3 fast-growing companies to know about this reporting season

You might not have heard of them, but Service Stream Limited (ASX:SSM), iSentia Group Limited (ASX:ISD) and BWX Limited (ASX:BWX) are worth watching.

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Every investor dreams of finding a stock that is just about to announce an earnings upgrade, successful expansion or new initiative that will transform the business. But very few of us are in possession of the time and discipline required to do this.

However, following companies that announce good news during reporting season in the following months can also be a winning strategy, as you may be able to pick up shares at the beginning of an "upgrade cycle" where the business goes from strength to strength.

Here are three options that are worth a place on your watch list for exactly that reason.

Service Stream Limited (ASX: SSM) is a small company with a very big job. The company is one of the major contractors involved in the national rollout of the National Broadband Network, or NBN. The company also has a strong position providing contract services to utilities and the telecommunication industry.

A recent contract win from Nokia, along with ongoing work from the NBN rollout contributed to a forward order book of over $500 million. This brought an increase in net profit for the half of 15% and also allowed the company to announce a dividend of $0.01, alongside a proposed capital return of $0.05.

Risks for Service Stream include the fact that like all contractors, earnings can be volatile, along with the fact it is definitely a micro cap, and therefore suited to experienced investors.

iSentia Group Ltd (ASX: ISD) is not a household name, although some organisations use its products each and every day. iSentia is an aggregator and provider of media monitoring reports and services to its clients.

These clients are varied, from government departments to not for profit bodies, multi-national technology companies and start ups. The service is invaluable, particularly for client-facing companies and departments who interact with the public as it allows them to monitor news about them, and attitudes towards them.

More recently, the company has moved from providing summaries of news from traditional sources like newspapers and expanded into social media reports that collate sentiment and articles on Twitter and Facebook.

While iSentia is yet to report, it does have pricing power and a growing book of clients, which means that it may well surprise the market on the upside. Risks to iSentia include competitors who are attracted to the space by the high margins on offer, as well as free services like Google Alerts, which are less specific and targeted, but may be an acceptable substitute for some.

Since its IPO debut late last year, manufacturer and seller of skincare and beauty products, BWX Limited (ASX: BWX) is one of the best-perfoming stocks on the ASX.

The primary driver for the business is the Sukin skincare brand, which is a natural product free of the chemical additives that are present in most traditional beauty products. While Sukin is a market leader in its niche in Australia, the excitement for the stock comes from its ability to expand into China, where spending on cosmetics is huge. Paired with the Australian "clean and green" image that is crucial in China, the drivers for BWX are strong, as evidenced by recent results.

Top line sales grew 25% to $27.6 million, while net profit for the half was up by 61.5% to $6.3 million. The interesting part of the results announcement was that the company has yet to actually expand in a meaningful way internationally, with management noting that it has only "continued to develop the platform for export growth".

The obvious risks to BWX is that it cannot ramp up supply fast enough to meet demand, along with the fact it is a relatively immature company seeking to expand overseas, with all of the challenges that brings.

Motley Fool contributor Ry Padarath has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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