Previously, we covered some of our favorite dividend stocks for 2016. For more growth-orientated investors, another list is in order. These list features companies that are growing or have the potential to grow quickly but are still trading at favorable valuations.
And we’re sticking with smaller companies, providing new ideas. Everybody already knows about companies like Netflix, Amazon, or Facebook. No, we’re going off the beaten path for some companies that could be next year’s unexpected high-fliers.
First up, Century Casinos, CNTY on the Nasdaq. It’d be easy to look at this stock, up big in 2015 and say the move has already passed. But after such a foul year for stocks, it is worth looking at stocks that have bucked the tide.
Century certainly fits the boat. Not many people watch this company, it’s small and it has an odd group of assets, with casinos in Colorado, Alberta Canada, and Poland, along with some cruise ships. It is quite a random grab-bag and likely suffers from a conglomerate discount, since investors who want to invest in one of those markets may have reservations about the others.
Regardless, earnings rose to 46 cents a share for this year, a huge figure for a $7 stock, and revenues spiked 15% higher, despite economic problems in both the Polish and Canadian markets relating to the fall of commodities. These figures would have been even stronger except that the dollar rose sharply, causing a negative impact to the Polish and Canadian operations.
Poland’s operations were greatly aided by a government crackdown on illegal slot machines that more than overshadowed the fall in the Polish economy. In Canada, new product offerings more than made up for a slowing local economy hurt by falling oil prices. And the Colorado economy continues to perform strongly.
With 2015 such a strong year, despite weakness in two of the three company’s main operating markets, the stage is now set for a strong 2016 if commodity prices reverse. This stock could easily see $10 with a couple more good quarters.
Fonar trades on the Nasdaq under ticker symbol company FONR. The company is, like Century, one of 2015’s big winners. But there’s nothing here that would preclude a repeat performance in 2016.
Fonar is a niche medical devices industry player. Its founder and CEO Raymond Damadian was one of the key inventors behind the original MRI machine. Damadian has continued to pioneer new developments in MRI machines, and Fonar now has a unique patent-protected upright MRI machine that differentiates it from the competition.
Fonar doesn’t just sell MRI machines, it also operates MRI facilities and in addition earns processing fees from doctors.
While the company has not seen much momentum selling MRI machines in recent quarters, its management side of the business has been picking up steam rapidly. Revenues have grown more than 10% a year compounded over the past five years.
Despite 2015’s big gains, the stock still trades at a single-digit PE ratio. And it has a great balance sheet. The market seems concerned by Mr. Damadian’s concentrated control over the company, and it is a valid concern. But for a company trading this cheaply and growing this quickly, it is an excusable flaw. This stock should trade to $25, with upside if one of the bigger players such as General Electric wants to buy Fonar out.
Investors Title, which trades as ITIC on the Nasdaq, is up next. Investors Title is another well off the beaten track stock that has been performing strongly. It in fact is trading at all-time highs. But there is plenty more to come.
The company provides a simple product, title insurance used for when properties are sold or re-financed. The company is a pure-play way to take advantage of a stronger housing market. And in 2015, the housing market finally began to regain the sort of vigor seen before the 2008 financial crisis.
Investors Title is a greatly profitable company, with its PE ratio under 15 despite the stock’s strong performance. And the company trades only slightly above its liquidation value. The company is aggressively buying back shares.
As long as the housing market continues to flourish, this stock will continue heading higher. 100 should be reached shortly. Continued low interest rates and rebounding regional economies are very strong tailwinds for this firm. The company generates a large portion of its business from Texas, and Dallas in particular is booming again. That, along with more new home sales and a continued high level of demand in mortgage refinancings will keep earnings strong for at least the next year.
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