2 growth and dividend stocks for shrewd investors
Ibstock(LSE: IBST) found itself trending lower in Thursday business following the release of half-year numbers. The stock was last down 6% from the mid-week close and peeling further away from the summer's record peaks of 260p.
But there was nothing in the release to suggest a sudden souring in investor appetite. The brickmaker announced that revenues soared 8.7% during January-June, to £228.3m, a result that powered pre-tax profit 2.7% higher to £38.9m.
"The Group has delivered a robust first half performance," chief executive Wayne Sheppard commented. "UK brick volumes were well ahead, driven by good activity levels in the UK new-build housing sector and our concrete businesses also enjoyed solid growth."
And Sheppard remains broadly optimistic looking ahead, noting that "the longer term fundamentals underpinning the new-build housing market in the UK - government support, good mortgage availability and an under-supply of new homes - remain in place, although we continue to be alert to any changes in customer confidence stemming from political uncertainty after the recent General Election result and the ongoing Brexit negotiations."
A rosy future
There is nothing hugely alarming in Ibstock's latest release that would cause me to revise my bullish take on the business. Indeed, the upcoming opening of its 100m-brick capacity plant in the fourth quarter should give revenues an extra shot in the arm -- the new facility will raise group capacity by 13% when fully operational.
Instead, I would view today's weakness as a non-surprise given the huge share price gains Ibstock has chalked up over the past six months, during which time it had gained more than 30% in value up until today's release.
The City expects the Leicestershire company to enjoy a 4% earnings rise in 2017 alone, and to follow this with a 12% advance next year. And these projections create pretty good value for money, the building materials play dealing on a forward P/E ratio of just 12.5 times.
There is plenty for dividend chasers to get excited about, too, Ibstock's solid earnings picture and excellent cash generation expected to keep dividends shooting higher. 2016's payment of 7.7p per share is expected to rise to 8.4p and 9.6p in 2017 and 2018 respectively. And these forecasts also create meaty yields of 3.6% and 4.1%.
Be bowled over
I also reckon Hollywood Bowl (LSE: BOWL) should be on the watchlist for those seeking great growth and income shares.
While the bowling behemoth is expected to endure a 20% bottom-line fall in the year to September 2017, it is expected to come roaring back with a 17% rise in the upcoming year. This projection also makes Hollywood Bowl brilliant value, the stock boasting a P/E rating of 14 times, and PEG reading of 1, for fiscal 2018.
And those seeking meaty dividend growth should also give the company serious attention, a predicted 5.4p per share for the outgoing year being up from 0.19p in 2016 and yielding 3.1%. Furthermore, the 6p reward anticipated for 2018 nudges the yield to 3.5%.
With tenpin fever in the UK steadily on the rise, and Hollywood Bowl capitalising on this trend with its alley refurbishment and expansion scheme, I reckon investors can look forward to solid returns looking ahead.
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Royston Wild owns shares in Ibstock. The Motley Fool UK has recommended Hollywood Bowl. 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.