It isn’t easy at the best of times, attempting to dig out prospective growth stocks, less so when the markets have enjoyed a good run and shares begin to look toppy.
That said, I think it worth my keeping an eye on a company that I covered last year in the Private Punter column, namely NetPlayTV.
The original article, that may be of interest is shown below and was written almost a year back, when the shares stood at 10p against today’s closing price of 17.2p.
I am often cautious in returning to past subjects, particularly when they have enjoyed a decent run.
But, looking at how NetPlay has performed over the last year, along with current expectations, I take the view that at the very least, they are worth my taking another look.
Claiming to be the UK’s largest interactive TV gaming company, it has seen sales rise from £19m in 2008 to last years recorded figure of £27.3m. Importantly, it has turned the corner of successive loss making years whereby roll out costs and expenditure peaked to deliver some decent numbers. And it is worth noting against a harsh economic environment too.
While a small pre-tax profit of £550k was achieved in 2011, last years numbers released in April of this year, delivered a significantly improved figure of £3.14m.
While that in itself may suggest, the company is certainly doing something right, the cash generation and subsequent figure on the balance sheet, also appears solid.
Up from just under £8m it now stands at £12.2m, while the return on capital employed also rose impressively. As always, I try and balance things out for my own satisfaction looking for those negatives, but here the balance sheet looks solid enough, while latest trading news remained positive and there is also a small dividend.
Enjoying strong tie ups with the likes of ITV and Channel 5, NetPlay also recently announced that its SuperCasino brand was the headline sponsor of Big Brother, which is now currently running.
As for its other brands, such as Roulette and Black Jack, these have become popular and with others have assisted the group in growing revenues.
The company has also revealed recently, that its 2nd qtr net daily revenues continue to grow compared to the same period last year.
While it is tempting to take the view that at some point growth will slow and that is a reasonable line of thinking, it is worth noting how well the company has performed in that tough environment.
It is also worth recognizing that further growth can be achieved via tablet and smart phones, as customers further embrace this area as a form of game playing.
As the price has risen, so too has the holding from Henderson Global which now sits on 26% against the 24% figure that it increased to last year.
Broker N+1 Singer is forecasting pre-tax profits of £4.3m this year, rising to £5.4m next year.
That puts the shares on forward PER of 12, falling to 9 next year, which looks decent enough to my eye.
As always Do your own research, but anyone interested may wish to take a look at the past article, along with NetPlay’s