Two small-cap growth stocks I'd buy for the next decade


Shares in Accsys Technologies(LSE: AXS) have had a rocky time, though they're up around 20% over the past 12 months to 78p. The uncertainty among investors is largely down to the fact that the company is not currently profitable -- and the risk is added to by the company's pioneering technology for producing a durable acetylated timber product.

But interim results released Wednesday make for encouraging reading, with the firm reporting a rise in revenue to EUR28.3m (against EUR25.1m in the same period last year).

Demand is apparently growing worldwide, and the company's Accoya plant is running at full capacity to meet a 13% rise in sales volumes.

There are big questions over when we'll be seeing first profits and whether Accsys has the liquidity to reach that target, but I'd say the balance is very much on the positive side now. Though debt did rise significantly from EUR5.7m to EUR23.1m, cash also grew during the period to EUR46.9m from EUR7.9m a year previously, thanks to funds raised for the expansion of the firm's manufacturing plants.

Capacity expansion

And to that end, the company expects capacity at its Arnhem Accoya plant to grow by 50% early next year, and the construction of a new Tricoya plant is under way in Hull -- sales of Tricoya panels are up by 24%.

Chief executive Paul Clegg said: "We continue to see good global demand for both Accoya and Tricoya in an important year for Accsys. We are making transformational changes to our manufacturing capacity to meet this demand, having secured significant support from shareholders and our industrial and financial partners."

That suggests Accsys really could be close to the point of profitability, and I'm warming to it despite my earlier bearishness.

Engineering startup

Van Elle Holdings(LSE: VANL) is something we don't see in the UK every day -- a startup engineering business. 

The company, which floated just over a year ago in October 2016, describes itself as a "geotechnical engineering contractor offering a wide range of ground engineering techniques and services to customers in a variety of UK construction end markets," and produced a mixed set of results for the year to July 2017.

Though revenue and underlying EBITDA rose by 11.8% and 12.9% respectively, underlying earnings per share (EPS) came in flat with reported EPS down 19%. Operating cash conversion rose impressively from 79.6% to 91.9%, but return on capital employed dropped from 38% to 30.6%.

Yet Wednesday's trading update gave cause for optimism, telling us that "trading in the first half of the financial year has been positive and the Board expects to report turnover of approximately £53m" -- and that's significantly better than the £43.1m recorded in the first half of 2016. Underlying pre-tax profit is expected to grow by 15%.

Low valuation

Van Elle hasn't exactly pleased investors with its share price performance so far, but this latest update did give the shares a 9% boost on the day to 86p, and forecasts make the shares look like a bargain to me.

Theres no EPS growth predicted for this year (though I can see that changing now), and the shares are on a lowly P/E of seven -- with a 13% boost to EPS on the cards for next year, that would drop to just over six. With dividend yields of 4.1% and 4.7% added to the mix, I'm seeing a long-term buy here.

Can you make a million?

Investing in companies with growth and cash potential like these, at the right price, can be a great step on the road to financial security, and even millionaire status.

To learn more about how to build your wealth, get yourself a copy of The Foolish Guide To Financial Independence. Looking at ways to reduce your outgoings while growing your cash, and giving you more ideas for great investments, this brand new report is a must-read for any aspiring millionaire.

It's completely free, so all you need to do is CLICK HERE for your personal copy today.

Alan Oscroft 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.

Read Full Story Click here to comment