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Tap into a cash generative technology growth stock

A little known cash-rich technology group has just reported 25 per cent organic profit growth driven by strong ongoing structural growth in its three main end markets
Tap into a cash generative technology growth stock

•    First-quarter pre-tax profits increase 25 per cent.
•    Net cash up 10 per cent year on year underpins forecasts of double-digit dividend hike.
•    All three divisions performing well.

Shares in Israeli-based technology group MTI Wireless Edge (MWE:65p) have succumbed to profit taking since I covered the annual results (‘Small-caps with upgrade potential’, 1 March 2021), having doubled in value in the previous six months after I initiated coverage, at 40p (Alpha Report: ‘Tapping into 5G and climate change technologies’, 4 Sep 2020).

First-quarter results and news of further contract wins indicate that the share price reversal is seriously overdone. Indeed, MTI increased pre-tax profit by 25 per cent to US$0.9m on 4 per cent higher revenue of US$10m in the three months to 31 March 2021. The growth was organic as one would expect given that all three of MTI’s divisions have robust trading prospects driven by ongoing structural growth in their respective end markets: global warming and climate change; increased defence budget spending; and demand for next generation 5G networks.

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