Tamawood Limited, Money3 Corporation Limited and Austal Limited: 3 growing stocks for your watchlist

It’s almost surprising how many investors focus exclusively on blue-chip stocks. In most other walks of life people don’t choose to go to the busiest, most competitive location, however when it comes to investors they seem drawn to the names and sectors that everyone else is clamouring over.

For investors who are happy to step away from the crowd, the potential to discover a bargain increases dramatically. One of the best places to find bargains is amongst smaller capitalisation (cap) stocks.

While there can be greater risks involved with small caps, here are three businesses worth knowing.

Tamawood Limited (ASX: TWD) shares are trading at a one-year high having gained 23.5% over the course of the last 12 months. The company updated investors with a presentation during the week which reinforced that it is well positioned for growth. This given that Tamawood operates within the home building sector which is currently experiencing an upswing in demand.

What’s next: Having reporting a strong rise in sales over the FY 2014 year, management has provided guidance for a 25% increase in the FY 2015 interim dividend to 10 cents per share fully franked. With a growing franchise business and debt free balance sheet, the stock is one to watch for investors looking for exposure to the housing construction cycle.

Money3 Corporation Limited’s (ASX: MNY) share price has rallied nearly 18% over the last 52-weeks, a gain which has been vindicated after reporting a 32% increase in earnings per share for FY 2014. The consumer lending group grew its footprint significantly over the course of the financial year with written income increasing by 86.6% and good growth achieved in both the loan books and the cash advance facilities.

What’s next: Management has forecast new record revenue and profit levels in FY 2015.

Austal Limited (ASX: ASB) has just announced the delivery of its fourth joint high speed vessel (JHSV) to the US Navy. The delivery is part of a ten ship, US$1.6 billion contract for the Australian-based ship builder with a shipyard in Alabama. The market has certainly taken a liking to the company with the stock price rallying nearly 53% in the last year.

What’s next: Not only are there still six vessels to be delivered under the JHSV program but Austral is also mid-way through the construction and delivery phase of its $3.5 billion independence-variant Littoral Combat Ship (LCS) contract too, which bodes well for future activity levels and cash flows.

A value price tag + growth + big dividends!

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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