Shares in cloud computing and managed hosting company Iomart (LSE: IOM) have made a superb start to 2015 and are up 40% since the turn of the year. This means that, over the last five years, they have risen by a hugely impressive 310%, which compares very favourably to larger technology peers such as ARM (LSE: ARM) (NASDAQ: ARMH.US) and Micro Focus (LSE: MCRO). Their share prices are up by 275% and 67% respectively in that five year period and, looking ahead, there could be more growth to come.
Size And Scale
Of course, ARM and Micro Focus are relatively stable, large businesses with track records of growth. For example, in the last four years, both companies have grown their bottom lines in three of them and, at the present time, are in the process of rapidly increasing dividends per share so that investors can more directly partake in the company’s bottom line growth.
In fact, Micro Focus is expected to increase dividends per share by 24% next year, which puts it on a forward yield of 3.2%. And, while ARM’s yield is just 0.8% at the present time, dividend growth of 22% next year should help to improve the yields obtained by its investors. These increases show not only that the two companies are performing well in terms of profit growth, but also that their management teams are confident about their financial standing and, for long term investors, this bodes well.
Growth Potential
Clearly, there is much more to investing in technology companies than income prospects and financial stability. And, despite being somewhat ‘sensible’ investments in terms of having both qualities, ARM and Micro Focus also provide excellent earnings growth prospects, too. For example, ARM is expected to increase its earnings by 74% this year, while Micro Focus’ bottom line is due to rise by 18% in the current financial year.
Interestingly, both of these growth rates are ahead of Iomart’s forecast growth numbers, with it being due to post growth of 15% per annum over the next two years. This, though, is still twice the wider index’s growth rate and means that Iomart trades on a very appealing price to earnings growth (PEG) ratio of just 1. As such, its share price could continue its upward trajectory, and its shares are certainly not overvalued at the present time.
Looking Ahead
In addition, Iomart also offers an excellent track record, with it having delivered profit growth in three of the last four years, just like ARM and Micro Focus. Furthermore, Iomart’s 1.3% yield and 22% forecast dividend growth rate for next year provide evidence of its sound financial standing and, as such, it seems to offer an excellent mix of growth, value and long-term stability. As a result, teaming it up with ARM and Micro Focus in Foolish portfolios seems to be a sound move.
