On Monday we added AGI to our model portfolio. These are the main points from our research report:
- Opportunity for growth in US and Asia, with 70-90% revenue growt
h, and >100% EBIT growth.
- Healthy profit margins (64% gross profit margi
n, 33% EBIT margin).
- Exceptional returns on capital, 29% ROA
versus 5.5% cost of capital.
- Company is debt free
- Trades on a PE of 16.4x
next years earnings, versus 22.7x for Aristocrat.
In terms of the charts, it has pulled back in a large 3 wave decline from the October high of $3.79. It has just moved out of oversold on the RSI (circled). There is minor resistance at $4.10 but we expect the share price to head back to $4.70.