It's worth a quiet look at DGM, who said 2 weeks ago that they are on target for the forecast £2m pretax in 2006, which is a very impressive turnaround.
DGM is currently on a p/e of below 10, compared to IBG at 40+, which gives them a cap of about £13m v IBG on £20m
DGM assert that they are growing at about 50%, so let's assume a 2007 pretax of £3m (They do not pay tax, by the way!)....and let's say the very sceptical city allows the DGM p/e to grow to 20 (only half that of IBG), you get a cap of £60m.
This is 4.5 times current value, and it means the price of DGM would be over 14p.
Even if you halve my assumptions, you would double your money!
Something about old rope.......?
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