Shares inCastleton Technology(LSE: CTP) have been moving steadily higher over the past year. Since June 2014, the companys shares have gained 132% thats around 9% per month.
And if this trend continues, within six months Castletons shares could hit 5.6p, 93% above present levels.
But is this a realistic expectation? Can the company maintain its lofty growth rate?
Throughout much of the past year, Castleton has been going through a period of transition.
During June of last year the company concluded theacquisition ofMontalHoldings Limited, a well-respected provider of IT managed services to the public and not-for-profit sector.
Then, during November of last year, Castleton acquiredDocumotiveLimiteda document management software and scanning business focused on the social housing sector.
The full benefits of these two deals are yet to show through in Castletons results.
However, we do know that for the six monthsended 30 September 2014,Montalcontributed revenues of 1.9m for the Castleton group.
Still, the company is yet to report results for the past six months.
Castleton has been extremely busy during the past six months. Indeed, the group has been concentratingno both organic and bolt-on growth to boost sales.
For example,at the beginning of Marchthe company announced that it had acquiredsocial housing managed services providerKeylogicLimited, for a consideration of 3.8m.
Also, Castleton paid 0.5m forOpus Information Technology Limited with a further 1.5m payable dependentupon performance.
Then, at thebeginning of June, Castleton announcedtwo more acquisitions. Firstly, the5m acquisition of Impact Applications Limited, a providerof business-critical repairs management and scheduling tools to the social housing sector.
And secondly Castleton paid 5m forBrixx Solutions Limited, a provider of software enabling users to produce financial models and long-term forecasts.
Thanks to these acquisitions, in the space of just a few months, Castleton has become the leading supplier ofsoftware and services to the social housing sector.
Nearly a third of all the social housing associations in the UK are now Castleton customers.
Moreover, Castletons management estimates that the groups revenue run rate now stands at 18m per annum, 50% of which is recurring not bad for a companywhich reported revenues of less than 2m last year.
Based on Castletons current revenue run rate, City analysts expect the company to report apre-tax profit of 0.1m for 2015. A pre-tax profit of 3.2m is projected for 2016.
These numbers suggest that Castleton is trading at a forward P/E of 15.1.
However, based on the companys aggressivegrowth achieved during the past few months, these forecasts could already be out of date.
Unfortunately, with this being the case, Im hesitant to try and place a per-share target on Castleton at present. Nevertheless, its clear that Castleton is growing rapidly, and there could be further upside to come.
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