Investors looking for stock stars off the beaten track could do a lot worse than take a closer look at Volex(LSE: VLX).
The cable-and-connector manufacturer has seen its market value surge 110% over the past year and, if Friday's explosive half-year financial report is anything to go by, we should expect this stunning ascent to keep on going. Indeed, Volex shot 6% higher on account of the latest trading update.
Sales fell 2.8% during the six months to October 1, to $161.4m as the result of an $11m drop in the company's largest Power customer's revenues. In better news, however, Volex saw revenues from its other clients boom 4.8% during the half year, reflecting ongoing efforts to increase its revenue streams. And at its Cable Assemblies arm, turnover jumped 8% year-on-year.
Meanwhile, the London-based business announced that operating profit clocked in at $5.1m for the first half, swinging from a loss of $4.6m a year earlier and the best result for five years.
On the mend
Volex has put in the hard yards in recent times to cut out costs in response to tough trading conditions and rising input costs, and to put it in a stronger position to generate sales in the years ahead.
Today chief executive Nat Rothschild commented: "I am pleased to report that the group has returned to profitability. The restructuring activities taken in previous periods have allowed the group to operate more efficiently and we are now seeing growth from both new and existing customers as we diversify our revenues."
City brokers expect earnings to slump 22% in the year to March 2018, but the firm's turnaround measures are expected to get profits propelling higher thereafter -- an 11% advance is chalked in for fiscal 2019.
And despite the aforementioned share price ascent, Volex remains exceptionally priced, its forward P/E ratio of 13.5 times falling comfortably below the widely-accepted value yardstick of 15 times or below.
Given the impressive progress of the firm's self-help measures, I am not alone in believing that this represents seriously good value.
Another cut-price corker
Costain Group (LSE: COST) is another small-cap that merits serious attention at current prices, in my opinion.
Earnings are predicted to spring 8% higher in both 2017 and 2018 and, as a consequence, the construction and engineering colossus deals on a prospective P/E multiple of just 12.7 times.
Additionally, chunky dividend yields of 3.3% and 3.7% for 2017 and 2018 respectively -- driven by the company's ultra-progressive payout policy -- should provide plenty of incentive to give Costain a look.
The billions of pounds that is being thrown at improving Britain's transportation, energy and water infrastructure continues to drive business at Costain, and as a result reported revenues at the firm leapt 11.5% during the first half to £847.8m. Reported pre-tax profit grew 38.9% to £15.7m.
And its fat order book, which stood at £3.7bn as of June, 90% of which was for repeat business, suggests sales, profits and dividends should keep growing at an eye-popping pace. Costain is a company that could make share pickers exceptionally rich in the coming years.
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Royston Wild 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.