Sophia Iacovou No Comments

5 Growth stocks to buy for your ISA

In our latest report we take a look at 5 UK listed stocks with great growth potential that we would buy for our 2017 ISA.

In the report we take a look at the fundamental and technical case for each stock

Bango PLC

Bango PLC (Bango) offers the Bango mobile payment platform. The Company’s principal activity is the development, marketing and sale of technology to enable mobile phone users to make payments for digital content and media on smartphones and tablets. The Company’s segments include End user activity and Platform fees.

The End user activity segment includes the content access fees paid by end users for accessing chargeable content provided by digital merchants, adjusted to take account of whether Bango is agent or principal in the transactions.

The Platform fees segment includes the amounts paid to Bango by digital merchants and others for package fees and other services, including analytics and operator connections. Bango Grid is a resource for Bango application store partners to plan their payments strategy.

Bango Grid enables partners to find the statistics of every mobile operator globally, and a range of other payment methods.

Technicals

The shares have formed a very neat inverse head and shoulders bottom pattern on the weekly chart. The share have now broken above resistance at 115p and look set to move higher over the medium term. The measured move of the bottom formation targets 195p, which is over 60% than its currently trading at.

Fundamentals

Bango scores well in our model when ranked against the 100 largest companies listed on AIM. The shares score very well on growth and quality metrics.

Spending across Bango’s payment platform has increased in line with company expectations so far in 2017

The company is expecting to at least double what it what it calls its end user spend (EUS) rate by the end of this year.

The update on current trading came in a full-year results statement that largely confirmed the numbers for 2016 that were released back in January.

Total revenue doubled to £2.6mln from £1.3mln in 2015, while the annualised EUS at the end of 2016 was up 191% year-on-year at £195mln a year, due to growth from existing and newly acquired channels.

EUS revenue expressed as a percentage of EUS was 1.8%, the same as in 2015, but an improvement on the 1.67% seen in the first half of 2016.

The underlying loss (LBITDA) narrowed to £2.8mln from £3.1mln in 2015.

Cash at the end of 2016 had declined to £5.7mln from £12.1mln a year earlier following the acquisition in May of BilltoMobile Inc.

Bango said the activation pipeline for new routes is stronger than ever with 220 identified opportunities across various stores, including Google, Microsoft and Samsung.

Last year broker Peel Hunt said that Bango reminded them of and early Arm Holdings, which as we know went on to achieve spectacular things. They are now in a world leading position in mobile payment technology. The shares are a decent bet for any ISA or share portfolio.

Bango is listed on London’s AIM. Small cap stocks are considered a risky investment and the value of investment can go down as well as up. The shares have reached as high as 270p and as low as 25p, so clearly there is scope for movement in both directions.

 

IQE Plc

IQE plc is a United Kingdom-based holding company. The Company is engaged in the research, development and provision of engineering consultancy services to the compound semiconductor industry. The Company’s segments include wireless, photonics, Infra Red and CMOS++.

The Company is the manufacturer and supplier of Compound Semiconductor wafers or epiwafers using a process called epitaxy. Its photonics business enables a range of end applications, from data communications and advanced optical-fibers, to sensors in consumer and industrial applications.

It operates through business units, including wireless, photonics, InfraRed, CPV (advanced solar), power switching, light emitting diodes (LEDs) and advanced electronics. It produces atomically engineered layers of crystalline materials containing a range of semiconductor materials, such as gallium, arsenic, aluminum, indium and phosphorous. The Company has operations in the United States, Asia and Europe.

Technicals

IQE is trading in a fantastic uptrend with dips towards support continuing to attract buyers. The shares dipped aggresivly intraday yesterday following results, however once fully digested investors took advantage of the cheaper entry levels.

The shares have travelled a long way over the past year, but with a solid history of growth and a being a favourite amongst growth investors, we expect to see higher prices.

Fundamentals

IQE ranks above average in our fundamental model when ranked against the largest 100 stocks listed on AIM. The shares score particularly well on value and momentum metrics.

IQE recently announced a full year profit and revenue growth. The company reported a 16.4% increase in revenue for the year ending 31st December to £132.7m, compared with £114.0m the previous year.

Adjusted pre-tax profits increased 17.4% to £20.6m which was up from £17.6m in 2016.

The share price has tripled in the last year and looks set to continue higher. The photonics business which accounts for 17% of group revenue reported a 4% like for like increase following 2 years of volume declines.

IQE has established itself as a market leader in photonics and infra red and there is no reason to believe that revenues will not continue to grow moving forward. The company has a solid track record of achieving growth, making the shares a great candidate for long term investment in an ISA portfolio.

IQE is listed on London’s AIM. Small cap stocks are considered a risky investment and the value of investment can go down as well as up. The shares have reached as high as 60p and as low as 12p, so clearly there is scope for movement in both directions.

Polymetal International

Polymetal International plc is a precious metals mining company. The Company has a portfolio of over seven operating gold and silver mines and a pipeline of projects in Russia, Kazakhstan and Armenia in Russia and Kazakhstan.

It operates through eight segments: Voro (CJSC Gold of Northern Urals), Okhotsk operations (LLC Okhotskaya Mining and Exploration Company, Svetloye LLC), Dukat (CJSC Magadan Silver), Omolon (Omolon Gold Mining Company LLC), Varvara (JSC Varvarinskoye), Amursk-Albazino (Albazino Resources Ltd, Amur Hydrometallurgical Plant LLC), Mayskoye (Mayskoye Gold Mining Company LLC) and Kyzyl (Bakyrchik Mining Venture LLP, JSC Inter Gold Capital).

Its exploration activities are focused on over five regions in Russia-Khabarovsk, Magadan, Chukotka, Karelia and Ekaterinburg, as well as on Kazakhstan. It has approximately 80 licenses for geological studies and gold, silver, copper and platinum group metals (PGM) mining, covering a total area of over 9,000 square kilometers.

Technicals

Polymetal has pushed higher in recent days and as a result has cleared an important resistance level at around 1000p. We have now completed an inverse head and shoulders bottom pattern that suggest upward potential towards 1217p.

Momentum has been strong in recent weeks and we expect further upside. We recommend buying on pullbacks towards the 1000p level.

Fundamentals

Polymetals scores poorly overall on our fundamental model, our recommendation is weighted heavily towards price action. The shares however do score well on quality and profitability metrics when compared against the largest 300 stocks listed in the UK.

Polymetal has boosted its revenues by 10% but have also ramped up spending at the same time.

Polymetal said capital expenditure has risen by 32 per cent to $271m (£220.54m) and revenues increased 10 per cent to $1.58bn.

Polymetal’s total gold equivalent production stood at of 1.3m oz, exceeding initial production guidance for the fifth year in a row.

The company said its adjusted earnings before income, tax, depreciation and amortisation (EBITDA) was $759m, up 15 per cent year-on-year.

Net debt of $1.33bn remained flat over the previous year’s $1.29bn and the firm declared a final dividend of 18 cents per share, which represents 30 per cent of the group’s underlying net earnings for the second half of 2016.

Panmure Gordon recently increased its price target on Polymetal to 1192p. This is roughly inline with our own 1217p target.

Polymetal is a Russian company and therefore political issues could impact the performance of the shares. The shares can have volatile phases that may result in trading losses.

 

Evraz Plc

EVRAZ plc is a steel, mining and vanadium business with operations in the Russian Federation, Ukraine, the United States, Canada, the Czech Republic, Italy, Kazakhstan and South Africa.

The Company’s principal activities include manufacturing steel and steel products; iron ore mining and enrichment; coal mining; manufacturing vanadium products, and trading operations and logistics. Its segments include Steel; Steel, North America; Coal, and Other Operations.

The Steel segment is engaged in the production of steel and related products at all mills except for those located in North America. The Steel, North America segment is engaged in the production of steel and related products in the United States and Canada.

The Coal segment includes coal mining and enrichment, which includes operations of Nakhodka Trade Sea Port as it is used for shipping of products to the Asian markets. Other Operations include energy-generating companies, shipping and railway transportation companies.

Technicals

The long term chart on EVRAZ displays a very large double bottom pattern with prices ranging from 54p to 210p.

In November 2016 the share price smashed through the resistance at 210p before hitting a high of 280p. The shares have subsequently retreated to re-test the break out level of 210p and so far have held.

The buyers seem keen to jump back in following a successful re-test of support and this should now provide the base to further gains. The measured move to the upside of the double bottom pattern is a massive 366p, over 70% above the current share price.

Fundamentals

When ranked against the largest 300 UK listed stocks, EVRAZ scores poorly in our fundamental model. The basis for the recommendation is heavily weighted towards price action. The shares do score reasonably well on momentum metrics.

Citi Group have recently upgraded the shares as its sees prices for Russian long steel and coking coal catching up with commodities elsewhere. There has been a jump in the price of China long steel on the closure of furnaces and stronger than expected construction demand.

EVRAZ is operating well under capacity and it is expected to enjoy a sizeable volume rise as global long product market tighten in reaction to China.

Coking coal price are still behind the recent of the world and a rebound in price could significantly boost earnings.

We expect to see first-quarter results reflect the coking coal rebound.

EVRAZ is a Russian company and therefore political issues could impact the performance of the shares. The shares can have volatile phases that may result in trading losses.

Halma Plc

Halma plc is involved in the manufacture of a range of products that protect and improve the quality of life for people. The Company operates through four segments: Process Safety, Infrastructure Safety, Medical, and Environmental & Analysis.

The Process Safety includes products, which protect assets and people at work, including specialized interlocks, instruments, and explosion protection and corrosion monitoring products. The Infrastructure Safety includes products, which detect hazards to protect assets and people in public spaces, transportation and commercial buildings.

Its products include fire and smoke detectors and fire detection and suppression systems. The Medical includes products, which enhance the quality of life for patients and improve the quality of care delivered by providers.

The Environmental & Analysis includes products and technologies for analysis in safety, life sciences and environmental markets. It also includes products to monitor water networks.

Technicals

Halma is trading in a very consistent long term uptrend. There has a been a large correction that took place at the end of last year which allowed investors the chance to get involved in the shares at a discount.

The reaction from the trend line has been excellent and following a solid set of results the shares look ready to push on and target the previous all time highs. We recommend buying these shares on pullbacks and tucking them away for the long term.

Fundamentals

Halma ranks above average when compared to the 300 largest listed stocks in the UK. The shares score particularly well on quality and momentum metrics.

Halma announced that they expect full year pre-tax profits to be in line with expectations and are eyeing potential acquisitions.

Last month the company said it would buy US-based multi-spectral imaging provider FluxData for $12m and an earn0out of up to $15.5m for growth to March 2019.

The companies financial position remains strong as it increased its revolving credit facility last November to £550m from £360m for five years.

Barclays has reissued its ‘overweight’ rating in recent days, the consensus generally is bullish with price targets ranging from 825p to 1210p.

Shares can go down as well as up in value. Past performance of a stock is not necessarily a guide to future performance.

 

The value of investments and any income from them can fall as well as rise and you may lose more than you invested. An investment’s past performance is not a reliable indicator of future performance. Tax allowances depend on your personal circumstances and the benefits of tax-efficient accounts could change in the future. Read our full Risk Warning for further information.

Risk warning for Financial Promotion.

This report is issued by Central Markets (London) Limited of America House, 2 America Square, London, EC3N 2LU, which is authorised and regulated by the Financial Conduct Authority, No. 473312. Trading in equities may not be suitable for all investors. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. An investment’s past performance is not a reliable indicator of future performance. Tax allowances depend on your personal circumstances and the benefits of tax-efficient accounts could change in the future. Before you begin to trade, you should obtain details of all commissions and other charges. You should make sure you can afford any potential losses before you begin to trade. Make sure you fully understand the risks involved and seek professional financial advice if necessary. You should only take a risk with money you can afford to lose. If you are in any doubt, please seek further independent advice. Any person placing reliance on the report to undertake trading does so entirely at their own risk and CML does not accept any liability as a result. Information and research produced by Central Markets (London) Limited, does not constitute a recommendation or offer to make a transaction in any derivatives or securities, and is intended to be general in nature. This report is prepared and distributed for information purposes only.

 

 

 

 

Leave a Reply

Be the First to Comment!

Notify of
avatar
wpDiscuz