They have given numerous repeat buying opportunities along the way, all of which I have flagged up, not to mention they have also prompted me to revisit the investment case as my target prices have been smashed. In fact, there are only a handful of constituents of the FTSE Smallcap, Fledgling and Aim indices that have performed better this year.
The reason for the strong investor interest in Trakm8's shares lies in an earnings upgrade cycle and one underpinned by a bumper sales pipeline and robust order book. Based in Shaftesbury, Dorset, the company distributes its hardware and software through a network of distributors worldwide and also provides vehicle monitoring and tracking services direct to the business-to-business market. Trakm8's IP-owned products and services allow vehicles and drivers to be monitored, enabling organisations to manage deliveries and services, or track stolen vehicles down to five metres.
It's proving very popular technology, so much so that analyst Lorne Daniel at brokerage finnCap upgraded his adjusted fully diluted EPS estimate from 10.3p to 11p ahead of last month's trading statement based on the company delivering pre-tax profit of £3.4m in the 12 months to the end of March 2016 on revenue up from £17.9m to £25m. This implies annual EPS growth of 86 per cent and means Trakm8's shares are now rated on 22 times earnings forecasts.
That may seem a full rating, but not for a fast-growing technology company; finnCap anticipates an acceleration in profitability in the 2017 fiscal year (March year-end), pencilling in revenue of £29.9m, pre-tax profit of £4.8m and EPS of 15.4p. On that basis, the forward PE ratio falls to 16, a rating that is sensible for a company growing so quickly and whose product offering is clearly generating a growing interest from the insurance and fleet sectors. For instance, Trakm8's cutting-edge technology has already secured major contracts with car insurers Marmalade and Direct Line, and with Bibby, one of the UK's leading logistics providers. Moreover, with the benefit of a debt free balance sheet, there is also scope for earnings accretive bolt-on acquisitions to supplement the ongoing strong organic growth.
So although both finnCap's and my previously upgraded target price of 220p has been well and truly taken out, and the share price has risen by 28 per cent since my last recommendation to run profits at 195p three weeks ago ('Cashed up for cash returns, 22 Sep 2015), I feel there could be further share price upside to come if Trakm8 yet again beats earnings estimates.
On a bid-offer spread of 240p to 245p, I would run your 166 per cent paper gain ahead of what will likely be a positive trading update alongside a bumper set of half year results in early December. Run profits.
Please note that I have written four articles today and links to the others are included in the list of my articles below.
MORE FROM SIMON THOMPSON...
I have published articles on the following companies in the past three weeks:
■ Trakm8: Run profits at 195p, target 220p; Character Group: Run profits at 518p, target 575p; Marwyn Value Investors: Buy at 220p; Global Energy Development: Speculative buy at 30p; Software Radio Technology: Buy at 27p, target range 40p to 43p; Globo: Buy at 33p, target 69p; Pittards: Hold at 105p ('Cashed up for cash returns, 22 Sep 2015).
■ KBC Advanced Technologies: Buy at 112p, initial target 142p; K3 Business Technology: Run profits at 298p; Cenkos Securities: Buy at 177p; Netplay TV: Buy at 10p ('Small cap value plays', 23 Sep 2015).
■ Miton: Buy at 26.5p, target 35p; 32Red: Buy at 73.75p, target 90p; Stanley Gibbons: Buy at 138p; Vislink: Buy at 40p, target 70p ('Building momentum', 29 Sep 2015)
■ Moss Bros: Buy at 97p, target 120p; GLI Finance: Buy at 52p, target 80p; Town Centre Securities: Buy at 315p, target 350p; Globo: Buy at 39p, target 69p ('Platforms for success', 30 September 2015)
■ Safestyle: Run profits at 255p; Epwin: Run profits at 138p; Manx Telecom: Buy at 188p, target 210p ('Income plays with capital upside', 1 October 2015)
■ LXB Retail Properties: Buy at 86p, target 99p ('Bag a retail property bargain', 5 October 2015)
■ Creston: Run profits at 162p, target 171p; Fairpoint: Run profits at 184p, new target range 200p to 220p; Trifast: Buy at 114p, target 140p; 600 Group: Buy at 16p, target 24p; Renew Holdings: Buy at 315p, target range 350p to 375p; Stanley Gibbons: Hold at 105p ('Engineering ratings upgrades', 6 October 2015)
■ STM Group: Buy at 71p, target 80p ('Riding small cap winners', 7 October 2015)
■ First Property Group: Buy at 39.5p, target 49p ('In pole position for re-rating', 7 October 2015)
■ Tristel: Run profits at 99p, target 110p ('Cleaning up with superbug buster', 7 October 2015)
■ Equity market strategy ('Bull market pointers', 8 October 2015)
■ Gresham House: Buy at 320p, target 450p ('A mandate for strong growth', 12 October 2015)
■ Tristel: Run profits at 123p, new target 130p to 135p ('Cleaning up', 13 October 2015)
■ AB Dynamics: Run profits at 267p ('Under-promising, over delivering', 13 October 2015)
■ Trakm8: Run profits at 245p ('Motoring ahead', 13 October 2015)
■ PROACTIS: Buy at 102p, target 130p ('Secured growth for re-rating', 13 October 2015)
■ Simon Thompson's book Stock Picking for Profit can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 and is being sold through no other source. It is priced at £14.99, plus £2.95 postage and packaging. Simon has published an article outlining the content: 'Secrets to successful stockpicking'
