3 under-the-radar growth stocks for your watch list

3 good value stocks to buy today, including United Overseas Australia Limited (ASX:UOS).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in New Zealand niche insurer CBL CORP FPO NZX (ASX: CBL) are up 36% since I first wrote about the company back in July. Since then CBL has released its results for the first half of 2016 which showed a 44.4% rise in operating profit.

Under the leadership of major shareholder Peter Harris, operating profit has risen from NZ$5 million in 2010 to NZ$60 million in 2015. Based on results for the first half of 2016 I estimate the stock trades on a forward price-to-earnings ratio (PER) of under 18.

However, that does not include any contribution from the proposed acquisition of Securities and Financial Solutions Europe SA (SFS). SFS is a Managing General Agent (MGA) and as such earns revenue from brokerage and fees, but does not bear insurance risk. SFS is a major distributor for CBL and has grown earnings before interest, tax, depreciation and amortisation (EBITDA) from €3 million in 2013 to €8.7 million in 2015.

Since I first wrote about SDI Limited (ASX: SDI) at the beginning of August, shares in the dental restoratives company are up 31%. The company reported a 22% increase in net profit after tax (NPAT) in 2016 to $7.6 million and has guided for revenue growth for 2017.

SDI's sales mix is shifting from amalgam products to composites, ionomers and whiteners. Amalgam products contain silver and generate lower profit margins compared to non-amalgam products.

Therefore, SDI is set to benefit from both a reduced dependency on silver prices and higher margins over coming years. Also, as total revenue increases, the company should be able to keep its indirect costs relatively fixed driving further profit growth.

Despite its recent rise, SDI is trading on a PER of 12 based on my estimated NPAT for 2017. This appears good value for a defensive business with market-leading products operating in a growing industry.

Shares in Malaysian property developer United Overseas Australia Limited (ASX: UOS) are up 18% since I named them as my top pick for September. The company recently released results for the first half of 2016 showing a 43.7% increase in profit attributable to owners.

Even after this month's rally, UOS trades at a 24% discount to its net asset value and pays a 4.8% dividend. The company also has a great long-term track record as a listed entity with shares up over 280% in the past 10 years and dividends and capital returns representing further gains of more than 150%.

Motley Fool contributor Matt Brazier owns shares of CBL Limited, SDI Limited, and United Overseas Australia Ltd. You can follow Matt on Twitter @MatthewBrazier1. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »