Parity (pty): Recovery?

Riz

Experienced member
1,266 5
Madasafish tipped the IT service group Parity (pty) during the week...so perhaps he can add more points here...

Showing typical signs of recovery, it of course all depends whether we're in a bull market or at least we've seen the end of the bear market...

After breaking down a couple of flat bases it finally shot off the last flat base on highest volumes illustrating big buyers' interest...

Certainly one to watch...

Riz
 

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madasafish

Well-known member
470 5
I am of the viewpoint that the long term bear market is small cap stocks is over.. indeed by definition it must be close as many are on valuations which assume imminent bankruptcy.

Take Parity which I bought some 2 weeks ago as it was clearly bottoming.
(all figures after results)
NAV £36M
Dividend 1.57p
Shareprice 43p
Yield 3.7%
Loss making due to cost cutting
Market Capitalisation £66M
Turnover £249M

So on fundamentals it's paying a dividend (it has cash in Balance Sheet) and its Market Cap is virtually 29% of turnover.
Assume the business makes 5% after tax on turnover in 2 years time: about £15M. On a PE of 10 that's £125M - twice the current price or 86p - and making no allowance for growth/changes in sentiment etc.
My chart is self explanatory:
 

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