I reckon most investors have room in their portfolio for a growth share or two, and Im looking at three that I think have great potential for the coming year and beyond.
A falling bargain
Shares in BTG (LSE: BTG) have had an erratic year, losing 14% over 12 months to todays 565p, despite a number of upwards spikes along the way. The firm operates in the specialist healthcare market, and thats a solid business to be in.
At the first-half stage reported in November, BTG announced a 24% rise in revenue (10% at constant exchange rates), and recorded a modest 4% rise in adjusted operating profit although adjusted EPS did drop by 5%.
Chief executive Louise Makin said that the outlook for the full year is strong, and told us the firm is expanding its Interventional Medicine business with a view to building leadership positions in selected areas of interventional medicine.
Why the share price fall? Well, growth investors often desert a company when earnings rises slow. But such years are to be expected, and forecasts for the following year suggest earnings growth of 45%. That would give us a P/E of 17 and a PEG ratio of just 0.4 (where less that 0.7 is usually seen as very good).
I see an emotional over-reaction thats left us with a nice buying opportunity.
A storming rise
My second pick is also in the health business, and its NMC Health (LSE: NMC). In this case weve seen a very strong year with the share price up 61% to 1,452p and over five years its soared by 575%.
You might balk at buying shares after theyve climbed so far you might not want to be holding them when a slow year comes along. But the thing is, even with that track record, NMC shares still look cheap on fundamentals to me.
For 2016, analysts are expecting a 47% rise in EPS, with a further 34% next year. Theres a dividend too, though its still early days in the firms development and yields are tiny. PEG ratios stand at 0.5 for this year and for next, with a 2017 P/E of 18.
Prospects look great, with the firm having acquiring the Al Zahra Hospital this month and having launched a successful placing.
Finally Im turning to small oil and gas explorer Indus Gas (LSE: INDI). Indus shares were flying high until September, when they took a tumble as it looked like the wheels might be coming off the tentative oil price recovery.
Full year results were positive overall, but Induss cash and debt position was looking a little risky. Although there was an operating profit of $33.15m, capital expenditure was high, there wasnt much cash on the books, and debt at 31 March stood at $321m with $37.56m due within a year.
But we also heard that during the next 12months, we expect a further step change in the growth of the company, and the analysts do seem to be on board. EPS by March 2107 is expected to rise by 134%, putting the 292p shares on a PEG of just 0.1, with a 2018 PEG of a still very attractive 0.4.
The price of oil does need to recover further and I can see investors remaining cautious, but this year could be transformational for the fortunes of Indus.
Are you investing for growth?
Finding good growth shares can bring you riches, and the Motley Fool’s expert stock-pickers are always looking for great new candidates across the market. And they want to share their findings with you.
Their unmissable report, A Top Growth Share From The Motley Fool, identifies a classic British success story thathas grown to bring in more than 160m inoverseas sales.
If you want to know which company they’re talking about, click here now for your own personal copy of the report, which won’t cost you a penny.
Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended BTG. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.