When it comes to looking for stocks that can generate huge returns, it can pay to look away from mainstream stocks that receive constant coverage. Many smaller companies receive very little attention from the broker community and as a result, its often possible to find fast-growing companies that are not priced efficiently. Here are two companies that stand out to me as high-growth opportunities.
Somero Enterprises
With President Trump looking to spend $1trn on infrastructure in coming years, I reckon Ive found the perfect under-the-radarbusiness to capitalise on this building boom.
SomeroEnterprises (LSE: SOM)specialises in producing laser-guided equipment that assists in the installation of concrete slabs. Someros equipment and technology ensures a high level of precision in concrete surface flatness, resulting in the faster installation of each slab at a lower cost. Although the company has operations in Europe, China, the Middle East and Australia, the bulk of the itsrevenues are generated in the US.
The laser specialists shares have surged higher over the last 12months, rising over 100%, and its not hard to see why when weexamine the numbers. Somero generates a high return on equity (33%), a high operating margin (27%), strong cash flow and has minimal debt. Revenue has increased 76% over the last three years and earnings per share have risen from 13 cents to 28 cents in this time. 2016 results announced in March were excellent, with revenue jumping 13% and profit before tax increasing 22%.
However despite the impressive numbers, Somero trades on a forward looking P/E of 15.3, which seemsattractivefor a company that should enjoy tailwinds from Trumps infrastructure boom. A dividend of 2.6% is also on offer, further sweetening the deal.
Augean
Hazardous waste specialist Augean (LSE: AUG) also looks like an interesting opportunity in my opinion.
Revenue jumped 25% last year and while earnings were a little lower than in 2015, City analysts covering the stock (all two of them) are forecasting earnings growth of a huge 43% for FY2017. The 6.2p consensus earnings figure places Augean on a forward looking P/E ratio of just 10.3, which seemsexcellent value given the fact that revenue has grown at an annualised clip of 19% over the last five years.
Management released an upbeat statement in March, stating that the company had seen an encouraging start to 2017 with a growing sales pipelineand that the board remains confident of maintaining its track record of year-on-year increases in profitability in 2017.In a further statement of confidence, the company also hiked its dividend by 54% for the year to 1p per share.
The stock has been trending upwards over the last five years, gaining approximately 70% in this time, and if revenue and earnings continue to increase in the coming years as analysts expect, I see no reason why the uptrend cant continue.
Do you want to be a millionaire in retirement?
While there’s no doubt that fast-growing smaller companies can significantly boost your wealth, if you’re looking to achieve millionaire status there are things you need to know.
That’s why The Motley Fool recently publishedYour 10Step Guide to Making a Million in the Market.
The report is FREE and can be downloaded within seconds, simply by clicking here.