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Buck the risk-off markets theme with this outstanding growth story
Since positive half year results in September Accesso Technology’s (ACSO: AIM)
share price has plunged more than 20%. This is potentially great for new investors because it means you can now buy the same business and growth opportunity for 20%-plus cheaper than you could last month.
The obvious question to ponder is whether the sell-off implies something uglier to come? Our own digging suggests not. We attribute the share price performance to nothing more than a global markets sell-off as the market mood changes. Our view is long-term and these selloffs can be good times to pick up decent stocks.
Accesso isn’t alone in terms of recent share price declines for popular AIM Stocks. For example, Fevertree (FEVR: AIM), Blue
Prism (PRSM: AIM) and GB Group (GBG: AIM) have all taken a hit in recent weeks.
Accesso is an attractions and queuing solutions supplier. Over the years it has created an integrated platform for everything from buying tickets, queuebusting, merchandise purchasing and more.
Clients include Alton Towers operator Merlin (MERL) and
Six Flags and it has emerging opportunities across Latin America, the Middle and Far East, including China.
Multiple vertical markets are also being explored, such as sporting events, music concerts, ski resorts, museums and theatres.
We believe Accesso has scope to expand in many ways. There are thousands of theme and water parks, tourist attractions and other high footfall visitor sites around the world that could potentially benefit from the company’s integrated visitor ‘experience’ solutions.
There is also an extra growth leg emerging in health via a development agreement with Henry Ford Health System.
Accesso is a business that has been ticking growth investors’ boxes for years. Since 2012 it has seen revenue soar from $46m to $133.4m, including last year’s (2017) 30% jump, and has an equally impressive record on profits. It has been free cash flow positive in every one of those years.
Future revenues will be impacted by new accounting rules, which change both how and when income is recognised. This does not change the underlying growth dynamics of the business and it will make little difference to profit and earnings going forward, which implies better margins.
Analysts expect operating profit of around $42m in 2020. It is forecast to report $25m or $26m this year, implying a 2018 price to earnings (PE) multiple of about 40. That’s high, yet if forecasts are to be believed, the forward PE could be slashed rapidly to about 22-times over the next 12 to 15 months. (SF)