Half-year results from iEnergizer (LSE: IBPO) have put the outsourcer on my radar in recent days. The business recently soared to its most expensive since January and, on a 12-month basis, it’s gained almost 30% in value.
Yet, for my money, it still appears to offer excellent value. City analysts think earnings here will rocket 30% this fiscal year. Consequently, this cheap UK share trades on a forward PEG ratio of just 0.4.
iEnergizer provides a broad range of services, from human resources and quality assurance support to market research and sales assistance, to businesses. Its expertise spans a broad range of industries too, such as healthcare, financial services, gaming and publishing. And last week, it said that sales had soared 35.1% year-on-year in the six months to September (to $121.9m).
Critically service sales sat its core Business Process Outsource rocketed almost 52% in the period, to $83.5m. This was driven by an influx of business from both new and existing customers.
What I like about iEnergizer is the wide selection of services it offers across a variety of very different industries. And it offers them across six continents too. This helps give it exceptional solidity and protection from weakness in any one industry or territory.
5.9% dividend yields!
I don’t think iEnergizer offers great value from just an earnings perspective either. Its excellent defensive qualities give it the strength and the confidence to pay out big dividends too. This means that for this year it carries a mighty 5.9%.
Fraud is a problem for companies like this, and in particular the threat of payments made to fictitious employees. It’s a key issue that was picked up in iEnergizer’s recent audit, in fact. Still, it’s my opinion that the company’s qualities could more than offset this risk, a problem that’s also more than reflected in its cheap valuation.
Another cheap share I’m watching closely
Kape Technologies (LSE: KAPE) is another dirt-cheap UK share I’m thinking of snapping up. Sure, it doesn’t offer a dividend. But I think forward price-to-earnings growth (PEG) ratio of 0.4 could be too good to miss. Like iEnergizer, its rating below 1 suggests it could be undervalued by the market.
Kape Technologies is a tech company I think will thrive as the problem of cybercrime grows. Businesses are investing vast sums in software to protect their operations, a phenomenon which blew underlying organic revenues at Kape 27% higher in the six months to June.
I also like this UK share because its excellent cash generation is allowing it to execute shrewd sales-boosting acquisitions. In September, for example, the firm splashed out a cool $936m on the purchase of ExpressVPN.
An appetite for acquisitions can create huge risks to a company. These can include unexpected costs, overestimating synergies and disappointing revenues. However, its my opinion that this risk is more than offset by the possible rewards Kape Technologies could reap as the cybersecurity market swells.
Royston Wild 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.
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