Midas share tips: IndigoVision and PHP
The Mail on Sunday's share-tipping column looks CCTV maker IndigoVision and GP surgery developer Primary Health Properties. You can also sign up for free additional Midas share tips that will be sent to your inbox once a week.
Smile please: The rise in camera use has seen turnover soar for Oliver Vellacott
It is said that the UK has more closed-circuit TV cameras per head of population than any other country in the world - more than 4m of them, watching out for everything from litter being dropped to murder.
Most people find the proliferation of CCTV rather frightening, but for IndigoVision, the desire of companies and governments to watch our every move is cause for celebration.
IndigoVision makes video surveillance equipment with a difference. About 90% of the world's surveillance equipment is analogue-based, which means cameras are connected to viewing rooms by dedicated cables.
Breakdowns are frequent, it is time-consuming to search for information, the cameras cannot be too far from the offices where monitoring takes place and recorded images can take up a lot of storage space.
However, Indigo's kit is digital and internet-based - it is more reliable, more effective and can be installed anywhere. Accessing information is faster, too, and the quality of the pictures is much better than the blurred images most CCTV cameras project.
Only last Monday, the company signed a contract with the Canada Border Services Agency to monitor the entire US-Canadian border and Vancouver airport. Other recent converts include the Nevada Gaming Commission and the new M Resort casino in Las Vegas.
The company has installed systems in 64 countries, but it is headquartered in Edinburgh and has a strong Scottish pedigree. Founder and chief executive Oliver Vellacott has a PhD in electrical engineering from Edinburgh University and chief technical officer Barry Keepence lectured at Napier University in Edinburgh.
Keepence also designed spacecraft control systems for the European Space Agency and has a PhD in robotics.
IndigoVision's customers range from airports to banks and from shopping malls to schools. Some are trying to stop relatively minor offences such as shoplifting, others are looking out for terrorists or smugglers.
The company reports results for the year to July 31 this week and they should be good. In August, Vellacott said turnover would be close to £26.3m, about 43% higher than in 2008.
He also said profits would be ahead of analysts' expectations, prompting brokers to raise forecasts from £2m to £3m. In 2010, profits are expected to rise to at least £3.4m and a maiden dividend of 10p is anticipated.
IndigoVision is small and valued on the market at just less than £50 million, but it is growing fast. Before the start of the economic downturn, the surveillance market was increasing by about 40% a year and even since then, it has been growing by 15% annually.
IndigoVision is one of the few companies to provide internet-based equipment, which should become even more appealing as the economy recovers.
Midas verdict: IndigoVision shares are trading at 617½p and have done well since last month's trading update. But there is plenty of potential for further growth. In 2007, the shares were more than 1000p and brokers believe they are easily worth 850p today. Buy.
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