Two smaller companies are among todays top risers. Both of the stocks in question have released updates which show they have delivered significantly improved performance in recent months. As a result, their shares are up by over 20%. However, does this mean it is now too late to buy them? Or, is there still upside potential?
Cheap growth play
Todays year-end update from building services group T Clarke (LSE: CTO) shows that it is making excellent progress. Its underlying profits for 2016 were substantially ahead of the previousyear. As such, it has entered the current year in a strong position in terms of its cash position and order book. In fact, its cash position improved for the fourth successive year and is now 9.2m, which is 39% higher than at the end of the previous year. Similarly, its forward order book has strengthened to 330m, from 300m a year ago.
Looking ahead, T Clarke is expected to record a rise in its bottom line of 20% in the current year. Given that it trades on a price-to-earnings (P/E) ratio of 9.6, this equates to a price-to-earnings growth (PEG) ratio of only 0.5. As a result, further share price gains seem to be on the cards even after todays 21% price rise.
Of course, the construction industry faces an uncertain future. Brexit could cause inflation to increase via a declining pound and this may hurt demand across the construction sector. However, this risk appears to be sufficiently priced in to T Clarkes valuation and it seems to offer a relatively wide margin of safety at the present time. So, while gains of the magnitude recorded today may not become commonplace, a significant rise in its share price could take place over the medium term.
An improving technology stock
While T Clarkes gains are impressive, technology company Ubisense (LSE: UBI) soared by 33% today, following the release of a trading statement. The enterprise location intelligence specialist showed continued good progress in 2016 versus 2015, with its sales growth, margins, cost management and order book all ahead of the prior year.
The companys increased focus on its Real-time Locating Systems (RTLS )software platform has paid off, with the signing of a global software licence deal with a major automotive manufacturer. Other new and extended RTLS product orders were all signed, which positions the company for future growth. Furthermore, it is in compliance with its banking covenants and expects to report a net cash position as of 31 December 2016, which has improved further during the last month, thanks to substantial debtor collections.
Clearly, Ubisense is a small company that lacks the size and scale of larger industry peer, and is therefore relatively high risk. However, its business seems to be moving in the right direction and with investor sentiment on the up, its share price could keep moving higher over the medium term.
But will this stock outperform both T Clarke and Ubisense in 2017?
There’s another stock that could be an even better buy for 2017. In fact it’s been named as A Top Growth Share From The Motley Fool.
The company in question may not be a stock you’re familiar with, but it could make a real difference to your portfolio returns. It offers a potent mix of growth and value which may boost your investment performance in 2017.
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