When a diverse company is starting to stagnate, it's often best to abandon all non-core businesses and specialise.
Hays(LSE: HAS), which started out operating wharves and warehouses on the Thames in 1867, decided in 2003 to do exactly that and focus on specialist recruitment services. And it's been doing pretty well at it.
If current forecasts prove accurate, Hays will have grown its earnings per share by 74% over five years and lifted its dividend by 24% -- while its share price has climbed by 133% to 166p.
Friday's Q4 update suggests the firm is very much on track.
While business in the UK and Ireland is under a bit of pressure and net fees from the region fell by 5%, the firm's business around the rest of the world (including continental Europe and the Asia Pacific regions) performed splendidly and led to a total net fee gain of 15% (7% on a like-for-like basis).
Loads of cash
It has, in fact, been another record for quarterly net fees, and the firm reckons its operating profit for the year just ended in June should be slightly ahead of the current consensus forecast of £209.5m.
Germany turned in the best country performance, with a 16% rise in net fees -- and the comparison with the UK's 5% drop perhaps hints at which economy might do better in the post-Brexit world.
Cash performance looks impressive too, with net cash of £110m on the books, and that bodes well for the 7% rise in the dividend expected by City analysts. The yield would only amount to around 2%, but the above-inflation rises of the past few years would soon boost that if they continue.
On a forward P/E of 16, Hays looks good value to me.
If you want a far more impressive share price rise, look no further than AB Dynamics(LSE: ABDP). AB supplies advanced testing systems to the global motor industry, and the success of that has driven a share price rise of nearly 400% over the past five years.
Between 2013 and 2016, earnings per share soared by 82%, and forecasts suggest a further 26% over the next two years. That does put the 1,605p shares on a forward P/E for 2018 of 20, but I don't think that's too much of a stretch if the growth story has further to go.
And I think it has, with April's interim results looking supportive. Chief executive Tim Rogers told us the firm has a good forward order book for this year and "well in to next year," and said that "gives us confidence in meeting market expectations."
AB has invested in a new factory (funded entirely from the firm's own cash) which it expects to be handed over in late summer, and it should provide valuable space for the development and manufacture of the next generation of high-tech test equipment -- and that's likely to spur a new phase of earnings growth.
There's a small dividend too, though it's only yielding less than 1% at the moment -- it's only been in place for a short time but it's nicely progressive, and if it keeps going that way we could be seeing a steady transition from growth to income as the company's markets mature.
The share price has flattened off a little recently, and I think that's presenting a buying opportunity.
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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.