Telit is a growth machine

Telit's 'one stop one shop' strategy of providing hardware, services, network solutions and an application development platform has been key to its success. The group is also benefiting from the shift towards high-speed 3G and 4G wireless standards, especially as its newer wireless modules fetch a higher price. And its market remains strong. Researchers at IHS Technology predict compounded annual growth of 23 per cent in unit shipments of M2M cellular modules between 2012 and 2018, which they expect will drive the market's value up about a fifth annually to $3bn (£1.9bn) in 2018.

The upshot has been that Telit has achieved compound average annual revenue growth of 27 per cent over the past five years. Its momentum has continued this year with first-quarter sales up 23 per cent, and management expects new automotive and platform offerings to underpin further progress and widen the group's addressable market. Indeed, broker Canaccord Genuity expects cash profits to climb 43 per cent to nearly $67m in 2016. Yet despite its rich prospects, Telit's shares trade at an enticing 14 times forecast earnings for 2016 - well below its peers.

Telit posted revenue growth in all three of its global regions in 2014. Sales rose 29 per cent in the Americas, which accounts for 46 per cent of revenue, reflecting the resurgent US economy and widespread migration from 2G to 3G wireless standards. The group also certified its first industrial, 'high speed' LTE (long-term evolution) module with mobile carriers AT&T and Verizon, meaning it can cater to high-bandwidth applications that require long-term network availability that are common in the energy and router markets. Similarly, sales in Asia Pacific - which accounts for 11 per cent of the total - grew by 45 per cent due to strong demand for Telit's high-end wireless modules for remote healthcare, point-of-sale devices and other uses.

There's more to Telit than a buoyant module business, though. The group's new cloud-based platform, m2mAir, allows enterprises to seamlessly connect and integrate remote devices, networks and applications without requiring any programming expertise. Sales of m2mAir doubled to $20m in 2014, and management is planning a rollout beyond Europe and North America. Telit also bought NXP Semiconductors' automotive communications division, ATOP, in March 2014, which should help it tap into the 'connected car' trend.