| Sector |
Software & Computer services |
Last closing price
(15/02/2010) (p) |
1300 |
| 52 week High/Low (p) |
1341/587 |
| Market Cap (£mn) |
465.5 |
Sector weight age by
Market Cap (%) |
2.17 |
| Average Volume (k) |
71.9 |
| P/E ratio (TTM) |
26.43 |
Sector P/E
ration (TTM) |
8.48 |
TTM: Trailing Twelve Month
Daily chart (FDSA.L)
Business background and investment rationale
Fidessa Group PLC supplies; multi-asset trading, portfolio analysis, decision support, investment compliance, market data and connectivity solutions for both the buy-side and sell-side globally.
Strong revenue
For the full year end to 31 December 2010, Fidessa reported strong growth with revenue climbing to £238.5m; a rise of 26% on the same period last year and a rise of 17% on a constant currencies basis. This strong growth was driven by momentum in recurring revenue, which increased by 32% to £193.9m from £146.5m in 2008, and now represents 81% of the firm’s total revenue. The business has no debt and continues to be strongly cash generative closing the year with a cash balance of £45.5m, compared to £33.1m in 2008. Fidessa continues to generate cash from operations and the operating cash conversion rate was 167%. The group also declared a dividend of 60.0p, including a 40.0p special dividend based on strong performance.
Despite pressure in the financial markets, usage of Fidessa’s network has continued to increase with traffic up by over 40% since the end of 2009, reaching approximately 250 million messages a month. This means Fidessa is carrying business flows of around $640bn every month.
Benefit from increased regulations
Following the economic crisis in 2008, the financial industry is anticipating increased regulation and the outcome from ongoing regulatory reviews is likely to result in changes to workflow and increased reporting requirements. These changes should benefit Fidessa on both the buy-side and sell-side, as firms look for a leading automated compliance and reporting solution to meet their obligations without incurring substantial costs.
Technical outlook
On the daily chart, Fidessa has broken above a channel between 1300.0p and 1058.0p with higher lows indicating an uptrend for the stock. MACD (moving average convergence/divergence) is positive and 12 day EMA (exponential moving average) recently crossed above 26 day EMA, indicating an uptrend in the stock. 14 day RSI (relative strength index) is below 60 and both the indicators are making an uptrend. 14 day positive DMI (directional moving index) is above 14 day negative and ADX (average directional index) is near 30 indicating uptrend. Stock is above 20 day and 50 day EMA indicating an uptrend for the stock. Stock has strong resistance near 1200.0p and support near 1000.0p.
Trading strategy
The stock can be bought around 1300.0p with a profit target 1450.0p and stop loss of 1234.7p.
| Sector |
Travel & Leisure |
Last closing price
(15/02/2010) (p) |
454.1 |
| 52 week High/Low (p) |
470.1/275 |
| Market Cap (£bn) |
8.39 |
Sector weight age by
Market Cap (%) |
15.6 |
| Average Volume (mn) |
10.28 |
| P/E ratio (TTM) |
15.31 |
Sector P/E
ration (TTM) |
33.06 |
TTM: Trailing Twelve Month
Daily chart (CPG.L)
Business background and investment rationale
Compass Group PLC is a contract food service company providing a range of food services to clients in 70 countries. It operates in North America, Continental Europe, the United Kingdom and the rest of the world.
Strong revenue growth and expansion in margins
In an interim management result announced on 5 February 2010, Compass’ organic revenue declined by 1.7% which was an improvement on 2009’s fourth quarter decline of approximately 3%. The continued focus on the MAP (Management & Performance) framework has helped the group to accelerate operating and overhead efficiencies, which have delivered £100m growth in profit and 60 basis points of margin growth for 2009. All four geographic segments have contributed to this strong performance. Compass continues to see strong growth in new customers both in food services and the fast-growing support services business. Retention rates remained high in the first quarter of 2010 with the company winning new contracts from Aviva, Banca d'Italia, Visa and CSN Corporative Brasil.
Mergers and acquisitions
Compass identified a significant market opportunity in growing its core food service business organically. In addition, the firm is continuing to create value through acquisitions and buy-outs. February 2010 Compass acquired Canadian company Hurley Corporation for a cash consideration of C$50m. Hurley’s predominant occupation in soft support services will further strengthen Compass’ ability to offer multi services across the healthcare, education and business and industry sectors. Last year Compass successfully integrated Professional Services and Medi-Dyn, two healthcare support services companies in the USA; Kimco, a support services company based in the US business and industry sector; a number of McColls retail outlets in the UK; and Plural, a support services business in Germany. All acquisitions are delivering results on target against the group’s strict criteria.
Technical outlook
On the daily chart, Compass has rebounded again to its 52 week high of 470.1p indicating an uptrend is forming in the stock, which is confirmed by trading above the downtrend line joining its 52 week high. MACD has turned positive and 12 day EMA is above 26 day EMA, indicating an uptrend is forming. 14 day RSI is above 50 showing strength in trend. ADX is below 20 and positive 14 day DMI is above negative 14 day DMI showing an uptrend is forming. Stock has recently crossed above 20 day and 50 day EMA and is still above 200 day EMA which indicates the short and long-term uptrend is intact for the stock. Stock has immediate resistance near 470.0p level and support near 400.0p.
Trading strategy
The stock can be bought around 448.0p with a profit target 499.65p and stop loss of 425.5p.
Stocks Update
Whitbread PLC
On the daily chart, Whitbread is rebounding from the bottom of a channel between 1344.0p and 1417.0p indicating a slight uptrend for the stock. MACD is negative and 12 day EMA has crossed below 26 day EMA indicating the formation of a downtrend. 14 day RSI is also below 50 supporting weakness in trend. Positive DMI is slightly above negative DMI, while ADX is below 20 indicating consolidation and a negative trend. Stock should be a hold with a reduced profit target of 1400.0p.
Wellstream Holdings PLC
On the daily chart, Wellstream is trading at the bottom of a channel between 490.0p and 576.0p. MACD is negative and 12 day EMA is slightly above 26 day EMA, indicating a downtrend is intact. 14 day RSI is below 50 but is above the oversold level indicating a weakness in trend. 14 day positive DMI is below 14 day negative and ADX is near 20 indicating the formation of a downtrend. Stock is also below 20 day and 200 day EMA supporting both the long and short-term down trend. Looking at lacklustre movement in stock it should be a hold with a reduced profit target of 485.0p.
Chemring Group PLC
On the daily chart, Chemring continues in a positive trend and is trading slightly above the recommended price of 3100.0p. It is still above 20 day EMA and 50 day EMA which suggests the short-term uptrend is still intact. MACD is positive and 12 day EMA is below 26 day EMA, indicating a rebound from the 52 week high. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative, while ADX is near 25 indicating an uptrend. Stock should be a hold with the same profit target.
Imperial Tobacco Group PLC
Imperial is continuously making a higher low from its 52 week low of 1368.0p with a positive slope, which is an encouraging sign. Trend for the stock looks positive as MACD is positive and 12 day EMA is just below 26 day EMA, which indicates an uptrend. 14 day RSI is above 50 showing strength in trend. 14 day positive DMI is above 14 day negative DMI and ADX is near 35 indicating strong trend in the stock. Stock should be a hold with the same profit target.
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This report has been issued by CSS Partners LLP (“CSS Partners”). CSS Partners is an appointed representative of Charles Street Securities Europe LLP (“CSS”) which is authorised and regulated by the Financial Services Authority in the UK. It constitutes non-independent “investment research” as contemplated by the FSA Rules and is thus considered a marketing communication. This report was prepared by Kuldeep Bhati who is employed as an analyst at CSS Partners and as such does not conform with the FSA definition of independent investment research and as such is not subject to the rule of not dealing ahead of distribution of the marketing communication and was not prepared in line with the legal requirements for independent communication.
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Risk Factors
There is no certainty that the recommendations will be successful or that they will make money for investors.
There is no certainty that execution prices can be achieved, either in opening or in closing a position.
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Regulatory disclosures
In accordance with the Conduct of Business Rules COBS12.4.7R (i) in the preparation of the report the analyst used price and volume charts provided by independent data suppliers and applied technical analysis tools of investment and trading evaluation in arriving at his recommendations, ii) all recommendations made by the analyst are followed up in subsequent reports until the closure of a position, iii) there is no certainty that any recommendation will be successful or that technical analysis should be used exclusively to arrive at investment decisions.
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CSS, CSS Partners and their respective officers, directors, shareholders and /or partners may have a shareholding in the companies reviewed in this report. They will not have access to this report until it is published, except those responsible for compliance issues concerning this report.
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Distribution of recommendations for the period 1st October to 31st December 2009:
| |
% Distribution of recommendations |
No of recommendation |
| Buy |
82% |
18 |
| Hold |
0 |
0 |
| Sell |
18% |
4 |
The first column displays the % distribution of recommendations made by CSS Partners in this Technical Analysis Trading programme and the second column shows the numbers of such recommendation. Neither CSS nor CSS Partners has any investment banking relationships with any of the companies covered in the Technical Analysis Trading Programme, namely the companies in the FTSE 350 index.
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