These under-the-radar stocks popped in July. I think there could be more to come

Looking for stocks showing positive momentum? These two had a great last month, reveals Paul Summers.

| 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.

Research has consistently shown that momentum investing — buying stocks that have already gone up in price on the hope that they will continue doing so — can work extremely well for investors.

So it’s always worth keeping an eye out for companies making positive moves in the market and here are two of July’s biggest winners from lower down the spectrum.

On the mend

Despite an awful 2018 in which the share price pretty much halved in value, I’ve always had a soft spot for veterinary services provider CVS Group (LSE: CVSG). After all, pet-obsessed Brits spend a huge (and growing) amount of money on their companions every year. That won’t change, regardless of what happens on 31 October

Aside from operating in a resilient industry, last week’s update for the year to the end of June also suggested trading at CVS has bounced back to health. At £406.5m, total revenue was 24.2% higher than in 2017/18. Earnings are also expected to be in line with the new targets set by analysts following the company’s positively-received update in June. 

Importantly, CVS revealed it had seen a fall in the number of vacancies for veterinary surgeons and nurses — an issue that had dogged the company for some time. This has, in turn, led to a reduction in locum spend and overall employment costs over H2. 

In other good news, the firm said the disappointing performances of its three new divisions (The Netherlands, Farm and Equine) earlier in the financial year had been reversed as a result of actions taken by management. Existing holders may also be reassured by the decision to adopt a more cautious approach with regard to future acquisitions to ensure the company doesn’t overpay in attempts to expand its estate. 

Shares in CVS are up 25% in July and currently trade on a valuation of 19 times forecast FY2020 earnings. While not exactly cheap, I think anyone buying at this level will probably still do well, considering the recent return to form.

Seeing gains

Another market minnow making impressive gains over the last month has been driver monitoring specialist Seeing Machines (LSE: SEE). Shares in the £140m-cap — whose technology helps spot when people are tired or distracted behind the wheel — have accelerated 42% in July alone, thanks to a flurry of positive news.

Only yesterday, the company revealed it had won a four-year contract with coach operator National Express to have its Guardian Driver Safety system fitted in around 700 of the latter’s vehicles by the end of 2019.

This win follows hot on the heels of last week’s announcement that Seeing’s FOVIO driver monitoring system (DMS) had been selected by an automotive Tier 1 supplier to be installed in additional models for an existing German OEM customer in an effort to meet the safety targets set down by the European New Car Assessment Programme.

This important milestone confirms Seeing Machines’ ability to scale our technology and participate in a broadening DMS market, including entry level solutions targeting Euro NCAP goals,” said new CEO Paul McGlone. 

With the European Parliament also calling for driver monitoring technology to become mandatory in all new cars sold in Europe from 2022, I’m optimistic that Seeing Machines will continue attracting more attention from (risk-tolerant) investors going forward.  

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.

Paul Summers owns shares in Seeing Machines. The Motley Fool UK has no position in any of the shares mentioned. 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

How much would I need to invest in income shares to earn £300 a month?

What kind of lump sum would be required to earn £300 a month by taking advantage of some of the…

Read more »

Investing For Beginners

Up 31% in a month, could this FTSE 250 stock be getting bought out?

Jon Smith takes a look at speculation that's pushing the share price of a FTSE 250 share higher and considers…

Read more »

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »