Home shopping company Ideal Shopping Direct’s long-term growth is based on the inexorable rise of digital television and online shopping, as well as favourable demographics, with its target audience of ageing women increasing.

IDS’s three channels, Ideal World, Ideal Vitality and Create and Craft retain 10% of the UK TV shopping market, and if the company simply maintains this position as digital penetration increases, IDS will experience 2% growth per year.

Following the departure of founders Paul Wright and Valerie Kaye, the new board plans to push growth and diversify – driving existing customers online, for example, could add another 1-1.5% to the top line alone. Several factors will mitigate this slowing, especially the cost of sales saved as more customers move online, and the guaranteed increases in the numbers with access to the channels; inhibitive TV set-up costs should also keep competitors at bay.

Boasting a strong balance sheet flush with £14.5m cash, broker Daniel Stewart sees turnover increasing from £96.9m in 2007 to £101m this year, with earnings set to increase to 18.4p (2007: 16.5p), ahead of 21.2p in 2009. This year's dividend is set to increase to 7.3p (2007: 5.5p). Trading on prospective multiples of 9.7 and 8.4 and given a 220p target price, we think the shares are undervalued given growth prospects.

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Ideal Shopping Direct	AIM	£15.13m	51.00p	0.00p
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