Leading share registry and administration business, Computershare Limited (ASX: CPU) today smashed through its previous 52-week high to trade at $13.37 around midday, up around 2.45%.
In early February, Computershare reported its half-year results. Whilst on first glance, the 88% fall in headline statutory net profit might be cause for alarm, judging by the share price, savvy investors appear to have read between the lines.
In the past month alone, Computershare's stock price is up 15.8% on the back of relatively little company specific news.
Sure, it recently announced a small acquisition in Canada but, in my opinion, it isn't enough to explain the price rise.
And it also recently conducted a presentation at an investor conference. Though, once again, it wasn't enough to justify such a big rise in share price.
So what could possibly be providing the impetus for its recent rally?
The devil is in the detail…
Its shares don't appear cheap on conventional metrics. For example, its current price-earnings (P/E) ratio of 19 hardly screams, "bargain". Nor does its price-book ratio of 5.5.
However as Motley Fool writer Tom Richardson put it yesterday, "(Computershare) generates a substantial portion of its revenues in U.S. dollars. Moreover, the company holds investable client funds that will achieve better returns if the U.S. cash rate is lifted."
Over the last week, good economic data out of the U.S. has lifted expectations of interest rate hikes in the world's biggest economy.
Given Computershare's leverage to the U.S. dollar and interest rates, the good times could keep on rolling for Computershare shareholders.
