With the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) jumping around 3% higher over the past five trading sessions, it appears that investors are once again in a “risk on” mood.
If you are wondering how to position your portfolio to benefit from a rising market, the following three small growth stocks – which all presented at the recent Australian Microcap Investment Conference – could be worth considering.
Melbourne IT Limited (ASX: MLB)
With a market capitalisation approaching $170 million this leading information technology (IT) solutions provider has achieved share price gains of 42.5% over the past 12 months.
The group has two divisions – a small and medium business solutions division which provides domain name registration, website and email hosting, website design and online marketing services.
The second division is enterprise services and provides managed services for websites and digital platforms.
Melbourne IT operates on a calendar year basis and based on forecast data from Morningstar the group is expected to grow earnings per share (EPS) rapidly over the next few years. Based on the forecast for 2017 of 617.1 cents per share (cps), the stock is trading on a price-to-earnings ratio of 11 times.
Hub24 Ltd (ASX: HUB)
As I noted here, Hub24 recently received a takeover offer from wealth advisor IOOF Holdings Limited (ASX: IFL). Currently the stock is trading with just a 3 cps discount to the indicative offer which doesn’t offer a particularly compelling takeover arbitrage opportunity, however, the long term growth prospects remain appealing.
Hub24 operates investment, superannuation and pension platforms in both the Australian and UK markets. With the long term growth profile looking positive, shareholders could eventually receive a higher offer price or if the stock were to remain listed they may capture further upside themselves.
PS&C Ltd (ASX: PSZ)
This IT services company has only been listed on the ASX since 2013. The company has three divisions which make up the acronym of its name: people, security and communication.
The People division is a contacting and recruitment solutions business with a focus on the delivery of SAP technology.
The Security division is arguably the fastest growing and most exciting division. It offers clients services such as IT security consulting, education and systems penetration testing.
The Communications division provides unified communications for a range of corporate and government clients.
According to consensus data, the group is forecast to earn 11.2 cps in the current financial year, implying a PE ratio of just 8.5 times.
Motley Fool contributor Tim McArthur 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.