3 under-the-radar growth stocks for your watch list

Shares in New Zealand niche insurer CBL CORP FPO NZX (ASX: CBL) are up 36% since I first wrote about the company back in July. Since then CBL has released its results for the first half of 2016 which showed a 44.4% rise in operating profit.

Under the leadership of major shareholder Peter Harris, operating profit has risen from NZ$5 million in 2010 to NZ$60 million in 2015. Based on results for the first half of 2016 I estimate the stock trades on a forward price-to-earnings ratio (PER) of under 18.

However, that does not include any contribution from the proposed acquisition of Securities and Financial Solutions Europe SA (SFS). SFS is a Managing General Agent (MGA) and as such earns revenue from brokerage and fees, but does not bear insurance risk. SFS is a major distributor for CBL and has grown earnings before interest, tax, depreciation and amortisation (EBITDA) from €3 million in 2013 to €8.7 million in 2015.

Since I first wrote about SDI Limited (ASX: SDI) at the beginning of August, shares in the dental restoratives company are up 31%. The company reported a 22% increase in net profit after tax (NPAT) in 2016 to $7.6 million and has guided for revenue growth for 2017.

SDI’s sales mix is shifting from amalgam products to composites, ionomers and whiteners. Amalgam products contain silver and generate lower profit margins compared to non-amalgam products.

Therefore, SDI is set to benefit from both a reduced dependency on silver prices and higher margins over coming years. Also, as total revenue increases, the company should be able to keep its indirect costs relatively fixed driving further profit growth.

Despite its recent rise, SDI is trading on a PER of 12 based on my estimated NPAT for 2017. This appears good value for a defensive business with market-leading products operating in a growing industry.

Shares in Malaysian property developer United Overseas Australia Limited (ASX: UOS) are up 18% since I named them as my top pick for September. The company recently released results for the first half of 2016 showing a 43.7% increase in profit attributable to owners.

Even after this month’s rally, UOS trades at a 24% discount to its net asset value and pays a 4.8% dividend. The company also has a great long-term track record as a listed entity with shares up over 280% in the past 10 years and dividends and capital returns representing further gains of more than 150%.

Here are three more great value stocks that pay fully franked dividends and offer the very real prospect of significant capital appreciation.

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Motley Fool contributor Matt Brazier owns shares of CBL Limited, SDI Limited, and United Overseas Australia Ltd. You can follow Matt on Twitter @MatthewBrazier1.

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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