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Hot Stocks Under $1
Article appeared in: BRW
Author: Phillip Rennie
Date: 25th September 2005
Recruitment firms have often done well as listed companies, despite the field being highly competitive. Peoplebank Australia (PBA) was floated in June and is selling at a modest premium over its 50¢ issue price. The business was founded in 1990 to specialise in IT contracting and recruitment. It has 92 staff, more than 900 contractors and turnover of $106 million.
52-week high/low: 63¢-52¢
Market capitalisation: $22.2 million
Reason to buy: Participating in the IT management recruitment revival.
IT management recruitment is experiencing strong demand. Not only is IT investment making a comeback after lagging in recent years, but strong capital expenditure generally by Australian companies points to a high level of accompanying IT needs. Peoplebank expects organic growth in line with this IT upswing. It is also seeking bolt-on acquisitions.
Net profit for 2004-05 exceeded prospectus forecasts and the company expects to better this for 2005-06. No specific dividend forecast was made with the float, but the policy is to pay out 50% of profit. Earnings per share in 2004-05 was 6.6¢, suggesting a prospective payment of perhaps 3.3¢ in 2006.
This is a small company, with a capitalisation that will not appeal to institutions. But the industry is attractive and Peoplebank has growth potential.