In morning trade the technology company's shares have jumped 17% higher to 41 cents.

What is Security Matters?

Security Matters is a technology company that owns and is commercialising the technology to permanently mark any object either solid, liquid, or gas with a hidden chemical-based barcode.

This barcode can be read using the company's unique reader to access the corresponding stored data and is recorded and protected using blockchain technology.

Why is its share price jumping higher today?

This morning Security Matters announced the incorporation of a new joint venture company, Security Matters Beverages in collaboration with Global Bevco.

Global Bevco is a company owned by former Macquarie Group Ltd (ASX: MQG) banker Peter Yates AM and Leon Kempler AM.

The joint venture will aim to complete the development of its patented wine anti-counterfeit and adulteration system and commercialise its application. The two companies will have a 50% stake in Security Matters Beverages.

The newly formed partnership will apply Security Matters' solution to alcoholic beverages globally, with work already underway with key stakeholders to develop global standards and test the technology.

Security Matters founder and CEO, Haggai Alon, said: "We are focused on assisting FMCG companies to demonstrate brand integrity and production visibility – from raw material to recycling – with all information stored on the block chain. Through the joint venture we will be executing an aggressive strategy in 2020, targeting the FMCG market and specifically the alcohol industry which accounts for over $500 billion annually of counterfeit goods."

"Following the successful demonstration of our pioneering technology incorporated in different types of wine, we are finalising the markers to embed into wines within Australia and Europe while solving the regulatory issues surrounding wine provenance, quality and production methods," he added.

This could be helpful for global wine giant Treasury Wine Estates Ltd (ASX: TWE) which has had issues with copycats and counterfeits in the past.

Peter Yates, Director of Global Bevco, notes: "The sale of counterfeit wine is a significant threat to the industry that occurs at all price points and is particularly prevalent in China."

"Moreover, it is a social problem that deprives communities of the value they have created, especially growers of premium product. SMX's technology, pioneered in Israel, is a unique commercial solution to this social problem and represents the holy grail for preventing counterfeiting of wine," he concluded.

The post Why the Security Matters share price rocketed 17% higher today appeared first on The Motley Fool Australia.

Four shares which have defied the market and climbed higher today are listed below. Here's why they have started the week with gains:

The ALS Ltd (ASX: ALQ) share price has climbed 5% to $6.94. The testing services company's shares have been on a tear since it announced its full-year results. The result was so strong it led investment bank Citi to upgrade its shares from a sell rating to a buy with a $6.90 price target. After the strong rally, I think ALS shares are fully valued now.

The SMS Management & Technology Limited (ASX: SMX) share price has jumped up 4% to $1.76 after fellow IT services company ASG Group made a non-binding expression of interest valuing it at $1.80 in cash per share. Rival DWS Ltd (ASX: DWS) had hoped to acquire the company for the equivalent of $1.61 per share. I believe there is a reasonable chance DWS will come back with a better offer.

The Ten Network Holdings Limited (ASX: TEN) share price has bounced back from last week's heavy decline with a 13% gain to 19.2 cents. The media company's shares have been on a rollercoaster ride this year, ultimately falling a whopping 80%. The most recent decline is attributable to Lazard Asset Management Pacific Co selling down its substantial stake.

The Vita Group Limited (ASX: VTG) share price has surged 7% to $1.09 despite there being no news out of the retailer. Despite today's gain Vita's shares are still down a remarkable 65% year-to-date. Concerns over its future profitability following a decision by Telstra Corporation Ltd (ASX: TLS) to cut its remuneration by 30% over the next two and half years has weighed heavily on its shares. As cheap as it looks, there are still a lot of unknowns. This makes it one to avoid in my opinion.

The post Why these 4 ASX shares have started the week with gains appeared first on The Motley Fool Australia.

Going against the grain today have been four shares in particular. Here's why they have started the week with a bang:

The Aconex Ltd (ASX: ACX) share price has jumped almost 6% to $3.53 despite there being no news out of the software-as-a-service company. With its shares down 37% in the last 30 days, some investors appear to think they have dropped into bargain territory. I would agree with this view and I believe a long-term buy and hold investment could prove to be rewarding in the future.

The Nanosonics Ltd. (ASX: NAN) share price has climbed 7% to $2.73 after the infection control company advised of new guidelines to establish broader requirements for high level disinfection of ultrasound probes internationally. The guidance identifies the company's trophon product as being very efficient, rapid, environmentally friendly and quality-assured.

The QBE Insurance Group Ltd (ASX: QBE) share price is higher by 4.5% to $12.85 following the release of the insurance giant's full-year results. Although the result was reasonably solid and showed a big improvement in the business as a whole, I feel it was QBE's three-year $1 billion buyback that pleased the market the most.

The SMS Management & Technology Limited (ASX: SMX) share price has rocketed 11% to $1.55 after DWS Ltd (ASX: DWS) announced its intention to acquire the information technology services firm for the equivalent of $1.66 per share. The DWS share price has tumbled almost 6% on the news. It seems as though its shareholders may not be keen on acquiring the underperforming business.

The post Why these 4 ASX shares have started the week with a BANG appeared first on The Motley Fool Australia.

In early afternoon trade its shares have rocketed higher by around 13% to $1.58.

According to the release DWS has offered $1.00 in cash and 0.39 DWS shares for each SMS share as part of the Scheme of Arrangement, the equivalent of $1.66 per share.

Furthermore, SMS declared a fully franked interim dividend of 1.5 cents this morning following the release of its half-year result. This dividend will still go ahead as planned without a reduction to the scheme consideration.

In addition to this SMS has retained the right to declare a special fully franked dividend of up to 10.2 cents per share.

The SMS board has unanimously recommended the Scheme, believing it to be in the best interests of shareholders.

What now?

I think this was a good result for shareholders of SMS. Had it not been for the takeover offer, I believe its share price could have tumbled lower following the release of its half-year report this morning.

SMS reported a 10% drop in revenue and a 55% drop in earnings before interest, tax, depreciation, and amortisation compared to the prior corresponding period.

Further, the company reported a $44.5 million net loss after tax for the period. The majority of this loss was attributable to a non-cash impairment charge of $46.7 million relating to the writedown of goodwill of the SMS Consulting business.

That business continues to weigh on the company's results and is showing little sign of a turnaround.

In light of this, if I were a shareholder I'd be inclined to go along with the SMS board and vote in favour of the scheme.

The post Why the SMS Management & Technology Limited share price is going nuts today appeared first on The Motley Fool Australia.

But despite this the index has managed to grind out a solid 3% gain month-to-date. Unfortunately not all shares have climbed higher this month, with three in particular being crushed. Here's why:

Adairs Ltd (ASX: ADH)

This homeware retailer's shares have fallen a staggering 34% in November following a shock profit downgrade at the beginning of the month. Following weak trading in the first four months of FY 2017 management downgraded sales guidance to between $265 million to $275 million from $275 million to $285 million. Just as bad is that due to discounting and lower online sales, margins are expected to come in far lower than forecast. Whilst its shares may look cheap now, I would keep away until there is a clear sign of improvement.

iSentia Group Ltd (ASX: ISD)

Shareholders of media-monitoring company iSentia have seen the value of their holdings plunge 28% in November. The decline comes as a result of a trading update released in the middle of the month which revealed that its Content Marketing segment has been severely underperforming. As a result full year revenue and EBITDA is now expected to grow in the high-single-digit range. Although this is a huge disappointment, management expects a big improvement next year. Because of this I believe the decline has presented investors with a great entry point.

SMS Management & Technology Limited (ASX: SMX)

The shares of this information technology solutions provider have dropped 24% in November after hopes of a turnaround in its performance failed to materialise. At the end of FY 2016 the company saw a deterioration in its sales pipeline and contracts wins. Unfortunately no improvement has been seen so far in FY 2017. This led to management providing half-year EBITDA guidance of between $4.5 million to $5 million, down from $11 million in the first half of FY 2016. Despite the sell off I wouldn't recommend buying its shares. Things may get worse before they get better.

The post Why these 3 ASX shares have been crushed in November appeared first on The Motley Fool Australia.

In early afternoon trade the information technology solutions provider's share price is down 13% to $1.41, bringing its year-to-date decline to a massive 53%.

In August the company released full year results which revealed an 8% year on year drop in revenue to $328.7 million and a 43% plunge in net profit after tax to $9.7 million.

The unexpected loss of a large client transformation project at the start of the financial year was largely to blame, leading to its SMS Consulting division posting a 14% drop in revenue to $234.4 million.

Considering the segment accounts for 71% of total revenue, its underperformance makes a noticeable impact on the company's overall performance.

At the time I pointed out that management had not advised of an improvement in trading conditions during the first six weeks of FY 2017. This led me to believe that a turnaround was not forthcoming and that investors would be better off staying away until today's trading update.

As it turns out a turnaround has not materialised and the company's performance continues to weaken. The deterioration of its sales pipeline and contract wins in the second half of FY 2016 has had a negative impact on the first four months of FY 2017.

As a result management expects first half FY 2017 revenue to be in the range of $150 million to $155 million, with EBITDA of approximately $4.5 million to $5 million prior to significant items.

This will be a drop from last year's result, which itself was down significantly from the same period a year earlier. Half year revenue in FY 2016 was $168.1 million, with EBITDA coming in at $11 million.

Once again I would urge shareholders to keep clear of the company until there is a vast improvement in its performance. Until then industry peers RXP Services Ltd (ASX: RXP) and Melbourne IT Limited (ASX: MLB) may be better investment options.

The post Why SMS Management & Technology Limited shares are getting crushed today appeared first on The Motley Fool Australia.

In light of this other companies in the industry such as Melbourne IT Limited (ASX: MLB) have climbed higher in anticipation of bumper results of their own.

SMS Management & Technology Limited (ASX: SMX) was another one. Prior to today its share price had risen almost 30% since the start of August. But unfortunately for these investors, SMS Management & Technology failed to live up to its peers and its share price is down 9% today as a result.

This morning the company released its full year results and they didn't make for pleasant reading. The company reported an 8% year on year drop in revenue to $328.7 million and a massive 43% plunge in net profit after tax to $9.7 million.

The sudden and unexpected loss of a large client transformation project at the start of the financial year was undoubtedly a big blow to the company and led to its SMS Consulting division posting a 14% drop in revenue to $234.4 million.

Its M&T Resources division performed admirably well though. But being a much smaller division and contributing just under 29% of total sales, its 11% lift in revenue to $94.3 million was never going to be able to offset the poor performance of the SMS Consulting division unfortunately.

Earnings per share were down to 14 cents from 24.1 cents in FY 2015, and the company cut its full year dividend from 17 cents per share to just 9.5 cents per share. At the current trading price this equates to a PE ratio of 14 and a fully franked 4.7% dividend.

Considering management has not advised of an improvement in trading conditions so far in FY 2017, I am pessimistic that a turnaround of fortunes is forthcoming. For this reason I would stay away from SMS Management & Technology at least until the company provides its next trading update at its Annual General Meeting on 14 November 2016.

In the meantime I would turn my attention to RXP Services, which I still feel is good value despite the post-results rise in its share price.

The post Why SMS Management & Technology Limited shares are getting shredded today appeared first on The Motley Fool Australia.

Australia's big four banks have all surged higher and are leading the market higher while resources shares are lagging.

Going against the trend, these four smaller companies all saw their share prices sink…

1-Page Ltd (ASX: 1PG) saw its share price crash 16% to 73 cents, and the share price has now lost 78% of its value since the start of this year. The once-promising market darling saw its share price sink 7% yesterday after its annual report had materially different earnings from its preliminary results and investors clearly aren't happy. The company is trying to disrupt the hiring process and make it easier and cheaper for companies to filter job applicants but has yet to make a profit.

SMS Management & Technology Limited (ASX: SMX) saw its share fall 15% to $1.565, after the technology consulting firm announced a massive profit downgrade and the resignation of its CEO. As we wrote earlier today, this is a tough sector and there are very small margins for errors thanks to its high fixed cost base and low profit margins. Like companies operating in the mining services sector, IT consultants can see their business dry up through no fault of their own if their customers feel the need to cut costs.

PS&C Ltd (ASX: PSZ) has seen its share price fall 7.9% to 70 cents, despite no news from the company. PS&C is an IT company providing contracting and recruitment, security, and unified communications systems and solutions to a wide variety of customers, but recent financial results weren't exactly thrilling as we pointed out in February. Director Leanne O'Connor has also been selling down her holding – which now stands at 9.14% after selling 1.7 million shares in the past two months.

Lynas Corporation Limited (ASX: LYC) continues to fall, losing another 4.5% to 6.4 cents, as investors fret over the long-term viability of the rare earths producer. Last week Lynas reported that it was unable to maintain its breakeven performance in the March quarter, which is stopping the company from paying down debts and reinvesting back into the business to improve its performance. Stuck between a rock and a hard place, Lynas is only still in business thanks to the flexibility of its lenders.

The post 4 small cap shares slammed on the market today appeared first on The Motley Fool Australia.

It's the lowest share price the technology consulting firm has seen in the past 52-weeks and a long way from the high of $5.43 reached in October 2015, although there are a number of reasons why the share price has sunk this low…

1. CEO Jacqueline Korhonen resigned today, effective immediately, despite only being appointed to the role in February 2015. A term of just over a year is a very short timeframe for a CEO, and it clearly indicates that the board is disappointed with the results achieved.

   Chairman Derek Young said today, "We have set out a clear strategy to grow our business over the next three years and have been working hard to execute this plan. However, recent performance has been disappointing and well below expectations."

2. Signs were there in November 2015 that the new strategy was having a negative impact on the group's revenues when SMS Management issued a profit downgrade for the first half of the 2016 financial year. EBITDA was expected to be down 15-20% on the previous year's $13.5 million, and the company eventually reported $11 million in EBITDA.
   The fall was largely attributed to an unexpected client decision to terminate a large transformation project, and contract delays due to transitioning to a new organisational structure.
3. SMS Management now say revenues for January 2016 to April 2016 are well down on the prior year, and the company expects to report full year EBITDA of $15.5 to $16.5 million. If you take out the $11 million reported in the first half, the second half is expected to be just $4.5 to $5.5 million – a greater than 50% fall compared to the first half.

Technology consulting is a tough business with low profit margins, and with a large fixed cost base, there's little room for error. Data#3 Limited (ASX: DTL) had similar issues (high fixed costs and low margins) in 2014 as SMS faces now, which saw its share price crash.

What SMS Management will do with the former CEO's strategy remains to be seen, but some might suggest a year is too short a time period to judge its effectiveness, while others might see that as enough evidence to classify the strategy as a failure.

Foolish takeaway

Investors might want to think twice before they invest in technology services firms – as their share prices can be highly volatile and need exceptional management to steer the ship. SMS Management's dividend is likely to be cut too when the company reports its full-year results – so investors can ignore the 10.6% trailing dividend yield.

The post SMS Management & Technology share price sinks: Here's why appeared first on The Motley Fool Australia.

Here's what SMS reported on Thursday:

• Revenue slipped 5% to $168 million with the fall blamed on an unexpected client decision to terminate a large transformation project, time lag in anticipated start dates of managed services engagements, and delays with contract finalisation during the transition to the new organisational structure
• Earnings before interest, tax, depreciation and amortisation dropped 19% to $11 million
• The EBITDA margin contracted from 15.6% to 13.3% for the SMS Consulting division
• Net profit after tax was down 18% to $7.1 million
• Diluted earnings per share declined to 10.1 cents per share (cps) from 12.1 cps
• Return on capital employed slipped to 16.8%
• Net debt was just $7.5 million
• Billable utilisation slipped to 82% from 84% in the prior corresponding period
• Contract wins during the period totalled $214 million
• A fully franked dividend of 6.5 cps has been declared by the board. SMS's shares will trade ex-dividend on March 17 with payment on April 8.

Attractive pricing

The IT services sector is an interesting hunting ground for investors seeking value given the seemingly undemanding multiples which many stocks are trading on.

RXP Services Ltd (ASX: RXP) recently released a strong set of interim results, yet the stock continues to trade on a price-to-earnings (PE) multiple of just 7.6 times.

With respect to SMS, while no specific guidance figures were provided by SMS's management, based on an analyst consensus forecast for earnings per share of 24.7 cps for the full year, SMS is trading on a PE of 10.3 times.

The post Why has the SMS Management & Technology Limited share price soared? appeared first on The Motley Fool Australia.

But some investors were pulling their investments out of several stocks, some on disappointing news. These four companies were heavily sold off.

SMS Management & Technology Limited (ASX: SMX) share price crashed 23.5% to $3.41, after the company unveiled a forecast earnings downgrade, as we discussed in detail here. IT Consulting is a tough gig at the best of times, but it seems clients are keeping their hands in their pockets at the moment.

Simonds Group Ltd (ASX: SIO) share price dropped 13.6% to $0.93. The homebuilder gave a market update yesterday and announced a strategic review of its Madisson Projects – a business-to-business project builder, which appears to be struggling. Simonds also announced a $6 million acquisition of West Australian homebuilder Gemmill Homes Group – WA's eighth-ranked homebuilder with revenues of $132 million. Investors were clearly disappointed in the news and opted to sell out instead.

Ainsworth Game Technology Limited (ASX: AGI) saw its share price sink 6.5% to $2.90, despite announcing the acquisition of Nova Technologies. The purchase will see Ainsworth's units in participation in North America double to more than 2,600. But perhaps investors were focused on the poker machine company's comment that margins will fall temporarily thanks to the lower Australian dollar in the near term. That will result in the pre-tax profit for the 2016 financial year being similar to the previous period.

MMA Offshore Ltd (ASX: MRM) share price slipped 4.1% to $0.23, most likely on the back of a broker downgrade. Hartleys maintained a 'Reduce' recommendation on the marine services company, as market conditions in the oil and gas sector deteriorate fast. We also provided an in-depth look at MMA Offshore yesterday.

The post 4 ASX stocks smashed by the market today appeared first on The Motley Fool Australia.

That follows a trading update from the company's CEO at today's AGM, which was light on details.

New CEO Jackie Korhonen reported that first half financial year (FY) 2016 earnings before interest, tax, depreciation and amortisation (EBITDA) is likely to be down between 15% and 20% compared to the previous period's EBITDA of $13.5 million.

It's going to be another disappointing result from a previous market darling. In the first half of FY14, SMS also managed to disappoint investors, when net profit plunged 55%, despite revenues rising 6% to $153.5 million. The 2015 first half result was a step up, with net profit rising 48% to $8.6 million after revenues rose 15% to $176.4 million.

Miss Korhonen said the fall in earnings is due to a number of factors including:

• Organisational restructure causing short-term issues for sales effectiveness, leading to a shortfall in revenue targets, and
• The wind-down of several major projects

Essentially, SMS is driven by market sentiment, IT investment cycles and project timing. If companies fear the outlook ahead, they tend to hold onto their cash rather than expense large capital projects. IT consultants such as SMS are one of the first in line to feel the impact of that. Miss Korhonen says that the company is confident of an improved second half performance.

It's an issue all companies feel when their major clients tighten the purse strings. IT contractors are also likely to see projects deferred or even postponed during tough economic environments. The yo-yo results from year to year certainly show that, and make it extraordinarily difficult to predict or forecast future earnings.

With the share price down more 52% since 2010, it also shows that investing in IT consulting companies can be hazardous to your wealth. ASG Group Limited (ASX: ASZ), another IT consulting and managed services company has seen its share price drop more than 17% over the same period while DWS Ltd (ASX: DWS) has seen its share price fall 16% in the past five years.

Foolish takeaway

All companies in the IT consulting sector are heavily dependent on company discretionary spending, which means they'll do well when their clients are flashing around their cash. But when tougher times arrive, it means less cash and contracts to go around. That means big trouble for consulting companies with a relatively large fixed cost base.

The post SMS Management & Technology Limited's shares crash 23% appeared first on The Motley Fool Australia.

The company is an IT software and service provider servicing a broad range of industries in Australia. SMS offers a mix of role-based (IT services [the cloud], systems integration, consulting, customer relationship management) and outcome-based (business performance improvement, application development and operational change) services to companies in the financial, communication and technology, and transport sectors.

So What? SMS' full-year report was well received by investors and analysts as they believe the tide may finally be turning for the Australian IT services industry. The industry, which is dominated by mid-cap ASX-listed companies like SMS, UXC Limited (ASX: UXC) and Technology One Limited (ASX: TNE), has struggled as customers have put off IT spending due to weak revenue growth.

My colleague Brendan Lau reported at the time that "it wasn't so much the 34% surge in net profit to $17 million for the year ended June 30, 2015 that is exciting investors", rather it was "the 200 basis point (two percentage point) increase in earnings before interest, depreciation and amortisation (EBITDA) margin for its core consulting division to 14.8% in 2014-15 compared with the previous financial year."

Now What? In my very first article for the Motley Fool back in 2013 I wrote about how analysts believed that a meaningful revival in the IT services and infrastructure industry was just around the corner… so if you're going to buy, go in with your eyes wide open.

The 2014-15 result finally breaks a two-year downtrend in the company's earnings and has seen analysts upgrade their 6% net profit growth assumption for the current financial year to nearly 16%!

Analysts expect the 2016 financial year to return around 32 cents earnings per share and a dividend of nearly 21 cents implying a price to earnings ratio of 15.5 and dividend yield of 4.2% fully franked. SMS remains cheaper than its rivals, however, there remain major risks in its business model which appears ripe for disruption!

The post SMS Management & Technology Limited surges 38% in a month: is it too late to buy? appeared first on The Motley Fool Australia.

While the just completed reporting season could be considered as lacklustre, there were a handful of companies which investors responded positively to. Adding to the headwinds which investors had to endure during August was heighted global stock market volatility which helped push the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down a total of 8.6% over the course of the month.

In comparison the following three stocks all headed higher in August.

1. Village Roadshow Ltd (ASX: VRL) ended the month up 8.8% after reporting all time record Theatre Exhibition results which saw earnings jump around $10 million. While Theme Parks were a drag on earnings after experiencing record rain, Village Roadshow still managed a solid increase in earnings before interest and tax (EBIT) from $97.7 million to $105.5 million.
2. Smartgroup Corporation Ltd (ASX: SIQ) ended the month up 22.5% after reporting a 33% increase in normalised profit to $11.3 million and declaring a fully franked dividend of 7.9 cents per share on the back of a 24% rise in normalised revenues to $43.1 million for the half-year ending June 30.
3. SMS Management & Technology Limited (ASX: SMX) ended the month up 26.6% after the information technology (IT) services firm reported a 13% rise in revenues, a 34% surge in profits and a 33% jump in the final dividend. A particular highlight for SMS shareholders was news that the group had signed contracts worth $411 million during the year, up 18% on the prior period.

With management at all three companies providing positive guidance on the outlook for the current financial year, continued momentum is a possibility.

The post Village Roadshow Ltd, Smartgroup Corporation Ltd, SMS Management & Technology Limited: Should you buy? appeared first on The Motley Fool Australia.

These four stocks look headed for a strong gain today…

SMS Management & Technology Limited (ASX: SMX) shares are up 13.6% at $4.05, after posting a strong gain in net profit for the six months to December 2014. We cover the results for the IT consulting firm in more detail here.

Matrix Composites & Engineering Limited (ASX: MCE) shares are up 12.4% at 77 cents after it too posted a strong performance for the six months to December 2014. Net profit rose 567% to $3.9 million and the company declared a 2 cents per share dividend. But the falling oil price may dampen the future, as the company notes. You can read more on the result here.

Codan Limited (ASX: CDA) is up 10.5% at 95 cents, after the metal detector and radio communications group posted a 17% increase in net profit for the half year to December 2014. Metal detection revenues continue to fall, and it was the jump in communications product sales mostly responsible for lifting net profit.

Travel agent Helloworld Ltd (ASX: HLO) has seen its shares jump 28.8% to 38 cents. Today the company informed the market that investment bank UBS had sold 31 million shares (7% of issued capital) to an existing substantial shareholder, Sintack, for 39 cents per share. That price was a 41% premium to the volume weighted average price over the past five days. Sintack now holds 19.3% of shares in Helloworld. Qantas Airways Limited (ASX: QAN) is still the largest shareholder with 29% of the shares.

The post 4 stocks surging on the ASX today appeared first on The Motley Fool Australia.

An IT consulting, solutions and managed IT services company, SMS reported a net profit of $8.6 million for the half year, as revenues surged 15%. The company operates 2 main divisions, with SMS Consulting generating the lion's share of revenues, with M&T Resources around 24%.

Here's a summary of the results:-

• Revenues up 15% to $176.4 million
• Reported net profit up 48% to $8.6 million
• Earnings per share also up 48% to 12.3 cents
• Fully franked dividend of 7 cents per share, up from 5 cents last year

New contracts signed during the six month period to December 2014 totalled $212 million, up 21% and the company says consultant utilisation improved to 84%.

SMS Consulting saw $134.3 million in revenues and increased its earnings margin from 12.78% last financial year to 13.6% this year. The M&T Resources division generated $42.1 million in revenues for an earnings margin of 5.7%.

The company's Indicium acquisition in 2013 appears to be a good purchase, with new client wins and expected to outperform its earn-out target.

What is disappointing was SMS's Operating cash flow – which came in at a negative $0.3 million – the same as last year – although the company says $7 million of expected customer receipts were not collected until the week following cut-off.

SMS says it continues to focus on high demand areas such as mobile solutions and cloud services. That suggests the company is in for a good 2015 financial year. Trading on a P/E ratio of around 14.4 times earnings and paying an expected dividend yield of 3.4%, SMS looks to be around fair value.

The post SMS Management & Technology Limited soars as profit jumps appeared first on The Motley Fool Australia.

That has offset some of the falls during the week, with most indices ending the week slightly up. The near correction (a fall of 10%) we experienced in October appears long forgotten.

Despite the index gains, these 5 stocks were hammered today…

Vocation Ltd (ASX: VET) continues to plummet, losing another 15.3% today, to close at 66.5 cents. It's a far cry from its 52-week high of $3.40, with much of the blame laid at the feet of the company's management. Last week the company announced that it had lost close to $20 million in government funding, surprising the market, and investors appear to have lost faith in the company. Further falls from here appear likely.

Gold miner Resolute Mining Ltd (ASX: RSG) saw its shares drop 13.5% to 22.5 cents today, after the company announced that it was raising up to $25 million via a convertible note issue, with a face value of $1.00. Funds raised will be used to undertake feasibility studies on 3 projects, drilling programs and to "maintain ongoing operations". That suggests the company may be operating at a loss in the face of gold prices at their lowest since April 2010.

RedFlow Ltd (ASX: RFX) saw its shares drop to 29.5 cents, losing 9.2%. Redflow is developing zinc-bromine batteries that can be used to store and provide energy. But it may just be investors taking some profits, with Redflow shares jumping more than 150% this year. Zinc-bromide batteries are reportedly ideal for storage of renewable energy, as well as supporting off-grid or micro-grid power systems.

UGL Limited (ASX: UGL), the engineering services company also appears to have lost investor faith, falling another 7.3% today to $5.46. Yesterday UGL's shares dropped 14%, after the company announced its Joint Venture partner was likely to take provisions on a power station project of $85 million this quarter. What is concerning is that the partner CH2M had raised the potential issue as far back as August, but UGL management did not raise it as an issue, despite a number of opportunities to do so.

SMS Management & Technology Limited (ASX: SMX) saw its shares drop 6.9% to $3.63 today, although there was no news from the company. Shares in SMS have dropped 21.7% so far this year, although have recovered from a fall to $3.12 in May this year. The IT services and consulting company reported a disappointing 2014 financial year with net profit falling 40%.

The post 5 stocks smashed on the ASX today appeared first on The Motley Fool Australia.

The company is positively positioning itself for any uplift in activity and has made several add on acquisitions at the likely bottom of the down cycle. It has also established a major development centre in Vietnam with access to 1,600 variable cost consultants and captured more annuity-based revenue.

With two operating divisions, 1) Consulting – which mainly deals with financial institutions, government bodies, telecommunications, utilities and resources; 2) Contract labour – which is where SMX hires contractors on a semi-permanent basis and utilises them for projects. Due to over optimistic timing this division had a very poor 2014 achieving a record low utilisation rate.

Financially sound, SMX ($3.88) is set to reward patient investors in the medium term.

UXC Limited (ASX: UXC) is the largest locally owned IT services and solutions business and will also experience a lacklustre 2014 profit wise. UXC has the capabilities to provide an end to end ICT (information communications technology) solution for corporate and utility clients giving it a significant competitive advantage as the cycle turns. UXC is also deepening its range of cloud related services across the spectrum.

The company has firm relationships with the leading application vendors – Microsoft Dynamics, Oracle, SAP and ServiceNow. Following a couple of strategic acquisitions the North American market is providing opportunities for the group, and revenues here are expected to grow strongly.

UXC (85c) is due to report 2014 results on August 28 and an $18.5m net profit is anticipated – giving a 2014 PE ratio of 14.75 and a yield of 4.9%. With earnings expected to rebound in 2015, it should produce EPS 8c, PE ratio 10.5 and a 7.4% yield. In my view UXC is undervalued by the market.

The post Are SMS Management & Technology Limited and UXC Lmited poised to deliver big returns? appeared first on The Motley Fool Australia.

My watchlist is currently full of companies, some big, some small, that I like but are just a tad too expensive at current levels; here are some of my favourites to buy when the market dips.

JB Hi-Fi Limited (ASX: JBH) is currently trading at around $18.10, having retreated swiftly from its January high of $23.13. The company has been sold off as a result of weakness in consumer sentiment that has hit the sales of rival retailers, mainly in the clothing industry. So far the company hasn't made any announcements about its performance this year, which I view as a positive, and it could surprise on the upside in the coming months.

SMS Management & Technology Limited (ASX: SMX) is one of Australia's largest and best IT consultancy firms. The company has struggled in recent years as customers have focussed on reducing costs following the GFC. A recovery in IT spending has been mooted for the last 18 months or so but is yet to eventuate. The recent federal budget has promised more government spending, which should benefit SMS, but as the budget is yet to be passed, it's tough to buy SMS just yet. If it fell another 20% on no news it would be tough to ignore.

Financial services provider Iress Ltd (ASX: IRE) has operations in Australia, Canada, New Zealand, South Africa and the UK. It provides services to financial advisors and individual investors and rarely looks cheap. The company has very little competition in the Australian market and a recent acquisition in the UK should allow it to develop a significant business in the country over time. It has pulled back from highs due to concerns about its ability to grow earnings, however a recent announcement has quelled those fears to a degree. Unfortunately it's still not cheap enough for me to buy, but is a great quality business to pick up on a dip.

The post Are you ready? 3 top stocks to buy in the next dip appeared first on The Motley Fool Australia.

Clime Asset Management has identified seven candidates that could be prime private equity targets – and we can add another to the list. They could also be candidates for a strong turnaround in their fortunes, with many facing short-term issues, rather than structural problems with their core business.

Without further ado, here are the first four and a brief summary of why they may be targets…

SMS Management & Technology Limited (ASX: SMX) has seen its share price fall more than 38% from its 52-week high, hit by a 55% fall in net profit for the last six-month period. Many IT services companies have been hit by a lack of major technology projects, as companies hold back their capital spending, but a revival could be just around the corner.

Reject Shop Ltd (ASX: TRS) – has struggled with an intense new store rollout program and CEO Chris Bryve recently quit. The share price dropped more than 50%, and while it has recovered somewhat, still looks cheap. Earnings should grow strongly as new stores mature.

McMillan Shakespeare (ASX: MMS) – has been hit hard by Labor's plan last year to reform fringe benefits tax (FBT), and the CEO recently announced his retirement. But the current Federal government has pointedly said that it would not follow through with the FBT reforms. Like Reject Shop, McMillan also looks cheap, as earnings should recover fairly quickly.

Ausdrill Limited (ASX: ASL), provides mining services including drilling and blasting and associated services to resources companies, but has been hard hit by falling resource development and exploration investment. Having said that, the company is trading at less than half its net tangible assets of $2.41, with the share price currently sitting at 96 cents. Investors may also be concerned about its mountain of debt – and it's unlikely to be a takeover target in my books.

You can find Part II here.

A better bet than these four…

The post 8 potential takeover stocks, Part I appeared first on The Motley Fool Australia.