Are these six stocks having massive growth potential?

Vita Group Ltd

VTG Details
Strong FY16 performance:Vita Group Ltd (ASX: VTG) reported a robust 19% growth in revenues to $645.1 million for FY16. The underlying EBITDA grew 55% to $62 million while net profit grew 43% to $38 million. The group declared a dividend of 13.97 cents per share and the free cash flow for the year was at ~$19.1 million. The group has spent $ 15 million towards store acquisitions. During the period, VTG added five Telstra Business Centers (TBCs) to total count of 21 at the year-end.
 

Revenue and EBITDA movement (Source: Company Reports)
 
The group continued its investments in the growing enterprise channel, which is Vita’s platform for competing at scale in the large business market with an emphasis on delivering professional managed services. The channel delivered a strong growth and recorded significant account wins. The new accounts would be income accretive in FY17. SMB and enterprise channel continues to be growth driver for the group in future. Vita Group has been added to S&P/ASX 300 Index from September 16, 2016 we believe the stock has more upside potential. We are positive on the stock and recommend a “Hold” at the current market price of $ 4.89


VTG Daily Chart (Source: Thomson Reuters)

Challenger Ltd

CGF Details
Strong growth in FY16: Challenger Ltd (ASX: CGF) recently announced for its Dividend Reinvestment Plan (DRP) issue price per share for the final 2016 dividend to be $9.2505. The company earlier announced for its FY16 assets under management moving up to $60 billion while annuity sales jumped up 22% to $3.4 billion. This was primarily driven by platform sales. Normalised profit after tax (NPAT) soar 8% to $362 million while statutory net profit after tax was up 10% to $328 million. CGF’s stable Life margins drove cash operating earnings up 9%. Moreover, the group is launching five new annuity partnerships in 1H17 and is teaming up with Suncorp to white-label Challenger term and lifetime annuities. Given the potential and the stock trading close to its 52-week high price, we maintain our “Hold” recommendation at the current price of $ 10.33

 
CGF Daily Chart (Source: Thomson Reuters)

Altium Ltd

ALU Details
Increase in number of new AD licenses sold:Altium Ltd (ASX: ALU) reported 16.7% rise in revenues to US$93.6 million for FY16. EBITDA grew 20.9% to US$20.9% to US$27.4 million. EPS grew 43.5% to 17.9 US cents. Moreover, the company described its plan to achieve market leadership in coming years and more than doubling the revenue to US$200 million by 2020. Additionally, the company would be benefited by its partnership with France based software giant Dassault Systemes. Its acquisition of Perception Software Inc would be earning accretive next year. During the year, the company reported 20% increase in number of new AD licenses sold and 11% increase in subscribed seats to 31,134. However, the stock is trading at a high P/E, we rate the stock as “Expensive” at the current price of $ 8.35

 
ALU Daily Chart (Source: Thomson Reuters) 

Isentia Group Ltd

ISD Details
Limited local SaaS operation growth:Isentia Group Ltd (ASX: ISD) reported a 23% rise in revenues to $156 million. The strong growth is backed by 19% rise in value added services. EBITDA grew by 20% to $21 million with Australia and New Zealand SaaS/ VAS EBITDA margin being increased from 45% to 46%, Asia SaaS/VAS EBITDA margin increased from 23% to 24% and King Content acquisition contributed margin of 18% with H2 margin of 21%. With this the company reported 19% year on year (yoy) growth in underlying net profit. King Content boosted local revenue by $12.4 million. On the other hand, the group’s local SaaS operation growth looks limited, which saw a revenue rise of less than 1% to $86.7 million due to the transition of clients to fixed price contracts.
 

Growing performance since FY13 (Source:  Company Reports)
 
The group has invested 10% of revenues in R&D with strategic enhancements to Media portal, communiqué and mobile apps. The stock is also trading at a high P/E, and we rate the stock as “Expensive” at the current market price of $ 3.91

 
ISD Daily Chart (Source: Thomson Reuters)

Webjet Ltd

WEB Details
Strong growth in TTV: Webjet Ltd (ASX: WEB) reported a 28.8% rise in TTV which increased its revenues by 29.7% to $155.3 million for FY16. EBITDA grew 31.4% to $36.6 million, which contributed to 27% rise in net profit to $22.2 million. The cash balance was at $116.2 million. The company is entering North American market, which has large wholesale market potential. Webjet Ltd was also included in S&P/ASX 200 index effective September 16, 2016. The stock surged over 104.18% in the last six months (as of October 11, 2016). Trading at a higher P/E and close to its 52-week high price, we rate the stock as “Expensive” at the current market price of $ 11.99

 
WEB Daily Chart (Source: Thomson Reuters)

Xero Ltd

XRO Details
Impressive performance: Xero Ltd (ASX: XRO) reported a subscriber base of 717,000 numbers in FY16 from 475,000 numbers in FY15. ARPU increased to $30 from $28. Gross margin increased to 76% in FY16 from 70% in the prior corresponding period with the LTV (Life time value) per subscriber increased from $1,733 to $2,103. LTV is poor in international market and accordingly Xero is focusing on this market and gaining traction in the US and UK market.
 

Financial performance (Source: Company Reports)
 
Xero’s annualized committed monthly revenue (ACMR) was at $258 million at March 2016 increasing 62% on prior year. ACMR provides a 12 month forward view of revenue based on current subscriber numbers, hence indicates better future growth prospects. In the recent time the stock has corrected (5.4% in the last one month, as at October 11, 2016), and we believe it is a “Buy” at the current market price of $ 17.30

 
XRO Daily Chart (Source: Thomson Reuters)

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