Interquest – Time to call bank profits and sell

Share On Facebook
share on Linkedin
Print

My July 2006 recommendation on t1ps.com (the site I founded in 2000 and edited until this September) of shares in specialist IT recruitment group, InterQuest (LSE:ITQ) is not one which has covered me in glory. Having tipped the shares at 67.5p, they traded above 80p until economic conditions darkened in the second quarter of 2008. A low of 30.5p was hit in February 2009 and the shares again traded at sub 35p in August of last year.

But to be fair to me I did suggest an aggressive average down at 45.5p and again in a detailed fashion at 49p as you can read here on 22 November.

I said then that my target price was 64p. Results came out earlier this month and the shares are now 67p. Well I am a man of my word.

For what it is in worth in calendar 2012 EBITDA before one-offs came in at £1.8 million ( below forecast by £400,000), the headline ,loss for the year was £100,000. Basic earnings per share were 3.5p and the total dividend was unchanged at 2.5p. Net debt fell by a fifth to £4.4 million at the year end.

I am sure that this year will be better. Earnings could well be 6-8p but on the other hand macro headwinds could see Interquest miss its targets yet again. Even if it hits 8p a PE of 8 looks more than enough for this sector. And a yield of sub 4% is not enough to justify the risks.

And so I would say sell Interquest.

If you want to stay in the same sector – a larger play with more earnings visibility yet which trades on a far lower multiple is Impellam (LSE:IPEL). For a full analysis of its potential click HERE

 To obtain a free twice weekly newsletter from Tom Winnifrith including an exclusive free share tip a week as well as links to all of his other articles on UK and US financial websites register HERE

Libertarian investment writer Tom Winnifrith writes extensively for a number of US and UK financial websites. All of that material appears on his own blog, which also carries his extensive original non financial material, at TomWinnifrith.com – for alerts on all Tom’s writings (except for that free share tip) follow him on twitter at @tomwinnifrith

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20211204 14:55:12