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Is Melbourne IT (MLB) a worthy short-term trade?

Our Analysts in the Equity Story team went through a myriad of stocks over the past week and over the weekend to bring to you our pick of this week.

Having recently put out their results, the Company have said “1H17 delivered strong numbers with revenues up 11% to $91.7M, NPAT up 259% to $7.9M”, which equated to an EPS of 6.8c that placed MLB on ~17x FY17 earnings.

Most importantly, the outlook for FY17 has been reaffirmed with underlying EPS expected to fall between 17c – 19c. If it can hit the higher end of that range, this Company will be trading on ~15-16x FY17 earnings.

For a Company that has the growth potential as Melbourne IT has, and the impressive deliverance on their guidance, we think this ticks a few boxes for us not only short-term but medium to even longer-term.

MLB at current prices still offers good a risk/reward investment considering the current organic growth being delivered, and their positive outlook. Most importantly, margins are growing strongly which is being reflected in bottom line growth.

Did you know that their dividend has also been significantly increased by 75% to 3.5c which equates to a FY17 yield of 3.5%??

Looks well poised to say the least, and with a chart that has only moved upwards since 2015, we find it hard to fault this stock not only as a short-term trade, but a story that could potentially deliver longer-term gains.

Worth of the Hot Stock status? We think so.

 

 

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