Stm Share Discussion Threads

[philw2009] 20/5/2015 15:24

So given that we closed on higher than 48p yesterday, I guess Simon's target price is now 60p.

But not surprising to see a few people running profits either a he recommends.

[philw2009] 20/5/2015 14:29

I missed this from Simon Thompson on 14th May...


Profiting from a pension pay day

It hasn’t taken long for investors to warm to the merits of STM (STM: 45p), the Aim-traded financial services company specialising in the administration of assets for international clients in relation to retirement, estate and succession planning and wealth structuring. Having recommended buying the shares at 35p only 17 days ago ('Tapping into a pensions payday', 27 April 2015), the price has surged by 28 per cent and is closing in on my initial target price of 47.5p.

Investors’ enthusiasm for the shares has been fully justified too as the company released an upbeat trading update at the annual meeting yesterday. Chairman Michael Riddell noted that the business continues to make inroads in increasing its distribution network. In fact, it has signed on more intermediaries in the year to date than in the whole of the previous financial year. STM is also in the final stages of setting up a sales office in the Middle East, and recruitment for a further office in Asia is well under way too. This gives further reassurance that the company will be able to deliver on profit estimates.

Analyst David Buxton at brokerage finnCap predicts that STM is on course to grow pre-tax profits this year by £1m to £2.7m based on a £1.8m increase in revenue to £17.7m. On that basis, expect EPS to almost double from 2p to 3.8p. But with pro-forma net cash of £4.7m on its balance sheet equivalent of 8p a share, the shares are still only priced on 10 times cash adjusted net earnings even after the sharp price rise. That’s hardly a punchy rating for a company that is forecast to increase EPS by 95 per cent this year. A price-to-book value of 1.15 times is hardly punchy either.

Moreover, the increase in recurring revenue from STM’s pension business means that a modest £900,000 forecast rise in revenue to £18.6m in 2016 is expected to boost pre-tax profit by a further £1m to £3.7m, albeit this performance is also being enhanced by the reduction in finance charges following the redemption of the convertible loan notes I discussed in my article last month. Nevertheless, on this basis EPS estimates surge from 3.7p in 2015 to 5p in 2016, implying that STM’s shares are trading on only 9 times next year’s likely earnings, or 7.5 times on a cash-adjusted basis. That's a modest rating for a company set to deliver robust EPS growth over the next few financial years.

True, the 14-day RSI is overbought at a reading of 80, but this can unwind itself without the shares selling off heavily as the price can move in a sideways fashion as has been the case with Redde. Furthermore, if STM’s share price can take out the 47.5p level, coinciding with a six-year high dating back to January 2009, then a run-up to the next price target of 60p, representing the pre-Lehman Brothers lows in the summer of 2008, would be on the cards.

So if you followed my previous advice I would run your healthy profits for now and I am placing a conditional buy recommendation on the shares on a close above 48p for new investors. In this event my new target price becomes 60p.

[smithie6] 20/5/2015 13:51

...just the next day after I said I was a fan !!....sorry !

[reddave999] 20/5/2015 12:49

oh eck going south

[smithie6] 19/5/2015 16:05

....good number of buys gone thru today...
which is +ve imho after such a large price rise recently..

Be interesting to watch the share price in coming days / weeks..but important thing imo are the next interim and final results...the share price will look after itself...

[nibble] 19/5/2015 15:57

Hi Smithie

Might be reminding you of the Durlacher days, but I've not seen anywhere near the same level of hype around STM yet (just that IC article, which was a few weeks ago now).

Volumes aren't bad, but it's hardly a feeding frenzy at the mo. Makes me wonder what will happen if this gets publicised more widely.

[smithie6] 19/5/2015 15:38

Hi QS
...no....just recalling the Durlacher share price action...like stm..kept going up.....and up....

-----

Trade of 30k shares...yup...noticed that as well

Stm has doubled and still buyers arriving...

(Stm.....I'm a fan)

[qs99] 19/5/2015 14:21

smithie6 do you mean this is over valued then? Just interested....forward eps is c.5p I believe and should still have net cash so not sure it is iMO......anyway, someone looks like paid earlier today 55p for £30k.....interesting...

[smithie6] 19/5/2015 10:18

...reminds me of the Durlacher share price ..back in the dot com days...

[nibble] 19/5/2015 10:11

Yes OS99, doesn't seem to want to stop does it?

I've only had the good fortune to get into a couple like this over the years, but have usually got out too early. Intend to hold on tight for now, as the market movement over the last 3 weeks does not look to me like a flash in the pan.

Wouldn't be surprised to see some transformational news in the very near future, but who knows?

[qs99] 19/5/2015 09:19

I was joking about a quid, but at this rate....!

[philw2009] 18/5/2015 15:45

Seems to be continuing so far... Is this what they call a "break out"?

[qs99] 15/5/2015 14:13

agreed....be interesting to see if it continues the ride next week....

[nibble] 15/5/2015 13:04

Not bad volume either. Something besides the IC article driving this now.

[qs99] 15/5/2015 12:57

at this rate we will be through a quid in short order IMO haha! GLA

[qs99] 15/5/2015 12:17

BOOM through 50p....

[qs99] 15/5/2015 12:16

welcome on board indeed....if it keeps building up its cash alongside its EBITDA, then yes should still look GV for newbies into the stock IMO....DYOR though....reckon there may be a further IC write up next week given recent tipping IMO...lets see....but 5p forecast for following year to this Dec so all to play for IMO....

[philw2009] 15/5/2015 12:05

BOOM

Smashes past 50p. Where next?

[nibble] 15/5/2015 11:06

Welcome aboard, firtashia. Hope you enjoy the ride.

[firtashia] 15/5/2015 10:50

Couldn't buy online on the day of the AGM statement, but glad I persevered yesterday. It was it's "in line" statement that convinced me to buy, because if it does continue to meet forecasts then its still decent value despite the recent rise.

[nibble] 15/5/2015 10:10

Hope you're right. Always nice to bag the odd one or two ;-)

[qs99] 15/5/2015 09:40

50p looks on the cards IMO today...fast approaching...that will be over a "bagger" for me then...

[qs99] 15/5/2015 09:38

does look like it IMO....net cash which is growing, decent update, highly profitable from recent results....just depends what level people are expecting this year and beyond....but there are obviously IMO plenty of buyers as shows no signs of stopping IMO

[nibble] 15/5/2015 09:32

Nice solid stuff. I imagine there are a couple of early sellers kicking themselves. Do you get the impression that there's a trickle of clever money sneaking into this?

[qs99] 15/5/2015 09:08

off we go again!