Why I'd buy these 2 Footsie-beating multi-baggers today

After a near death experience at the end of 2015, over the past 20 months, shares in steel producer Evraz(LSE: EVR) have staged a staggering recovery.

The shares have risen nearly 330% since the lows, and it looks as if the company's recovery still has plenty of room to run based on its results for the six months to the end of June, which were published today.

Double-digit yield

The results show strong growth across the board for Evraz. Net profit for the period came in at $86m versus $7m for the year ago period. Meanwhile consolidated earnings before interest tax depreciation and amortisation rose by 99.7% year-on-year thanks to cost-cutting and higher steel prices. The company shaved $63m of its cost base during the first half, and these savings, coupled with higher margins helped the group report a robust free cash flow of $549m for the period, up from $102m the first half of 2016.

With cash flowing into the business, management has started to pay down the group's enormous debt mountain. Net debt fell to $4.3bn from $4.8bn at the end of 2016, and as well as this debt reduction, management is so confident in Evraz's outlook that it has announced an interim dividend of $0.30 for the period, totalling $429.6m. That's a nice reward for long-suffering shareholders.

For the full year, City analysts are expecting the company to report a pre-tax profit of £760m and earnings per share of 44.3p. Based on these estimates, shares in the company are trading at a highly attractive forward P/E multiple of 5.3. Analysts are also forecasting a full-year dividend of 10.8p per share, although this is significantly below today's interim dividend, which is worth 23p per share at current exchange rates.

If management decides to declare a final dividend at a similar level, the shares are on track to yield around 17% for the full year. This level of income coupled with Evraz's lowly valuation leads me to conclude that there could still be plenty of additional upside for the shares.

Cash cow

Evraz's peer Anglo American(LSE: AAL) has also made a staggering recovery from its lows at the end of 2015. Since crashing to a low of around 225p per share, shares in the miner have now gained around 450% excluding dividends. At the end of July, the company reported its interim results for the six months ending June 30.

Just like Evraz the firm showed progress across the board with underlying earnings before interest tax depreciation and amortisation rising 68% and free cash flow jumping from $1.1bn for the first half of 2016, to $2.7bn for 2017.

With plenty of funds available, management has been able to reduce net debt by 50% over the past year, and as the business continues to throw off cash, shareholders are set to be well rewarded.

For the full year, City analysts have pencilled in earnings per share of 173p and a dividend per share of 41p giving a yield of 3.8% and putting the shares on a forward P/E of 6.7. This low valuation, coupled with Anglo's modest dividend yield leads me to believe once again that there could be plenty of upside for the shares ahead.

10 steps to a million

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Rupert Hargreaves 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.

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