Opportunity with Veda Group (VED)

by Michael Gable

Our Investment View
This is an extract from our research report last week:
We consider that the recent share price weakness presents an excellent entry opportunity into the stock, given the excellent fundamentals. The current P/E ratio of 22x (having traded in the mid-to-high 20s) appears reasonable given that the Company has a market-leading position, significant barriers to entry, high margins, a long history of stable revenue and earnings growth and consistently high levels of ROE (~17% for FY15). 
Further, EBITDA growth (and EPS growth) in FY15 and FY16 are expected to outstrip forecast revenue growth over the same period, underpinning the strong leverage in the Company’s earnings to increasing revenues. 
Our Charting View
Since peaking in March, you will notice that VED has had a rough time, dropping over 20%. It looked oversold in early June but it struggled to bounce higher, finding lower levels in July. It bounced impressively last week and we could be seeing the beginning of a recovery. It is early days, so more conservative investors would like to at least see a “higher high” which means we need to see it up at $2.10 to be comfortable that the trend is turning.


Disclaimer: Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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