Mid-cap Accesso Technology (LSE: ACSO) is a great example of just how profitable growth investing can be. Ten years ago, shares in the virtual queuing solutions provider were priced around the 30p mark. Before the markets opened this morning, the very same stock traded for just over £19. Had you had the courage, foresight or plain old good luck to invest £1,000 as the financial crisis began to take hold towards the end of 2007, you’d have multiplied your money 64-fold.
While most early investors might be tempted to leave the party when they’re having the most fun, I still believe the stock is worth holding on to after this morning’s solid (rather than overwhelmingly spectacular) interim numbers.
More growth ahead
Performing in line with management expectations, AIM-listed Accesso achieved revenues of £46.6m over the first six months of 2017 — equating to 17.4% top-line growth. As a result of acquisition-related expenses, however, pre-tax profit fell just over 30% to £1.6m. Net debt also increased by just under 90% to £23.8m.
Away from the headline numbers, the company confirmed that the integration of recent acquisitions — ticket distributor Ingresso and theme park software company TE2 — were proceeding to plan. Volumes for the former (whose customers include Amazon Tickets and GroupOn) rose 48% year-on-year over the period since it was purchased. Both companies are expected to “grow substantially” over the rest of the year and contribute meaningfully to Accesso’s profits thereafter.
Elsewhere, Accesso secured a number of contract wins for its Passport ticketing suite over H1, with new customers including the NFL Experience in Times Square and the CNN Studio Tour in Atlanta. A five-year deal with Australia’s largest theme park operator, Village Roadshow, was also announced last week. On top of this, it continues to bond with FTSE 100 constituent Merlin Entertainments with its technology now in operation at Alton Towers and the new Legoland park in Japan.
Arguably the most encouraging news, however, related to Accesso’s ongoing expansion into relatively untapped markets. The Reading-based business recently signed the largest ever contract for its Siriusware product with Experiencias Xcaret in Mexico. Its ShoWare solution — the focus of its efforts to grow in South America — also continues to experience positive business momentum. Ticket sales in Brazil over H1, for example, exceeded the figure achieved for the whole of 2016.
As far as its near-term outlook is concerned, Accesso confirmed that it remains on track to achieve its aims in 2017 while cautioning that full-year performance would, “as ever“, be more dependent on trading over the second half of the year.
Priced to perfection?
Of course, its status as a premium growth company is reflected in the eye-watering valuation attached to its shares. Right now, these trade on 54 times forecast earnings (assuming expected growth of 50% in the current year is realised). Combine this with the fact that technology stocks have a tendency to be more volatile than most and it’s little wonder if many investors believe the stock is priced to perfection and destined to fall.
Despite this, I remain positive on Accesso. The aforementioned valuation is mitigated to an extent by the fact that — at 1.1 — the stock’s price-to-earnings growth (PEG) ratio remains low enough to still justify buying a slice of the company. This, combined with the push to diversify the firm across markets and geographies, makes me believe there could be further upside ahead.
