Are Paysafe Group Plc, Virgin Money Holdings (UK) PLC And Interserve plc Cracking Growth Bargains?

Paysafe Group Plc (LON: PAYS), Virgin Money Holdings (UK) PLC (LON: VM) and Interserve plc (LON: IRV) could be great low-PEG buys.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’m always on the lookout for tasty growth candidates, and Paysafe (LSE: VM), formerly known as Optimal Payments, might just be one. The mobile payments firm turned a decent profit in 2013, and followed that with earnings per share (EPS) growth of 56% in 2014 — and we’ve just heard of a 15% rise in adjusted EPS for the year ended December 2015.

That came with a 68% increase in revenue, which boosted adjusted pre-tax profit by 60%. The integration of Skrill Group (acquired in August) is apparently going well and contributing to the bottom line. These results were slightly ahead of expectations, and are expected by the City to be followed by a 37% rise in EPS this year followed by another 15% in 2017.

The result, in share price terms, has been a mammoth gain of more than 1,500% since September 2011, with the past year bringing a rise of 73% (although there was very little change on the morning of the results). After all that, the shares are on a forward P/E of 14.4 this year and a PEG of only 0.4 (that’s P/E compared to earnings growth, where anything less than around 0.7 is usually taken as good value for a growth share). And 2017 forecasts suggest a P/E dropping to 12.5 and a PEG of a still attractive 0.8. That doesn’t look stretching for a strong growth candidate and the analysts are rating it a strong buy, but it’s a highly competitive business.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

Banking upstart

Virgin Money (LSE: VM) shareholders have had a rocky ride over the past 12 months, with their shares slumping to 273p on 9 February. But since then they’ve enjoyed a 38% recovery to a healthier 370p. The firm’s first full year as a listed company, ended December 2015, produced a 53% rise in underlying pre-tax profit to £160.2m, and investors snagged a modest 1.2% dividend yield.

But the year just gone is not what’s so good, it’s what forecasters think is still to come that should be exciting growth investors. A predicted 40% gain for the current year would put the shares on a P/E of under 12 which, in more bullish times, would probably be seen as very cheap for such growth prospects. And what’s more, it would give us a PEG ratio of only 0.3.

It’s not just the one year either, as a further 32% EPS rise pencilled-in for 2017 would drop the P/E to just nine and would keep the PEG at that lowly 0.3. The City’s analysts are on a pretty clear strong buy stance for Virgin Money, and I can see why.

Turnaround time?

Support services group Interserve (LSE: IRV) has suffered a 25% share price fall over the past 12 months, to 440p, though that’s up from a low of 360p on 12 February. The company, which serves hospitals, schools, government, and other sectors, has posted several years of steady growth up until 2015. But there’s a 6% dip in EPS predicted for 2016, and that will have taken some of the shine off the growth story and contributed to the poor share price performance.

But there’s a return to growth of 11% on the cards for 2017, which would drop the P/E to just 6.3 (from a still very low 7 for this year), and would hand us a PEG of 0.6. On top of that, there’s a 5.7% dividend yield expected for this year, followed by 6% next, both of which would be well covered.

So, a good low growth valuation with very tasty dividends thrown in, on such an attractive P/E — there must be something wrong, mustn’t there? I can’t see anything myself, and neither can the brokers who have Interserve as a strong buy (with no dissenting sell votes).

This AI stock is becoming a digital juggernaut in a £ 12.5 billion market!

🤖 Curious about the next big player in AI? 🤖

Our leading industry analysts have uncovered a trailblazing content platform that's revolutionising the industry with its unparalleled generative AI technology, setting new standards in creativity and efficiency.

Care for a sneak peek?

Trusted by global giants like Amazon, Disney, and Netflix, this innovative company is not just transforming digital media with AI-generated 3D content but is also capturing a significant share of a £12.7 billion market!

With a remarkable 62% gross margin, indicating exceptional profitability and operational efficiency, this company's growth trajectory positions it as a must-watch for savvy investors.

Best of all, we're offering exclusive access to the name of this game-changing stock, absolutely free!

Discover your free AI stock pick

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

Here’s how a first-time investor could start buying shares with £3k

Is it possible to start buying shares with £3K? Yes it is -- and here our writer goes into some…

Read more »

ISA Individual Savings Account
Investing Articles

Thinking of starting a Stocks and Shares ISA this April? Avoid these 4 mistakes!

A Stocks and Shares ISA can be a way for an investor to try and build wealth over the long…

Read more »

ISA coins
Investing Articles

Here’s how to build a £100k ISA starting with £5k today

Increase an ISA's value 20-fold? It need not just be the stuff of dreams, according to this writer -- though…

Read more »

A senior man and his wife holding hands walking up a hill on a footpath looking away from the camera at the view. The fishing village of Polperro is behind them.
Investing Articles

6.9% yield! I just added this share to my SIPP

In a turbulent stock market, our writer has been hunting for bargains to add to his SIPP. After a 31%…

Read more »

piggy bank, searching with binoculars
Investing Articles

With Rolls-Royce shares moving up again, is a £10 price target back on the horizon?

Rolls-Royce shares wobbled when President Trump dropped his tariff bombshell on us. But three weeks is a short time in…

Read more »

UK financial background: share prices and stock graph overlaid on an image of the Union Jack
Investing Articles

2 UK stocks to consider buying as the market sell-off continues

Stephen Wright thinks investors looking for opportunities might be able to take advantage of short-term weakness in some UK stocks.

Read more »

Closeup of "interest rates" text in a newspaper
Investing Articles

1 stock for passive income investors to consider buying before the Bank of England cuts interest rates

With the Bank of England’s Monetary Policy Committee set to meet in May, passive income investors should think about how…

Read more »

Tesla building with tesla logo and two teslas in front
Investing Articles

Is Tesla about to become the ultimate passive income machine?

Our writer discusses whether Tesla stock might be worth him buying, just in case the EV giant enables passive income…

Read more »