Today I’m looking at two brilliant companies whose share prices could rise next week.
You may not have heard of Keywords Studios but it’s a stock that’s making some serious waves in the global video games industry.
The AIM-quoted company -- which provides technical assistance to game developers -- is riding the stunning popularity of the Fortnite franchise across the world, and said in January said that it expected full-year revenues for 2018 to have leapt to “at least” €250m from €151.4m the year before.
The Fortnite phenomenon is yet to show any signs of dying down any time soon as developer Epic Games stays committed to bringing out different playing modes for the popular franchise. Indeed, the company estimates that the Creative mode which was launched in December has attracted some 100 million gamers already. And this bodes well for Keywords’s bottom line for a long time yet.
For this reason I’m expecting another strong update when full-year results are put out on Monday, April 8. But Keywords is by no means a one-trick pony.
The tech titan is expanding its range of services to cover exciting new areas, ones like “predictive analytics, music services, marketing services, sound design, and Hollywood-based voice production and writing services” (as the firm itself noted in January’s update), and areas which the business has built its presence in with the help of ongoing M&A activity. It’s made nine acquisitions since the start of 2018 alone.
One other reason to be bullish: the rollout of 5G mobile networks and improvement in internet bandwidths, moves which will bolster the growth of so-called cloud gaming, also presents stunning sales opportunities for Keywords further down the line.
City analysts are certainly optimistic and they predict earnings expansion of 21% in 2019 and 12% next year, projections that make the business a bargain on paper (it sports a forward PEG reading of just 1.1 times). In fact, this low rating could provide the platform for Keywords’s share price to take off in the wake of fresh trading details next week.
Newsagent chain WH Smith is also riding the crest of wave at the moment, its share price trading just a whisker off the 14-month highs struck in the wake of great trading numbers in January. All eyes, then, will be on whether the FTSE 250 firm can gain extra ground when half-year results are unpackaged on Thursday, April 11.
I’ve long admired the cracking performance of its Travel stores in the UK and in overseas territories, and was cheering the start-of-year update when it was revealed that total sales at this division had risen 16% in the 20 weeks to January 19 (with like-for-like turnover growing by 3% year-on-year).
The results paid tribute to the massive sums that WH Smith is investing in its business across the globe, including the potentially game-changing acquisition of US-based travel chain InMotion late last year.
The retailer is in great shape to capitalise on surging traveller numbers the world over as it expands its geographic footprint, and it’s why City brokers are predicting earning growth of 5% and 10% in the years to August 2019 and 2020 respectively. Forget its slightly-toppy valuation, a prospective P/E multiple of 18.8 times, I say. I reckon WH Smith’s share price is in great shape to sprint skywards, possibly as soon as next week.