectations for the full year. And it expects operating profit to be balanced more equally between the two halves.

There are clearly risks here, and the share price could remain depressed for some time yet. But analysts expect positive earnings per share (EPS) this year, and then an 80% boost by 2027 that would take the price-to-earnings (P/E) ratio down to only about eight.

Alan Oscroft has no position in YouGov.

The post 5 AIM stocks to consider buying for the long term appeared first on The Motley Fool UK.

Then and now

However, from a financial and operational perspective, the company’s unrecognisable from when it floated in April 2005.

During the year ended 31 July 2005 (FY05), it reported turnover of £2.9m and an operating profit of £961,000. In FY24, revenue was £335m and the company disclosed an adjusted operating profit of £49.6m. Since IPO, earnings per share has increased from 5.8p to 29.4p.

Using these figures, it does appear to meet the definition of a growth stock.

But the group’s recent troubles have dented investor sentiment. The stock now trades on 10 times its historic earnings. This is roughly half of where it has been over the past three years or so. This seems cheap to me and could be a good opportunity for investors to benefit from a stock that has much to gain from the emergence of artificial intelligence (AI) solutions.

The fourth industrial revolution

In 2024, the global AI market was estimated to be worth $279bn. By 2030, it’s expected to grow to $1.8trn.

YouGov already employs AI in a number of its offerings. Those who closely followed the UK general election last year will have heard of the multi-level regression with post-stratification (MRP) opinion polls produced by the company.

But politics is a small part of what the group does. The fact that 3.7bn people were entitled to vote in national elections in 2024 didn’t materially affect the company’s performance.

In fact, the group has three divisions – Data Products (a subscription-based model), Research (client-specific projects), and Consumer Panel Services (household purchasing data available in 18 European countries).

And all of them provide the data that many AI applications require to be effective.

Encouragingly, these services can generate very high margins. The same set of data can be sold to thousands of clients at very little additional cost.

Possible challenges

But there are risks. With a market cap of £350m, the company’s still relatively small. Its shares are traded on the Alternative Investment Market (AIM) where liquidity can be poor. A number of companies have recently announced plans to de-list, claiming their AIM valuations don’t reflect the true value of their businesses.

And although President Trump’s tariffs don’t affect the company directly, should there be a wider economic downturn, spending on data is one of the first things that companies might cut.

Indeed, the company’s cautious about its immediate prospects. It’s predicting “modest revenue growth” for FY25. And it says “trading conditions remain challenging reflecting the current macro-economic backdrop”.

I’m not expecting an immediate rebound in the YouGov share price. It often takes time to rebuild confidence after a profit warning. But it’s operating in a sector that should grow over the longer term. Therefore, I think it could be an excellent stock for those investors who like to look beyond short-term price volatility.

The post In my opinion, this FTSE growth stock looks set to soar over the next 5 years! appeared first on The Motley Fool UK.

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Gamma Communications

What it does: the company provides technology-based communication services across the UK and mainland Europe.

By Kevin Godbold. Gamma Communications (LSE: GAMA) is a big beast by AIM standards with a market capitalisation of around £1.57bn. But it didn’t start that way.

The firm arrived on the FTSE AIM market 10 years ago and has since delivered and well-balanced growth in revenue, earnings, cash flow and dividends. Not all AIM stocks are rubbish as this rising star proves.

City analysts expect more growth ahead, and the firm’s recent acquisitive expansion into Germany may help to provide it. But as businesses grow, they also face risks. Gamma has been winning for a long time and is perhaps due a setback or two.

One possibility is well-financed competitors may start to bite into chunks of the firm’s profitable niche in the market. Or maybe Gamma will make an acquisition that goes bad.

Nevertheless, recent updates have been positive and the outlook is upbeat. I’d focus on the growing business now.

Kevin Godbold does not own shares in Gamma Communications.

YouGov

What it does: YouGov is a market research company, with most of its revenue from the USA.

By Alan Oscroft. A few AIM stocks have struggled this year, with YouGov (LSE: YOU) one of the worst performers.

In June, the company warned that full-year earnings were likely to be 32% below the analyst consensus at the time. The shares crashed, and despite a few hints of life in the months after, they’re down near a 52-week low now.

My main fear is that we could get more bad news, as we might see more slowing demand across the sector.

But analysts expect solid earnings growth next year, even after downgrades. And they don’t think the dividend will suffer, though there’s only a 2.2% forecast yield.

We could be looking at a price-to-earnings (P/E) of 16.5 in 2025, dropping to under 12 by 2026.

AIM sentiment isn’t strong, so the short-term future could be erratic. But I see an attractive long-term valuation here.

With YouGov boosting its use of artificial intelligence, it might just be the one to put the AI into AIM.

Alan Oscroft has no position in YouGov.

Warpaint

What it does: Warpaint makes colour cosmetics under the W7 and Technic brands. It sells them at Tesco and major retailers in the US and Europe, plus its own website.

By Harvey Jones. The vast majority of my portfolio is culled from the FTSE 100, alongside a smattering from the FTSE 250. I hold just one AIM-listed stock but I chose well because it’s a goodie: Warpaint London (LSE: W7L).

Shares in the specialist supplier of colour cosmetics are up 80.16% in the last 12 months, and a blockbuster 614.84% over five years.

I bought Warpaint after spotting that it had repeatedly hiked earnings guidance, boasted ample cash reserves, no debt and a strong dividend track record.

On 17 September, I was pleased to see it post a 66% jump in first-half earnings to £12m, with group pre-tax profits up 76% to £10.9m.

The Warpaint share price jumped on the news, but has trailed downwards along with the rest of the AIM. Possibly because investors fear the Budget will hit inheritance tax breaks for the index.

Warpaint shares aren’t cheap, trading at 30.16 times earnings. The yield is just 1.67% but that’s largely down to the rocketing share price. I’m hoping sales will jump again as the cost-of-living crisis eases, unless consumers trade up to pricier brands when they feel a bit more flush. I doubt it, though. I’ll use the dip to top up my stake in November.

Harvey Jones owns shares in Warpaint.

Yü Group

What it does: Yü is an independent supplier of gas and electricity to businesses across the UK, and a smart metre installer. 

By Edward Sheldon, CFA. Yü (LSE: YU.) shares look really interesting to me right now. There are several reasons why. 

The first is that the company has been generating phenomenal top and bottom-line growth recently. In the first half of 2024, revenues grew 60% to £313m while earnings per share jumped 52% to 88p. 

The second is that the dividend is being increased at an unbelievable rate. For H1, the payout was increased by a whopping 533% to 19p. Currently, the yield is around 3.5%. 

Another reason is that the shares look dirt cheap. As I write this, the company’s price-to-earnings (P/E) ratio is just eight. 

In terms of risks, there are a few to be aware of. Yü operates in a competitive market. Meanwhile, it has no control over energy prices. 

I think the shares are worth a closer look right now, however. Given the low valuation and rising dividend yield, there’s a lot to like. 

Edward Sheldon has no position in ​​Yü Group.

The post Best AIM stocks to consider buying in November appeared first on The Motley Fool UK.

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Creo Medical   

What it does: Creo Medical is a medical devices company that makes instruments used in endoscopic surgery.    

By Ben McPoland. I think shares of Creo Medical (LSE: CREO) look interesting after falling 42% this year. The innovative small-cap company manufactures devices that enable minimally invasive surgical procedures.

Last year, it more than doubled its user base and analysts expect revenue to jump 28% this year to around £39.6m. Its recently launched Speedboat UltraSlim, a device compatible with most endoscopes, is expected to drive further sales momentum in the years ahead. 

On 18 September, Creo announced the sale of 51% of its European business to China’s Micro-Tech (a leading endoscopic instrument company). If approved, this will net the firm approximately €36.7m, which it will use to fund its growth.

Creo says this deal will “support our continued commercial growth in the [Asia Pacific] region through product registration and co-branding in China.” Opening up opportunities in the massive Chinese healthcare market could prove to be very lucrative.

The main danger here is that the company’s still in growth mode and not yet profitable. It has a cash-flow break-even target for 2025, but the lack of earnings still heightens risk. 

Nevertheless, with the market cap now at £95m (as I write), the stock looks attractive to me given the growth potential.

Ben McPoland owns shares in Creo Medical.

hVIVO

What it does: Specialist contract research organisation (CRO) focused on human medical trials of vaccines and antivirals.

By Mark David Hartley. hVIVO (LSE: HVO) is a clinical research organisation that serves biopharma companies. It recruits volunteers for clinical trials through its FluCamp database, which boasts over 320,000 participants. It can be a risky business, as clinical trials face the threat of medical complications or even fatalities. This could cause reputational and financial damage to the company. 

The company’s latest results revealed a 30% year-on-year increase in revenue and 67% EBITDA growth, translating to a 24.5% margin. Basic adjusted earnings per share also saw a 30% increase. However, with a price-to-sales (P/S) ratio of 3, revenue is lagging the share price. 

Still, its balance sheet looks solid, with cash up from £31.3m to £37.1m in H1. Looking ahead, management anticipates an 11% increase in full-year revenue with a projection of at least £100m in revenue by 2028. That’s a compound annual growth rate of about 14%.

Mark David Hartley does not own shares in hVIVO.

Serica Energy

What it does: Serica is one of the top 10 oil and gas producers in the UK North Sea, with an output of more than 40,000 barrels per day.

By Roland Head. Shares in North Sea oil and gas producers have been hammered by the falling oil price and uncertainty over government energy policy. Serica Energy (LSE: SQZ) is no exception.

The company’s share price has fallen by 40% so far this year. The shares now trade on just three times forecast earnings, with an 18% dividend yield.

The Autumn Budget on 30 October may provide some welcome clarity. In the meantime, we know that Serica had $131m of net cash at the end of June.

Serica’s projections suggest that the company could generate another $500m of surplus cash from its current production by the end of 2027.

My main worry is that management may blow some of the group’s cash pile on a misguided foreign acquisition.

However, the company recently confirmed its support for the dividend, declaring an unchanged interim payout. I think the shares just look too cheap right now.

Roland Head owns shares in Serica Energy.

Warpaint

What it does: Warpaint sells colour cosmetics under its own brands, W7 and Technic. It sells through major retailers and via its own website.

By Harshil Patel. Warpaint (LSE:W7L) is going from strength to strength. Not only are sales and profits rising, but its profit margin is too.

Achieving this hat-trick is impressive and it’s what makes this AIM stock stand out from the crowd.

Its half-year pre-tax profit jumped by 76% from £6.2m to £10.9m. The company’s sales are weighted towards the second half of the year due to its gifting attributes. So, I’d expect more growth to come.

There are plenty of opportunities, both from existing retailers and through new major shops which it is currently in discussion with.

Warpaint offers many of the qualities that I look for in the best shares. Namely, it offers a return on capital employed of 42%, over 20% operating margin and a solid balance sheet.

There is competition in this space, but it looks like it’s taking market share from rivals.

I wrote about this Aim stock a year ago, and although its share price has doubled since, I still like it today.

Harshil Patel owns shares in Warpaint.

YouGov

What it does: YouGov is a British internet-based market research and data analytics firm with global operations.

By Muhammad Cheema. YouGov’s (LSE:YOU) 2024 has been torrid with its shares falling by almost 62%. Investors were particularly spooked by a profit warning in June, which caused a one-day drop of 46%. Debt of £214m on its balance sheet is also risky and doesn’t ease concerns.

However, I believe this has been blown way out of proportion. On its later trading update on 6 August, it guided for revenue of £327-330m and operating profit of £43-46m. For context, FY23 revenue and operating profit were £258m and £44m, respectively.

This doesn’t warrant the share price fall in my opinion and presents a potential buying opportunity for investors to consider. Revenue growth remains strong and even though earnings are broadly in line with last year, historically the company has a strong track record of increasing this. This might just be a blip in performance, especially as the firm is in a great position to capitalise on the rise of AI.

Muhammad Cheema does not own shares in YouGov.

The post Best AIM stocks to consider buying in October appeared first on The Motley Fool UK.

However, even by AIM standards, the 53% fall in the YouGov (LSE:YOU) share price — since 31 May — is spectacular and unexpected.

Impressive growth

It’s a surprise because the company has a long track record of steadily increasing its earnings. During the 13 years up to and including the year ended 31 July 2023 (FY23), it grew its earnings per share in 12 of them.

However, on 20 June, the company issued a profits warning for FY24.

The data and analytics technology group announced that it expects earnings to be 32% below analysts’ consensus forecast.

Its share price crashed 46% on the day. This compounded an already disappointing run for shareholders. From the start of 2024 to just before the announcement, the shares had fallen nearly 30%.

But as Warren Buffett famously said: “Be fearful when others are greedy, and greedy when others are fearful”.

Maybe that’s why three directors of the company have recently bought 90,496 shares at a weighted average price of £4.15. They’re collectively sitting on a profit of nearly £39,000.

My own view

When I looked at the company in February I decided to put it on my watchlist for when I next had some spare cash.

I was impressed with the firm’s growth record. And I thought the move towards machine learning and artificial intelligence (AI) would lead to further demand for the data that the business provides.

Data is often described as the most valuable asset in the world. And YouGov has loads of it.

Even after the share price fall — largely as a result of lower-than-anticipated sales in its Data Products division and reported challenges in Germany, Austria and Switzerland — I remain a fan of the firm.

I view its problems as a temporary blip rather than a sign of anything fundamentally wrong. The shares are now trading on a lower multiple than before the profit warning and I do think the market has overreacted to the bad news.

However, I don’t want to invest at the moment.

That’s because my confidence in management has taken a bit of a knock. It wasn’t that long ago — on 26 March to be precise — that YouGov said it was “confident in achieving current market expectations for the full year”.

Oh dear.

I’m also concerned about the company’s relatively high gearing. This is something I’m going to keep an eye one.

YouGov has grown largely as a result of acquiring other businesses. Much of this expansion has been funded by debt. On 31 January 2024, the company’s balance sheet included borrowings of £213.7m. This is £24.7m more than the book value (equity) of the firm.

For these reasons, I want to wait and see the next trading announcement (scheduled for 6 August) before reviewing the situation once more.

The post After nosediving 53% in 8 weeks, could this be one of the best AIM stocks to buy right now? appeared first on The Motley Fool UK.

Two options I want to take a closer look at are B&M European Value (LSE: BME) and YouGov (LSE: YOU).

Let’s check what’s happened, and break down their investment cases to help me decide.

B&M

Discount retailer B&M has been on my radar for some time. The business has been on a remarkable growth journey for many years.

However, the shares are down 13% over a 12-month period from 536p at this time last year, to current levels of 464p. A sharp drop in June was caused by a mixed trading statement.

At the time, I thought that the reaction to the earnings update was overcooked. I stand by that view. The biggest issue was flat operating cash flow and adjusted earnings.

From an investment perspective, I’m a fan of B&M shares and would definitely look to snap up some shares when I next can. It’s now an even more attractive prospect due to a better entry point.

The way in which B&M continues to dominate supermarket giants, as well as continue to grow, is not to be sniffed at. It has made the most of the recent cost-of-living crisis. Plus, let’s face it, who doesn’t like a bargain!

At present, the shares trade on a price-to-earnings multiple of 12. Furthermore, a dividend yield of 7% – albeit slightly inflated by a falling share price – sweetens the pot. However, I do understand that dividends are never guaranteed.

From a bearish view, competition in the grocery sector is intense. This includes the so-called big four, as well as challenger supermarkets, Aldi and Lidl. With consumers looking for more bang for their buck, these firms have put a huge emphasis on budget ranges. As B&M only offers branded premium goods, albeit at discount levels, there’s potential for earnings and returns to be dented.

YouGov

Market research industry-leader YouGov experienced a mammoth 46% drop in one day last month due to a profit warning. I must admit, prior to that, the firm was on my radar anyway, but this piqued my interest even further.

The shares are down a huge 58% over a 12-month period from 1,055p at this time last year, to current levels of 440p. Ouch!

YouGov reported that revenue would come in 5% lower than expected. Not the end of the world. But, wait for it, earnings would come in 32% lower! This is a prime example of forecasts being way off the mark. It’s also why I always take them with a pinch (or in this case, a bucket) of salt.

There is plenty of meat on the bones to suggest a recovery could occur. Its dominant market position, as well as past track record, can’t be ignored. Plus, the rise of artificial intelligence (AI) and how YouGov could capitalise and use this to grow earnings and returns, is something I’m taking into account.

However, after recent events, as well as a lot of debt on its balance sheet, I’m not convinced.

I’m going to keep an eye on developments, but I won’t buy YouGov shares right now.

The post 2 UK shares near 52-week lows I’m considering snapping up appeared first on The Motley Fool UK.

However, the stock topped-out — as these well-known growth stories often do. Valuations can’t keep increasing forever, and nosebleed multiples often correct in the end because investors take profits.

What really torpedoed the share price though, was June’s update on trading.

A dip in profits

The firm said sales bookings were lower than anticipated. Full-year adjusted operating profits to the end of July will likely come in well down from forecasts.

Shareholders didn’t hang around to ask questions. Instead, many simply pulled the ejector seat handle and sold up. The outcome was a crash of almost 50% for the already-weakened share price.

However, it wasn’t all bad news in that fateful update. The company said it had seen increased demand for customised search solutions. On top of that, the consumer panels business was performing well.

But despite those positives, sales in the data products division were slow and there had been declines in fast-turnaround research services. On top of that, the company said it had experienced “challenges” in the Europe, Middle East, and Africa regions.

Looking ahead, the directors said they will focus on optimising the cost base and prioritising investment in “key” growth areas for the coming trading year. The intention is to upgrade the company’s data products, build on its artificial intelligence (AI) capabilities, and enhance the sales organisation.

A strong earnings rebound ahead?

City analysts are optimistic about the potential for recovery and have pencilled in 48% surge in normalised earnings for the trading year to July 2025. If that happens, earnings will be at a new high. So have we merely seen a temporary setback in YouGov’s growth trajectory?

If we have, the fallen stock price may be a value opportunity and a chance to pick up shares in a former growth darling at a knock-down price.

However, there are risks. We’re not used to seeing earnings plunge like they have. So has the spell been broken?

YouGov just demonstrated its ability to disappoint and may never again attract the rich levels of valuation it once did. On top of that, if earnings can plunge in one year, why not in another ahead? Can we trust YouGov to grow consistently in the future like it has in the past?

Because of these uncertainties, YouGov’s valuation looks cheaper now than for years. With the share price near 458p, the forward-looking price-to-earnings ratio for next year is around 12.

Despite the risks of the business going ex-growth and other unknowns, I reckon it’s a good time to conduct deeper research into YouGov now. If the company can keep hold of its mojo, it may prove to be one of the best-value growth stocks around.

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The data and analytics technology group announced that it expects revenue to be around 5% below the consensus forecast of analysts. And — rather alarmingly — earnings to be 32% lower.

Prior to releasing the news, the company was expected to record an adjusted FY24 operating profit of around £62m. Its shares were trading on a multiple of 15 times this figure.

It’s now anticipating a profit of £41m-£44m. After the recent fall, its market-cap is currently 11 times higher. On the face of it, the company’s shares are now offering better value than before they crashed.

But I think there are a number of reasons why the position in which YouGov finds itself is more complicated than this.

Doom and gloom

Primarily, there was little positive news to accompany the profits warning.

Sales have been slower than anticipated in its Data Products division with its “fast-turnaround” research services affected the most.

The company also reported “challenges” in Germany, Austria and Switzerland.

And although its newly-acquired Consumer Panel Services business is said to be performing in line with expectations, some of its sales will now slip into FY25.

Also, the company has borrowed heavily to help fund its expansion. At 31 January, its balance sheet disclosed debt of £214m. This is more than the company’s book (accounting) value of £189m.

If YouGov isn’t able to grow its earnings, its ability to borrow more will be restricted. It will then be unable to expand through acquisition, further damaging its earnings growth.

Two magic words

However, despite these warning signs, I believe artificial intelligence (AI) has the potential to transform its business.

For a while now, the company’s been using machine-learning to improve the accuracy of its predictions. It’s also adopted AI to detect and remove ‘suspect’ respondents to its surveys.

But AI models need to be ‘trained’ using vast quantities of data. And YouGov is well placed to provide this information.

The company also has an excellent track record in increasing its profits. During the 13 years to FY23, it grew its earnings per share in 12 of them.

Not convinced

But despite these positive reasons to invest, my confidence in the company has taken a bit of a knock.

On 26 March, the directors told shareholders: “While the overall weakness in macro sentiment may impact the speed and level of some client spending, we remain confident in achieving current market expectations for the full year”.

For the business to decline so badly — in less than three months — makes me nervous. I’m therefore going to watch from the sidelines with a view to revisiting the investment case when I know more about the company’s performance.

The post After its share price crashed 46% in a day, is this a bargain basement value stock? appeared first on The Motley Fool UK.