Bloody hell - lots of the quality picks already gone :S
Anyway - lets go for something a little different, maybe being a bit optimistic as a multi bagger but a good 50%-100% looks ominous if markets perform well next year (though still have thoughts that the general market might see a more general consolidated phrase for 2006 - but would like to be proved wrong)
Anyway something in the RECRUITMENT SECTOR worth putting in as a diversified portfolio - similar sector stocks not had the best year recently so could well be in for a nice run in 2006.
So first of two stocks I will put forward is GLOTEL - GLO 83p
RECENT RESULTS
Better trading conditions boosted first half profit at recruitment group Glotel with particularly strong performance in the Asia Pacific market.
Chairman Les Clark said, "Glotel's strength lies in its global reach: overseas sales rose 31% in the first 6 months of the financial year, with sales in the Asia Pacific market doubling."
Pre-tax profit increased to £1.7m in the half-year to 30th September from £1m the year before. Sales for the period increased by 18% on the half-year to 30th September 2004, Glotel said.
"The successful strategy of investing in its overseas operations continues and overseas sales have now reached an all time high of 68% compared with 61% the year before," it added.
BROKER COMMENTS
Bridgewell has a buy rating and 110p price target for Glotel.
Insinger de Beaufort believes shares in Glotel are inexpensive and are due a re-rating and believes Strategic Thought shares could well offer further upside.
Numis has a buy rating and 162p price target for Glotel
RECENT PRESS/TIPSHEET COMMENTS
Small-Cap Investor By : Andrew Hore December 04, 2005
TELECOMS consultants provider Glotel prospered in the late 90s on the back of increased telecoms investment. When this slumped at the beginning of the decade Glotel dipped into loss. It returned to profit two years ago and profits are set to rise sharply due to rejuvenated telecoms and network markets.
Investment in fixed and wireless networks plus higher spending on IT is helping improve Glotel’s performance. Glotel also does some permanent placement business.
Glotel was formed in 1989 and executive chairman Les Clark and chief executive Andy Baker were co-founders. Profits peaked at £6.2m in the year to March 2000 although turnover reached its high of £165m in 2001. It will take some time to get back to those levels, but Glotel is heading towards that goal.
In the six months to September 2005 turnover rose 18% to £68.7m. Profits moved from £1.03m to £1.66m. Telecoms clients contributed 63% of turnover, up from 54%. Public sector business has held steady at 13% of turnover, but other corporate commercial clients share fell in percentage terms and was flat in money terms. As utilisation of the consultants improves, more of the additional turnover falls through to profit.
A change in the geographic mix of business has also helped gross margins. US margins tend to be higher than the UK and Australia. The North American division accounts for less than half the group turnover, but three-fifths of its operating profit. This improvement was helped by management’s decision to drop low margin business. In contrast there is pressure on European gross margins.
New subsidiaries have been opened in New Zealand and India. Non-Australian business in the Asia Pacific division was £1.7m, but this should grow significantly over the coming years.
The growth in overall activity means that working capital is increasing and this has a knock- on effect on debt and interest charges. In the past six months Glotel has gone from a cash positive position to net debt of £1.9m. This is partly down to the fact that US companies’ tend to take longer to pay invoices.
Glotel paid a dividend of 1.2p a share in 1999-2000 but there are no indications that it intends to return to the dividend list.
House broker Bridgewell forecasts full-year profits rising from £2.8m to £4m in the year to March 2006. Next year it forecasts profits of £5m. Its forecasts are lower than other brokers and look achievable. The shares are trading on 13 times this year’s forecast earnings, falling to less than 11 for 2006-07.
It looks as though its market should continue to be strong for the foreseeable future so shares are good value at this level.
