Nextdc Ltd’s (ASX: NXT) share price has had a good year, returning 74% to shareholders. The company is trading on a spectacular forward price-earnings-ratio (PER) of 141x but earnings growth is also forecast to be strong over the next decade according to UBS. UBS expects FY19-29E EBITDA CAGR of 26%.
Nextdc is involved in the development and operation of independent data centres in Australia, supporting outsourced data centre infrastructure and cloud connectivity.
The company is embarking on its next wave of expansion by increasing its capacity by 142%. UBS believes this will underpin a very strong earnings growth profile over the next decade with strong accelerating demand for cloud computing. Nextdc in a perfect position to read the benefits with its data centres.
The high valuation may leave some investors a bit wary but the company is on the right track as data centres and cloud computing are becoming a part of the landscape.
UBS maintains its Buy recommendation.
We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.
That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.
We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!
Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.