Iress Ltd (ASX:IRE) is mid-cap company valued at about $2.1 billion providing technology solutions for the financial markets, wealth management and mortgage sectors.
The company’s shares have taken a hit in the past 12 months due to higher costs associated with the integration of acquired businesses in the UK. They were down to a low of $9.17 in April.
With no news out of the company, I think investors are re-examining the company. The 2017 results disclosed a 10% increase in group revenue from the previous financial year to $430 million.
The 2018 results should see the acquisitions bedded down and a material increase in profit from 2017. What I like about IRESS is the substantial investment in AI which would be expected to pay off down the track, together with its market dominance – IRESS commands about 60% of its market in Australia.
Look for companies with solid revenue growth which have been oversold due to lower-than-expected profitability or underwhelming earnings guidance. Often newly-acquired businesses take a good 12 months to bed down. An example of this is WiseTech Global Ltd (ASX: WTC) which was oversold to $9.49 in April (closing today at $16.76).
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Returns As of 6th October 2020
Motley Fool contributor Matthew Reynolds owns shares of WiseTech Global. The Motley Fool Australia owns shares of WiseTech Global. The Motley Fool Australia has recommended IRESS Limited. 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.
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