GB Group(LSE: GBG) doesn't exactly have an exciting name, but you could be forgiven for dancing with glee if you'd bought some shares five years ago as you'd be sitting on a four-bagger now.
Earnings per share multiplied 2.6-fold between the years ending March 2013 and 2017, with the shares on consistently low PEG ratings. That kind of growth usually comes at a price, and at 401p the shares are now rated on a forward P/E of 31 for the current year, dropping to 27 next. But I don't think that's too stretching.
What does GB Group do? The company bills itself as an identity data intelligence specialist, and its services are used in the growing fight against fraud. That is already big business today, and I can't see any drop off in demand for this kind of service in the next few decades.
A trading update Tuesday revealed a 40% rise in revenue in the first half of the year, to £52.6m, which represents organic growth of approximately 17% -- including £3.5m from the signing of a perpetual licence with a "leading European bank".
The firm expects to report a 90% rise in adjusted operating profit, to more than £10m, which is ahead of expectations -- and I can see forecasts being upgraded now.
While growth looks good, dividend seekers might be unimpressed by a yield of under 1%. But it's strongly progressive and rising way faster than inflation, with forecasts suggesting a doubling between 2013 and March 2019. And it's eight times covered by earnings.
That suggests the potential for a much bigger dividend as this company matures from its early growth phase, and I see a long-term cash cow here.
There's been an even more impressive gain from CVS Group(LSE: CVSG), whose shares have eight-bagged in the same period, to 1,345p.
The company, which describes itself as "the UK's leading provider of integrated veterinary services", is in a perhaps more obviously growing business -- more and more people are spending more and more money looking after their domestic animals than ever before, and I really can't see that declining any time soon.
Again we're seeing a relatively high forward P/E, of around 29, but again I don't think that's too high for a company with this kind of long-term potential. I expect we'll see some price volatility as CVS gets to maturity and earnings growth slows a little, but by then I think it will be well on its way to providing a good dividend income.
Dividends to come
Dividend yields are currently low at around 0.4%, but we're looking at around nine-fold cover by earnings -- and another progressive policy.
If forecasts come good, by June 2018 investors will have enjoyed a 2.7-fold rise in their annual dividend payment, and I see potential for a lot more than that over the next decade and more.
But right now, that cash looks to be better spent on acquisitions, with July's update telling us of 62 more surgeries having been bought up at a cost of £47.4m. There's net debt too, albeit of a quite modest £68m at the interim stage, and that's a likely target for spare medium-term cash too.
Overall, I see a good bit more growth to come, with another cash cow in the making over the longer term.
A million by retirement
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Alan Oscroft has no position in any of the shares mentioned. 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.