As staff are bombarded with more data from multiple sources – such as the internet, email, and internal databases – it is crucial that this information is correctly organised and easily accessed. So this company – which provides document reading and analysis tools that help users find and interpret this data quickly – is really in demand:
Gamble of the week: Infonic (Aim:IFNC)
Infonic, once known as Corpora, has been a big disappointment. In 2004, the stock touched 45p, but gradually sank to 5p in June after announcing a £2.45m fund-raising to boost its sales and marketing activities. But prospects are now looking brighter as demand picks up. Infonic develops software that improves the way organisations manage and use information.
With more than 360 clients in a range of sectors, the group serves many of the world’s most information-laden organisations. For example, military installations around the world rely on Infonic software to process essential information and ensure that is passed to commercial shipping fleets. The company’s software is also used to manage attendance systems in UK schools and colleges.
Another exciting development has been the launch of its ‘Sentiment’ news analysis tool, aimed at the high-growth area of algorithmic trading. In April, Reuters agreed to sell the software to help its customers scan news articles, measure the kinds of coverage firms are getting and trigger stock trades based on the resulting information. The software assigns “sentiment scores” to words or phrases. These are then processed to give an overall positive, neutral or negative view. I’m sure the likes of Bloomberg and the other major financial channels would also be interested in taking the software. In terms of the numbers, Infonic released its pre-close trading update on Monday, saying that “revenues for H1 2007 exceeded expectations and were around 100% higher than first half 2006 levels of £2m”. They also report that “careful control of costs has been maintained ”. With operational break even achieved, research group Equity Development expects Infonic to deliver turnover and underlying earnings per share of £7.5m and 0.13p this year, rising to £9.3m and 0.65p in 2008.
Assuming these targets are met, I would value the stock at around 8p a share – more than 40% above current levels. The main risk is that Infonic is still a relatively small player operating in a fast-moving industry, and therefore more funding may be required to fully exploit the opportunity.
Recommendation: SPECULATIVE BUY at 5.5p (market capitalisation £11.6m)
• Paul Hill also writes a weekly share-tipping newsletter, Precision Guided Investments
For the full list of how Paul’s ‘Gamble’ tips have performed, see: Gamble of the Week portfolio