Wednesday tips round-up: Domino Printing, Imagination Technologies
Domino Printing would seem to enjoy both a favourable outlook and a predictable business model. The firm, whose printers produce labels for consumer goods companies, believes it can grow at above the trend rate of global GDP going forward. Increased urbanisation and government regulations on sell-by dates and such are also favourable tail-winds. However, such good news means that it has attracted the scrutiny of competitors in high-growth markets such as China. Prices there have stabilised, but there is still caution on the part of potential clients in markets such as China and the Eurozone as well.
Domino Printing Sciences
915.00p
16:40 05/06/15
Electronic & Electrical Equipment
10,060.87
17:14 07/05/24
FTSE 250
20,413.08
17:14 07/05/24
FTSE 350
4,570.66
17:14 07/05/24
FTSE All-Share
4,522.99
16:54 07/05/24
FTSE Small Cap
6,621.61
17:14 07/05/24
Imagination Technologies Group
181.25p
16:35 02/11/17
Technology Hardware & Equipment
1,920.18
16:30 03/05/24
Furthermore, the company is in the midst of a technology race with rivals. That, combined with challenging market conditions, will keep a lid on pre-tax profits to close to £57.6m, for a 9% increase on a like-for-like basis. On the positive side of things, the outfit derives much of its sales from the less uncertain business of servicing the aftermarket. The shares also offer a dividend yield of 3.6%. However, on 16 times´ earnings the stock is fully valued, “so there is no urgency to buy,” says The Times´s Tempus.
Superconductors for the more inexpensive smartphones is not the place to be. Hence the decision by Imagination Technologies to migrate upmarket. Going in the opposite direction, so to speak, some of the cheaper players have opted to simply exit the segment, leaving the field wide open to lower cost Asian producers. In any case, Imagination´s decision seems to be paying off, as reflected in the 11% increase seen in licence revenues over the first half. Management is confident in its ability to grow margins up to between 30% to 40%, from 14% currently, thanks to those higher-value products. Perhaps so, but the markets it serves are notoriously hard to satisfy. Furthermore, the stock is trading on 32 times´ earnings. “I would be inclined to avoid for now but perhaps buy for the long term when they are cheaper,” says Tempus.