Sussex based Avesco Group (AVS) provides audio-visual equipment, lighting equipment and services to the live events, broadcast and entertainment industries. The Company operates through three operating
segments: Creative Technology, Full service and Broadcast Services. It has operations in Europe, North America, the Middle East, Asia, and Australia. Founded in 1984 and formerly known as InvestinMedia plc, the company changed its name to Avesco Group plc on completion of the acquisition of Avesco plc in May 2007.
Avesco published a trading statement on September 1st, and said that trading over the summer months had been strong, particularly in its Creative Technology (CT) division. In particular CT London had a very successful Olympics and Paralympics in Brazil providing equipment and services to many of the ceremonies and events in and around Rio de Janeiro. As a result, Avesco said that it expects FY results will be comfortably ahead of previous expectations.
The opportunity at Avesco had previously been identified by the VectorVest Unisearch function in 2015 when the shares traded at around 200p. Despite the sharp rise since the trading statement, we believe there is more to come. The VectorVest valuation and Relative Value (RV) ratios indicate the stock continues to trade well behind its actual value. The VectorVest valuation for Avesco stands at 480p vs. current price of 325p, while the RV of 1.43 is excellent on a scale of 0.00 to 2.00. Added to this, the VectorVest Earnings Growth Rate (GRT), which reflects a company’s one to three year forecasted earnings growth rate in percent per year shows a forecasted GRT of 30% for Avesco, which is excellent.
The chart of AVS is shown above. The green line above the price is the valuation while the blue line in the window below the price is the earnings per share (EPS). The price is making a series of rising bottoms after the breakout of a trading range which occurred in August 2016. Rising bottoms is price is considered by technical analysts as bullish behavior. The breakout in August was forecast by a step rise in EPS during June 2016.
In summary, Avesco continues to offer excellent value even after the share price rise following the recent statement. With a target of 480p, VectorVest rates the stock as a buy
David Paul
5th October 2016
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