Shares in Workspace Group(LSE: WKP) had a bad time in 2016, suffering from a general property-led malaise and getting a further kicking from the Brexit result. But since October they've been bouncing back, and have now gained 250% over the past five years.
The company, which rents out offices, studios, and warehouses to small and medium sized enterprises in London and the South East, recorded an earnings per share rise of 14% for the year to March 2017, lifting EPS 2.5-fold since 2013's 12.2p to 30.6p -- and we have the same again forecast for this year and next.
And going by Friday's first-quarter update, things are looking good. The company spoke of strong customer demand with 1,055 enquiries and 95 lettings per month on average, which is very close to last year's Q1 figures.
Acquisitions in Fitzrovia and Moorgate for £257m have added 333,000 square feet of lettable space, and the new 58,000 square foot Record Hall business centre in Holborn opened in May and 50% was already let or under offer by June.
Workplace offers flexible packages and provides connectivity, and that does appear to suit the direction the London business rental market is taking.
My only reservation is the P/E multiple, which currently stands at 25 based on forecasts for March 2018, dropping to 22 by 2019. That might seem a little high and the shares could suffer if there's any significant rental cooling in London over the next few years.
But I really don't see that happening, and I see Workspace's progressive dividend as another reason to buy -- the yield currently stands at around 3%, having soared from 9.7p per share in 2013 to 21.1p this year.
Telecoms used to be a big growth sector, but it seems somewhat overlooked in recent years. That's what I see when I examine Telit Communications(LSE: TCM), whose shares have been on a bit of a slide since April.
That's despite the company having trebled its earnings per share between 2012 and 2016, and having introduced a progressive dividend.
There is no real EPS growth forecast for this year, and a first-quarter trading update in April confirmed that things were going according to expectations, so there's likely to be some of that common growth stock phenomenon where a lot of shareholders sell up as soon as they see a slowdown in growth.
But forecasts suggest a return to upwards momentum in 2018 with a 34% EPS boost, and that would get the firm's PEG ratio back to the low levels it's seen during the past five years -- a value of 0.3 for 2018 looks very attractive to me, especially as the P/E would drop to around 10.4.
At the end of the last financial year, net debt stood at $17.7m, though that was after shelling out $15.4m for acquisitions and $9.8m in dividends. With a market cap of around £350m ($450m) and annual revenues of $370m, I don't see that as any problem at all.
Internet of Things
And the firm's specialist area, the Internet of Things (IoT), looks set for considerable expansion in the medium-to-long term.
Chief executive Oozi Cats said, after the firm's purchase of Gainspan Wi-Fi, "We have a full scope of communications technologies in order to provide the comprehensive end-to-end IoT solutions that our multinational customers require."
All in all, I see an attractive growth prospect here.
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Alan Oscroft has no position in any 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.