Today I am explaining why Quindell (LSE: QPP) could be considered a terrific stock for growth hunters.
Earnings ignition on the cards
Share price turbulence at telematics play Quindell shows no signs of abating, as fresh waves of short selling have re-emerged and scepticism from Gotham City Research over profits projections continue to worry the market, even though Quindell has since won a libel ruling over the mysterious US entity.
Investors will, of course, be anxiously awaiting the firm’s latest trading update due on 15 October for fresh clues over the direction of Quindell. But in the meantime City brokers are broadly in agreement that the business is in line to enjoy stratospheric earnings growth expansion in coming years.
Indeed, the number crunchers at Canaccord Genuity expect the tech specialists to punch earnings of 53.4p per share in 2014, a result which would represent a 42% on-year improvement. And analysts expect the good news to keep on rolling further out, and anticipate an additional 36% rise in the following 12-month period, to 72.7p.
These forecasts leave the business changing hands on rock-bottom P/E multiples through to the end of 2015 at least — this year’s earnings forecast creates a reading of just 3.2 times prospective earnings, thriving comfortably below the bargain benchmark of 10 times, and which drops to just 2.3 times for 2015.
The market leader in a spectacular growth sector
Many sceptics will say that these readings are too good to be true. But in my opinion Quindell undoubtedly has the credentials to back up these terrific earnings projections — the business has seen earnings improve remarkably during the past five years, culminating in 2013’s impressive 74% advance.
Few would argue that the area of telematics looks on course to enjoy stratospheric growth in coming years. Indeed, this week data from Sewells Research and Insight showed that almost nine-tenths of UK fleet operators said they expected to spend more on this technology next year in a bid to improve cost efficiency.
The technology has a wide range of other uses, of course, from container tracking through to logging of driving habits for insurance purposes. And I believe that Quindell’s position as the top supplier of such technology to both fledgling and multinational companies alike puts it in pole position to enjoy strong sales growth over the long term.