Question: What do you think of service stream and what would be a good valuation to sell?
Answer (by Paul Rickard): Service Stream (ASX:SSM) has certainly gone through a purple patch over the last 12 months or so, in part due to its contracts with the NBN.
If you were thinking about getting on board now, I would be a little concerned as the train may already have left the station.
Valuation to sell at? The only broker I can find that covers the stock is Ord Minnett, who has a target price of $0.95.
There is an old saying in markets that you never go wrong taking a profit – my sense is that you may do some now and then sit back and stay along for the ride.
Question: How do you rate Isentia? I’m looking for a growth prospect for long term Self Managed Super Fund investment.
Answer (by Paul Rickard): I like Isentia (ASX Code ISD) as a business. The stock has done pretty well since the IPO. It probably got a little overbought late last year, but since pulling back, it seems to be finding a base again. They recently reconfirmed guidance for revenue to be up 22% to 24% on FY15 and EBITDA to be up 18% to 25%.
The brokers also like it. According to FN Arena, the consensus rating is +0.7 (scale is -1.0 is most negative to +1.0 most positive), with a consensus target price of $4.42.
It’s trading on reasonably heady multiples of 22.7 x FY16 earnings and 20.1 x FY17 earnings.
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