Today I’m discussing three little-known growth stocks that I consider to be hot buys at current prices.
A Genuine V(I)P
I’m not going to pretend that VP doesn’t carry some degree of risk. The rental equipment provider sources the lion’s share of its profits from the UK, of course, and therefore is in danger of suffering some trading troubles as the Brexit saga damages the domestic economy.
There’s two schools of thought that suggest the small cap is still a great buy, though. Firstly, its rock-bottom valuation, a forward P/E ratio of 10.8 times, reflects the possibility of some trading stress materialising and dampening profits growth.
And secondly, VP has showed great resilience despite the worsening economic backcloth over the past year or so -- pre-tax profit leapt 22% in the six months to September, to £25.9 million -- and as it continues heavily investing in its fleet the stage looks set for it to keep on growing profits at a decent pace.
Indeed, City analysts are forecasting bottom-line rises of 7% and 8% in 2019 and 2020 respectively.
Now Tyman, which manufactures components for doors and windows, may not have delivered consistent, double-digit-percentage profits growth over the past half a decade like VP has. It’s still to be lauded as earnings have still risen solidly year after year in that period, though, and the number crunchers expect the small cap to keep up the pace (rises of 7% for 2019 and 10% for next year are currently anticipated).
And why wouldn’t they be so bullish? Despite the impact of adverse exchange rates and tougher conditions in the US building market in the second half of 2018, Tyman was still able to grind out profit before tax of £38.9 million, a figure that was up 13% year-on-year.
The condition of the company’s order books certainly give reason to be optimistic. These were described as being “promising” at each of its divisions and at group level orders were up 8% on like-for-like basis as of December.
Right now Tyman changes hands on a prospective P/E ratio of 9 times, below the widely-acknowledged bargain basement of 10 times and a figure that fails to recognise its exceptional growth profile in my opinion.
And I believe the same sentiment can be extended to Georgia Healthcare Group, too. The small cap currently carries a weightier forward P/E ratio of 16.5 times, although it could also be considered that a corresponding sub-1 PEG ratio of 0.3 makes it a bargain relative to its growth picture -- City brokers are anticipating profits advances of 55% in 2019 and 37% in 2020.
Soaring healthcare demand in the Eurasian state of Georgia meant that pre-tax profits at this stock jumped more than 16% in 2018 to 53.9 million Georgian Lari, but the fast-growing domestic economy and subsequent impact on sales isn’t the only reason to be excited. The hospital, pharmacy and medical insurance operator is also seeking to develop medical tourism in the country, providing it’s rock-solid growth story with an extra shot in the arm. I’m backing this business to deliver some seriously-great shareholder returns long into the future.