My sharepick for 2006 is ServicePower Technologies
EPIC: SVR
Cap: £25.03M
Shares in issue: 80M
Price 31p (Spread 30-32P)
52 week: H 37.75P L 24.35P
Net cash est. £1M - £2.5M
ServicePower provides a range of software solutions to companies managing and controlling the work of mobile workers. Its prospects have never been better with the list of prospective customers seemingly endless, multiple contract wins and large scale Director Buying during 2005.
Implementation of the software reduces administration costs; users have demonstrated significant productivity increases with the field workers completing more jobs per day; on time appointments becoming the norm and correspondingly a higher degree of customer satisfaction.
ROI is also achieved in a quick timescale for the company implementing, according to the company.
Positives
* Market leading product with Blue Chip Customer Base
* 4 Directors Buy in June 05 (400k shares); 1 Director Buy in July 05
(750k shares); 2 Directors subscribe for 1.1M shares in November 05 placing vote of confidence to me (all share purchases between 26p and 33.75p)
* General Electric maintains an interest in ServicePower following development of FSS and is providing additional repair jobs
Mr M Stubbs (Private investor ?) obtained a 5% holding during 2005
* Substantial number of contracts won by both businesses throughout the year business demonstrating good momentum
* Interims FSS sales up 115% and SERVICEpower sales up 145%
* Increased revenue visibility for 2005 and beyond large amount contracted and recurring
* Cash generation pencilled in for the 2nd half of 2005
Negatives
* Long lead times at SERVICEpower division lumpiness in revenues with resultant 2004 revenue shortfall
* Continued investment in FSS Company want to build a revenue growth and market dominance at the risk of short term profitability
* Small loss / breakeven forecast for 2006 may take another year to build up profitability will market only re rate when this company delivers. Will it be 2006 or 2007? (Or will they have to come back to the market cap in hand?)
A small company with £25M Cap that could have a blockbuster product on its hands. As it is partnered with such a prestigious company such as General Electric, I believe it worthy of consideration and my entry as a doubler in 2006.
