EKF Diagnostics (LSE: EKF) was setting the pace in Thursday business following the release of terrific trading details.
The medical play was last 8% higher on the day after hitting two-and-a-half-year peaks of 26p per share earlier in the session.
EKF announced that “trading in the second quarter of the year has continued the favourable trends experienced in the first quarter,” adding that Junes sales had been particularly strong. The Cardiff business said that this “is entirely due to organic growth with no major tenders won during the period.”
As a result, the AIM-listed firm advised that adjusted EBITDA for 2017 should ring in “comfortably ahead” of current projections.
And to round off a perky announcement, the blood testing star declared that, as a result of strong cash generation, that net cash as of June 30 stood at £4m. This is a vast upgrade from net cash of £2.2m posted at the end of 2016.
Set to bounce?
The City had already been predicting strong bottom-line growth prior to today’s release, forecasts pointing to pre-tax profit of £3.6m versus last year’s £1m loss. And profits were expected to tip to £4m in 2018.
But today’s release is likely to lead to seismic upgrades to these numbers in the near term. And further upward revisions are very likely should EKF keep up the momentum. As such, I reckon the stock is a great pick despite its conventionally-high forward P/E ratio of 31.3 times.
A champion boxer
DS Smith (LSE: SMDS) is another London growth giant that investors should take a close look at.
The company has proven to be a reliable growth generator for some years now, and the number crunchers expect further expansion of 3% and 6% in 2017 and 2018 respectively. These figures also make it decent value for money, sporting a prospective P/E rating of just 14.5 times.
The box-builder’s stock value also exploded recently after the release of perky financials, the London business gaining fuel after last week’s full-year results and striding to fresh record peaks above 485p per share just today.
DS Smith declared that revenues detonated 18% in 2016, to £4.9bn, a result that powered adjusted pre-tax profit 18% higher to £391m. While sterling weakness gave the top line a welcome boost, this does not tell the whole story as sales at constant currencies still rose by a healthy 6% year-on-year.
The packager’s programme of spreading its wingspan across the continent continues to pay off handsomely. It noted “continued excellent growth from pan-European customers” and enjoyed growth in all of its regions last year.
DS Smith shelled out £85m on acquisitions last year alone, and its appetite for M&A shows no signs of waning. The company has also bought an 80% stake in Interstate Resources this month for £722m, with an option to buy the remaining share within five years, in a move that marks its first foray into the massive US market.
I am confident the huge investment it is making to bolster its global footprint and position in key growth areas should continue to deliver meaty earnings growth in the years ahead.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended DS Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.