One of the three HotStockRockets share tips of the year for 2023
By Hotstockrockets | Monday 26 December 2022
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
We served up three tips of the year last week. Here is the first...
With 2022 having been a terrible time for the small cap market, our first selection for 2023 has held up relatively well and, with the stock market tending to anticipate a macro upturn a year or so before its actual arrival (which we expect in H2 2024), we consider stock market sentiment and its own trading performance should help SysGroup (SYS) from a 26p offer price, £12.7 million market cap.
This is a managed IT services, cyber security and cloud hosting company which most recently noted in last month-announced interims that “trading for the second half has continued with positive momentum and the board is therefore confident in meeting its full year expectations”.
That may sound dull but the numbers are anything but.
We forecast for 2022 a full-year adjusted pre-tax profit of £2.4 million on revenue of £20.5 million after £1.1 million on £11.3 million at the half-year, with full-year net debt down to £1 million. We look for further progress in 2023, though even a modest 10x earnings multiple of the noted suggests a more than 37p share price.
We therefore consider 40p+ possible on further 2023 progress as further updates make the valuation opportunity here clearer.