263 reasons why I’d buy shares in this small-cap growth stock

In June, I said Bloomsbury Publishing (LSE: BMY) still generates a lot of revenue from the Harry Potter series, but other business lines are expanding well.” And to me, today’s half-year results report bolsters the case for investing in the stock.

Impressive figures

Revenue for the six months to 31 August 2021 came in up 29% year-on-year. And diluted earnings per share shot up by 263% — that’s 263 reasons why I’d buy shares in this small-cap growth stock now!

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Those figures look impressive, but the comparison period last year occurred in the depths of the pandemic. Nevertheless, City analysts predict the business is on course to deliver a full-year uplift in earnings of almost 8%. And they expect an even better performance the following year to February 2023.

Part of Bloomsbury’s long-term growth strategy aims at “diversifying into digital channels.” And chief executive Nigel Newton said today’s results were driven by the approach of publishing for both the consumer and academic markets, and by “growth of digital revenues.”

I’m in no doubt the business is clinging to its growth mojo. And I see the stock as a promising potential addition to my diversified portfolio. So I’m keen to research the opportunity further with a view to holding some of the shares for the long term. It will be interesting to me to see how the growth story develops.

A growth valuation, but cash-flush

Meanwhile, with the share price near 356p, the forward-looking earnings multiple runs just below 18 for the trading year to February 2023. And the anticipated dividend yield is around 2.7%. Of course, that’s not a huge payout. And it suggests, along with the P/E rating, the valuation isn’t cheap. But the directors raised the interim dividend by 5%. And the compound annual growth rate of the shareholder payment is running at just over 7% for the past few years.

The valuation appears to price the company for growth. And that’s fine if growth continues. But I could end up with a losing investment if the business fails to make its estimates for growth in earnings. In a scenario like that, the stock market would likely modify the valuation lower, taking the share price down. And growth stocks going ex-growth can plunge a long way. So there are some clear risks with this one.

But the cash-flush balance sheet encourages me. If Bloomsbury can hang on to its £40m-odd in the bank, I can account for it in my valuation calculations. I reckon doing that shaves about 16% off.

At some point with stock investing, I must take some risks in order to be in line for potential (but not certain) gains. And I like the fact that Bloomsbury has a well-defined strategy for growth that appears to be succeeding. So for me, this one can keep its place near the top of my buy list.

However, Bloomsbury isn’t the only growth stock I’m considering right now…

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Bloomsbury Publishing. 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.

This post was originally published on Motley Fool

Financial News

Daily News on Investing, Personal Finance, Markets, and more!