2 unloved small-cap growth stocks that could still make you a million

Shares in travel company Dart Group(LSE: DTG) are surging after the company reported a robust fiscal first half.

For the period, revenue jumped 34% year-on-year, while operating profit rose 22% to £204.9m. Basic earnings per share also climbed 30% to 117.4p and, off the back of these numbers, management hiked the interim dividend payout by 9%.

Most of the company's growth has come from customer demand, particularly for its flight-only product. According to today's release, it seems as if this trend has continued with further strengthening of customer demand during the second half. With customer numbers continuing to rise, Dart's management believes the company will perform ahead of expectations for the full-year.

Unfortunately, increased investment in aircraft, advertising and people means that group losses will be higher than projected over the winter period. Still, the company's blockbuster first half should more than make up for the increased losses.

Continued growth

I believe these figures show Dart still has a bright future. The company's hefty investment in its travel operations is really starting to benefit and shareholders have reaped the benefits. Over the past 12 months, the shares have added 61% and year-to-date the stock is up 32%.

City analysts had been expecting the company to report a 22% decline in earnings for the full-year, as higher investment in the second half offset higher first-half growth. It now looks as if its losses will be better than expected and this bodes well for the years ahead.

Analysts had been expecting earnings growth of 11% for the fiscal year ending 31 March 2019, but I believe that this figure will be revised substantially higher following today's better-than-projected numbers.

However, even though Dart's outlook is bright, shares in the company only trade at a forward P/E of 14.9 (based on current City figures, which are now out of date), which looks cheap to me. Moreover, the shares may offer only a token dividend yield of 1%, but the payout is covered more than six times by earnings per share, leaving plenty of headroom for further growth.

As well as Dart, I'm positive on the outlook for Israel-based Taptica International(LSE: TAP).

Blue sky growth

Taptica operates in the fast-growing online advertising market. Over the past four years revenue has leapt 280%, or by 390% if I include City estimates for 2017 (five-year growth).

This expansion has not gone unnoticed by the market. Over the past 12 months the shares have jumped 150%, and it looks as if there's further growth ahead. City analysts have pencilled in earnings per share growth of 34% for 2017 and 22% for 2018. Even though these projections imply that the company is one of the fastest growing businesses on the London market, the shares only trade at a forward P/E of 15.3 or PEG ratio of 0.5.

A more suitable P/E multiple, based on future growth, would be 22, implying a share price of 720p, 88% above current levels.

There's also significant scope for dividend growth here. Taptica's current dividend distribution is covered six times by earnings per share.

An even better buy?

As well as Taptica and Dart, there's another company out there that looks to me to be a top buy for small-cap income and growth investors.

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Rupert Hargreaves owns no share 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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