Clipper Logistics plc is a high-growth mid-cap I’d retire on

Clipper Logistics plc (LON: CLG) has huge growth potential.

| More on:

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.

Clipper Logistics (LSE: CLG) has only been a public company since 2014, but the company has quickly captured the attention of investors.

Revenue and earnings have expanded rapidly over the past three years, and investors have been well rewarded for this growth with shares in the group gaining 243%, excluding dividends, since listing.

And there could be further gains ahead. Today the company released its final figures for the fiscal year ended 30 April, which show growth across the board. Group revenue for the period increased by 17.2% from £290m to £340m and earnings before interest and tax increased 21.8%. Profit before tax surged 20.6%, and earnings per share increased drastically by 20.5% from 10.3p for fiscal 2016 to 12.5p. Cash generated from operations rose 25.2% to £25.7m and on the back of this impressive growth in cash flow, management declared a 20% increase in the company’s dividend per share to 7.2p.

Should you invest £1,000 in Esken right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Esken made the list?

See the 6 stocks

You might not have heard of Clipper, but you’ve almost certainly used the company’s services at some point. It provides essential logistics services to the UK retail sector. Customers include ASOS, Morrisons, Halfords, John Lewis and other high street retailers as well as parcel delivery services. As the UK’s consumers increasingly move away from the high street, Clipper is well placed to capitalise on this shift. The company operates click and collect services as well as returns services for a number of retailers. According to today’s update, it has a “strong pipeline of new business opportunities” with both existing and new businesses.

Bright growth outlook

City analysts are highly excited about the group’s growth potential predicting a 29% increase in earnings per share for fiscal 2018, followed by growth of 25% for fiscal 2019. If the company hits these lofty growth targets, it will have doubled earnings per share in four years. Pre-tax profit will have grown fivefold since 2014. 

Unfortunately, this kind of growth does not come cheap. Shares in Clipper are currently trading at a forward P/E of 26.9 based on fiscal 2018 estimates. However, compared to projected earnings growth of 29%, this valuation does not seem overly demanding. There is also the potential for accelerated growth through acquisitions.

So, as a long-term buy, to capitalise on the consumer shift away from the high street, Clipper might be a great investment.

Undervalued spinoff

Another fast-growing logistics play is Eddie Stobart Logistics (LSE: ESL). Spun off from its parent company last year, City analysts expect the transport group to report earnings per share of 10.9p for the year ending 30 November 2017. For the following fiscal year, analysts have pencilled in earnings per share growth of 14% to 12.4p, giving a 2018 P/E ratio 13. 

Once again, compared to the earnings growth rate this multiple seems to undervalue the business. As revenues grow, analysts also believe management will initiate a dividend payout of 5.6p per share for 2017 and 6.4p per share for 2018, giving a current dividend yield of 3.9% for 2018 at current prices.

Whereas Clipper is a more specialist retail logistics provider, Eddie Stobart provides a broader range of transportation services for clients and therefore, the company might be a better buy if Brexit uncertainty hits the UK consumer. Stobart won’t escape unscathed from such a downturn, but the company’s diversification across the rail, warehousing and trucking industries helps mitigate consumer exposure.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. 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.

More on Investing Articles

Investing Articles

Is the Lloyds share price recovery finally kicking off thanks to the Treasury?

The Lloyds Bank share price has gained almost as much so far in 2025 as it did over the whole…

Read more »

Arrow symbol glowing amid black arrow symbols on black background.
Investing Articles

Down 37% despite hitting £2bn+ in sales, does this FTSE 250 firm look an unmissable buy to me?

This FTSE 250 fast-food retailer just hit the £2bn sales level, but its shares have tumbled. So what’s behind it…

Read more »

Electric cars charging in station
Investing Articles

Has a 2025 Tesla stock crash already started?

Tesla stock has been on a big climb in the past few months. But are investors being a bit over-ambitious…

Read more »

Investing Articles

Here’s what I’d need in an ISA to earn £1,000 of passive income a month

When we aim to generate a passive income stream using our ISA allowance, we need to pick and choose our…

Read more »

Investing Articles

Nuclear energy is on-trend: are Rolls-Royce shares my best option?

Rolls-Royce shares have surged in recent years, but investors are keen to see whether the engineering giant can capitalise on…

Read more »

Electric cars charging in station
Investing Articles

£10k in Tesla shares would have returned $100 per day since the US election!

Tesla shares have soared since Trump won the US election and tipped CEO Elon Musk as a potential advisor. What…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Here’s a cheap UK stock that could soar while Donald Trump’s US President

Looking for UK stocks that might benefit from Donald Trump's second term as US President? Here's a value share to…

Read more »

Older couple walking in park
Investing Articles

5 UK shares to consider buying for a £36k+ passive income in retirement!

Building a well-balanced portfolio of UK shares can significantly improve an investor’s chance of retiring comfortably.

Read more »