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Investing in growth stocks can be an excellent strategy for long term. If a companyâs earnings are accelerating for two or more quarters, it implies that the growth is accelerating. Companies with high profit margins, good dividend yield and increase in revenue are always decent indicators for stocks that have growth potential. Today we will see three such stocks which can be considered for growing your portfolio.
WISETECH GLOBAL LIMITED (ASX:WTC) â The company acquires CargoIT lately which is a leading Swedish logistics solutions and customs provider. The companyâs return on equity (ROE) which is broadly in line against 1HFY17 stood at 7.1% in 1HFY18. Meanwhile, the stock seems to be overvalued at current price and it traded at very high PE level of 112.590x among its peer group. The global operations continued to deliver high quality growth in the financial year 2018 with revenues up 44% to $221.6m, EBITDA up 45% to $78m and net profit after tax is $40.8 million which reflects a positive bottom line. The stock is trading higher at $15.760 as at November 15, 2018. Over the past 12 months period the stock has witnessed a performance change of 31.40%.Â
XERO LIMITED (ASX:XRO) â Xero introduced more than 1,500 feature and product updates, over the past 12 months. The current ratio of the company stood at 1.93x in 1HFY18 which reflects the ability to pay off short term obligations. The company has strong growth with disciplined execution with operating revenue of $256.5 million which is +37% year on year and EBITDA excluding impairments is of $34.5 million which +$17m year on year (YOY). Australia and New Zealand contribution improved 39% YOY, outpacing revenue trends and highlighting continuing efficiencies and operating leverage. The stock is trading higher at $40.650 as at November 15, 2018. Over the past 12 months period the stock has witnessed a performance change of 39.89%.
NEXTDC LIMITED (ASX:NXT) â The company on the financial front against the value of 0.7% in 2HFY17 has a return on equity (RoE) at 1.6% in 1HFY18, marking the growth of 90 bps on six months basis. Meanwhile, the stock seems to be overvalued at current price and it traded at high PE level of 272.440x among its peer group. The revenue of the company was up by 31% to $161.5 million and the underlying EBITDA up by 28% which is at $62.6 million. NEXTDC raised an additional $300m in senior unsecured notes (Notes IV) in July 2018, bringing pro-forma cash and term deposits to $718m. The stock is trading at $6.000 as at November 15, 2018. Over the past 12 months period the stock has witnessed a performance change of 16.32%.
The 12-month forward dividend yield for the stocks are provided in the chart below:
WTC, XRO, NXT 12M dividend yield, Source: Thomson Reuters.
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.
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