Midas: Sunny days for Vanco
The Mail on Sunday's share-tipping column Midas this week turns its attention to a company benefiting from holiday bookings and a recruitment IT firm. For Midas' 2007 share tips, click here. Check the performance of its 2006 share tips here.
For many of us, January is the most miserable month of the year. But some people can at least look back contentedly to a Christmas or New Year that they spent in sunnier spots.
The majority of holidaymakers will have reached their destination by plane and a number will have hired a car on arrival.
But have you ever wondered how companies such as British Airways or Avis make sure that their information regarding your ticket or your car is correct? Have you ever wondered how multinational firms like these manage all the information coming their way?
Most use sophisticated forms of internal email and it is so crucial to their business that they have their own dedicated networks to deal with it. Some set these up using a variety of local telecoms groups. But others use Vanco, a 'virtual' network operator that has no cables of its own but piggy-backs off others with tailormade systems.
Vanco is run by Allen Timpany, whose credentials include a first-class degree in thermodynamics. More pertinently, perhaps, he founded the company 18 years ago, since when it has been growing at more than 30% a year.
His clients include BA and Avis, and several new contracts were announced last week. Vanco's selling point is that it can offer businesses cheaper, more effective internal communication networks because it does not have a physical infrastructure to worry about.
It can also pool different networks from several countries and make sure firms are up and running electronically-round the clock. Vanco has strong growth prospects and current trading is robust.
Supporters believe it is a FTSE 100 candidate and in the medium term brokers predict a doubling in pre-tax profits from £11m last year to £22m in early 2008.
Timpany is also exceptionally focused, dynamic and ambitious, aiming to deliver revenues of more than £1bn by 2011 from current sales of about £180m.
Midas verdict: Concerns raised late last year about Vanco's cash position sent the shares tumbling and they now trade at 440¼p against a high for the past year of 613p.
Timpany has vehemently denied that there are problems and many in the City believe him. This is not a share for the inherently cautious, but it could deliver great growth over the next three to five years.
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Interquest has IT experts on tap
We all know what it is like when our computer breaks down. We panic. We try to fix the problem over the phone. When that doesn't work, we have to find an expert who will visit and help us out.
It is a nightmare, even on an individual level, so imagine what it is like for companies, whose systems routinely break down or experience blips.
Such is the need for experienced IT specialists that there are about am people in this field in the UK and the sector is worth an estimated £6bn. Yet trying to find one can seem as hard as picking six winning Lotto numbers.
That is where Interquest Group comes in. It focuses on IT recruitment, making sure that companies have access to experts when they need them. Interquest floated on the Alternative Investment Market in 2005 at 60p and the shares now trade at 80½p. Chairman Gary Ashworth has spent 20 years in IT recruitment and has an impressive record. His last company, Abacus Recruitment, floated in 1995 and was sold four years later, by which time the shares had risen tenfold.
Ashworth and chief executive Ross Eades hope to work the same magic at Interquest. IT recruitment is a deeply fragmented industry, so there is considerable scope for consolidation.
Interquest has made seven acquisitions in the past three years and plenty more are on the cards. It delivered earnings before interest of £1.37m in 2005. It is forecast to have made £3m in the year just ended and is expected to make £4m in 2007, so there is strong growth momentum.
Midas verdict: Interquest is worth only £27m, but Ashworth hopes to turn it into a £150m firm over the next three years. That is ambitious, but he has shown his mettle before. Buy.
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