Stocks with a tech slant always attract attention takeSepura (LSE: SEPU), for instance.
Heres my quick take.
Sepura (Market Cap 400m)
What you are buying: the companydesigns, develops and supplies digital radio systems, accessories and other related tools.Its forecast to grow revenues at an astonishing compound annual growth rate (CAGR) of 19% into 2017, which will likely yield rapidly rising earnings and dividends.
Bullish brokers forecast upside of up to about 30% from its current level of 160p a share. Earlier this week, Panmures price target rose to 190p a share from 170p, while at the end of May Liberum said that the business could be worth 202p a share.
I think analysts may well be right.
Its balance sheet is strong, and based on forward earnings for cash flows and net earnings, its shares could indeed rise from its current level if it keeps up with its current strategy on 26 May, it completed the acquisition of Teltronic, a 127.5m deal that was announced on 1 May, and contributed to a +24% performance since.
Genus (Market Cap 900m)
What you are buying:This is a biotech company with focus on animal genetics. I am not a big fan of biotech companies: they can deliver huge returns, but that comes at a high risk Genus fell 30% in 1Q14, for instance, although it has recovered most of its value since.Genus could be added to your wish list now, however.
Its stock is up 13% this year and 40% since June 2014. Admittedly, it doesnt trade in bargain territory, one of the reasons being thatits forward earnings multiple stands at 28x, while itsforward dividend yield is in the region of 1.3%.But if forecasts are correct, Genus may be able to grow earnings per share at 10% a year or more, which would render its stock cheaper, on a relative basis.
Much of its fortunes hinge on cash returns, in my view; the good news is that Genus has room to boost returns by deploying more capital.
SDL (Market Cap 330)
What you are buying: SDL offersinformation management solutions and software applications, a sector where consolidation is on the cards .SDL stock is essentially flat in 2015, and has been looking for direction for a couple of years now. It looks a tad expensive, based on key financial metrics, trading multiples, and in the light of a lowly forward dividend yield.
Its balance is strong, but core operating margins are not incredibly enticing. I think management would do well to announce a more aggressive corporate strategy with regard to capital allocation its core free cash flow yield is low, but theres room for action, if it exploits its balance sheet.
Until then, investors would do well to give it a pass.
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