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Fevertree Drinks PLC

When did you get so big? Billion-pound companies that maybe you thought weren't

That company you once regarded as a tiddler that would struggle to make it in the internet age is now a billion-pound company

Fevertree Drinks Plc -

You know when you see a young relative for the first time in years and think, when did you get so big?

The same thing can happen with stocks.

Sure, we know about the high-profile glamour stocks that have hit the big time – names such as Fevertree Drinks Plc (LON:FEVR) and Boohoo Group PLC (LON:BOO) – but there are several companies that have reached a size that make the average investor (and journalist) utter a three word phrase that starts with “what the …?”

Below, we print a list of billion-pound companies that might be bigger than you think; given that most stocks on the list have made the cut by virtue of rapid share price accumulation over the last three years, it’s unlikely all of them have escaped your notice but some might surprise you.
 

Name

Ticker

Market cap.

% chg. in share price over 3 years

Price/earnings ratio

PEG ratio

% chg. in EPS over 3 years

Future PLC

LON:FUTR

£1.0bn

+1,050%

50.0

0.6

+3,371%

Games Workshop PLC

LON:GAW

£1.5bn

+823%

23.1

6.3

+378%

Softcat PLC

LON:SCT

£2.0bn

+205%

34.5

1.8

+75%

RWS Holdings

LON:RWS

£1.6bn

+138%

33.8

1.6

+114%

Spirent Communications PLC

LON:SPT

£1.2bn

+136%

22.5

2.1

+116%

Marshalls PLC

LON:MSLH

£1.3bn

+126%

25.1

3.2

+85%

Gamma Communications PLC

LON:GAMA

£1.0bn

+121%

36.5

1.2

+69%

Dart Group PLC

LON:DTG

£1.4bn

+117%

9.6

n/a

+61%

Intermediate Capital Group PLC

LON:ICP

£3.9bn

+115%

21.1

0.5

+32%

Syncona Limited

LON:SYNC

£1.4bn

+73%

3.5

0.3

n/a

 

The table above demonstrates that rapid share price appreciation is often accompanied by impressive growth in earnings per share (EPS). The two do not always match up exactly, however, which is where the PEG ratio comes in.

This ratio is calculated by taking a stock’s price/earnings ratio (PER) and dividing it by its earnings growth, often incorporating projected earnings growth (as indicated by consensus forecasts).

A value of less than 1.0 is generally thought to be a signal that the stock might still be undervalued, despite its share price accumulation.

In the table above, specialist media company Future, alternative asset manager Intermediate Capital and life sciences investor Syncona all have PEG ratios that catch the eye.

Future was once an old-school magazine publisher and was supposed to have gone the way of the dodo (or Marie Claire, FHM and the NME) by now but it has passed with flying colours the tricky test of making the transition to the digital age.

Intermediate Capital, meanwhile, has made money out of making money for other people, mainly by investing in closed-end funds.

For its part, Syncona appears to have put stock-picker Neil Woodford to shame with its ability to back winners in the life sciences field; shareholders impatient with Woodford Patient Capital Trust PLC (LON:WPCT) – the shares have lost about 60% since the company’s flotation in 2015 – might take heart from the fact it is possible to make a success of funding biotech companies. As many people have noted, Woodford just needs one big winner to compensate for all his other (sleeping) dogs.

What about good old price/earnings?

If the PEG ratio is a bit too new-fangled for you or you don’t put much faith in brokers’ earnings forecasts, the good old fashioned PER might be more your cup of tea.

Once again, Syncona catches the eye (to the extent that it might be worth double-checking the earnings per share calculation) while Dart Group PLC (LON:DART), the company behind the Jet2 travel business, looks cheap at first glance, especially as a major competitor – Thomas Cook – has just exited the market.

Quick facts: Fevertree Drinks PLC

Price: 2195 GBX

Market: AIM
Market Cap: £2.55 billion
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