A share price fall can be a great buying opportunity so long as the fundamentals behind a business haven't deteriorated and the investment case remains intact. And that's exactly the situation right now at Thalassa (THAL), a fast-growing provider of niche offshore seismic services to large oil companies, helping them to better monitor a producing reservoir over the life of the field. The company's shares have fallen over 40 per cent in value during the past few months following substantial profit taking and a wider sell-off in small-cap growth stocks. Yet its underlying business continues to go from strength to strength, giving investors a chance to open or add to a position at a bargain price.
- Bargain valuation
- Double-digit profit growth
- Solid order pipeline
- Strong « balance sheet
- Uncertain guidance in trading update
- Placings dilute earnings this year
Strip out forecast year-end cash from the current share price and adjust for interest income, and Thalassa’s shares trade on just 10 times earnings forecasts for the current year, falling to just eight times in 2015. That lowly rating belies double-digit profit growth forecast for 2015 (expected to follow a hiatus this year) as well as Thalassa's strong growth record in the three years to the end of 2013 (see table).