Join our community of smart investors

Bargain way to play advertising's social shift

Simon Thompson highlights a digital media company that has been restructured and is poised to deliver strong profit growth in the coming years.
Bargain way to play advertising's social shift
  • The company is on an earnings upgrade cycle
  • 75 per cent of revenue is recurring or repeat business
  • Experienced management team has restructured cost base

One cash-rich technology company is forecast to deliver 45 per cent growth in pre-tax profits this year, yet it is only valued on a multiple of 10 times earnings. The contribution from acquisitions underpin part of the forecast profit surge, which mitigates risk, but there is a strong organic growth profile, too. With the smart management team leveraging an enhanced service offering across an expanded customer base, the risk to forecasts looks weighted to the upside. It’s reasonable to expect that the directors will utilise a cash-rich balance sheet to make further small bolt-on deals, another catalyst for potential profit upgrades.

Headquartered in London and with offices in Asia, the social and digital media business has undergone a dramatic transformation since a boardroom clear-out in the first half of 2020. It’s a story that investors have yet to fully cotton on to.

To continue reading...
Subscribe to Alpha Today and You’ll Get
  • Unlimited access to all of our content
  • The Analyst's round up of companies and updates on his Fantasy Sipp portfolio
  • Broker style company research notes from our small cap expert Simon Thompson
  • Quality, Momentum, Growth at Reasonable Price (GARP) and Dividend Yield stock screens
  • Algy Hall’s monthly value-momentum investment trust screen and portfolio of diverse closed-end funds
Have an account? Sign in