32Red

Online casino 32Red (TTR) is firing on all cylinders with news of a record performance last year and its first dividend payout. The Gibraltar based firm operates the www.32red.com website and in the year to 31 December achieved a 33% leap in sales to £17m as pre-tax profits almost doubled to £1.05m.

Marketing efforts have increased and this has helped boost active customer numbers by 23% to almost 31,000. Another positive for the AIM counter is the recent victory against William Hill - the former operator of the potentially confusing 32Vegas online casino. The Court also dismissed the counterclaim by Hill as to the validity of 32Red's trade marks. As a result 32Red could be in line for significant damages.

The ill fated acquisiton in 2006 of Bet Direct and its subsequent disposal is now well behind it, so acquisitions may be considered if they are earnings enhancing. In 2010 it swallowed www.nedplay.com and www.goldenlounge.com - both are doing well and contributed £860,000 to net gaming wins. In an interview with Growth Company Investor chief executive Ed Ware admitted 'our focus on the core business of operating online casinos is reaping big rewards'.

Net cash of £2.2m is strong so 32Red has elected to reward its investors with a 0.5p a share dividend. House broker Numis remains confident on future prospects and predicts pre-tax profits of £1.7m and EPS of 1.7p - or 14 times earnings. With trading in the first two months of 2011 up 29% the outlook remains positive. Buy.