Tribal Group ‘oversold’
Research house Edison serves up two undervalued AIM companies for consideration this month, including Tribal, the support services specialist helping improve public services delivery, whose shares are oversold at 83p in the opinion of Fiona Orford-Williams.
A recent half-year trading update from Tribal, which is reducing debt, indicated a company on track to meet full-year forecasts. Furthermore, ‘levels of committed income give good visibility and the bid pipeline is substantial’, according to Orford-Williams, who sees fertile growth opportunities in health and overseas.
She also sees tighter UK public spending playing ‘directly into Tribal’s hands via contracts increasingly targeted on delivery of cost savings and value for money’.
Based on annual forecasts to December – improved profits and earnings of £21.5 million (2008: £18.6 million) and 15.4p (2008: 14.7p) – a prospective price-to-earnings ratio of 5.4 does look grudging.
Also undervalued is semiconductor wafer product supplier IQE, currently 9p, where it commands a modest £39 million valuation. Industry wide destocking was behind a decline in first-half sales to £20 million (2008: £30.2 million) and net debt edged higher, yet Edison points out that IQE ‘remained EBITDA positive even at the lowest point in the cycle in January and February’, and is trading profitably and generating free cash.
With Edison forecasting a return to form in 2010, pencilling in profits up from £2.8 million to £4.8 million and EPS of 1.1p, IQE sells for eight times next year’s earnings.
‘This steep discount to the sector,’ argues Edison, ‘represents a misappraisal of its competitive positioning, and the stock could rally strongly if handset volumes positively surprise in H2 09.’
FWD is a strategic communications agency specialising in corporate & financial services in the UK, across Europe and into Asia. We understand financial markets inside out. We know who you want to talk to. And we know the type of messages they want to hear. Find out more.
Live and pre recorded video & audio updates from companies on their latest news, results & AGMs through interviews and presentations. Find out more.
Gain instant access to some of the best-performing and fastest growing companies in the small cap arena. Sign up NOW!
This research provides a comprehensive overview of cash shells, companies that have become a significant feature on the Main Market, AIM and PLUS landscape. The full report (out June 2013) is now available to pre-order in PDF format for £295 (+VAT). Contact us for more info
The annual Directors' Pay on AIM Report is the most comprehensive review of directors' renumeration on AIM available. It's ideal for benchmarking your team's, your organisation's and your own salary. The full report is available to order in PDF format for £350 (+VAT). Order report here
This new report examines valuation metrics, cash balances and financial performance to provide dealmakers with all the tools they need to pinpoint undervalued companies on AIM. The full report is available to order in PDF format for £295 (+VAT). Order report here
Informative features and research on fast-growing companies, with AIM market and small cap tips, news on growth stocks, penny shares and junior stock market companies. Regular share recommendations, directors' dealings, company news and analysis, new issues and upcoming IPOs.
If you're interested in business tax updates visit our specialist tax guide website.
In-depth coverage of selected AIM companies within the small-cap and fast growing company sector including AIM and PLUS Markets shares and listed stocks. Company research and analysis from GCI analysts updated daily.
Growth Company Investor examines the key criteria investors should consider
Growth Company Investor examines the opinions of a number of small-cap stalwards