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Is Xaar plc One To Watch?

Xaar (LSE: XAR) is a manufacturer/supplier of inkjet printheads and related consumables to certain niche markets and applications. It has been something of a darling of the tip sheets for quite some time.

Over the last five years it has delivered impressive growth, as you can see from the table below:

£millions

31/12/13

31/12/12

31/12/11

31/12/10

31/12/09

Revenue

137.13

86.30

68.71

54.68

41.5

Operating Profit (Loss)

39.70

15.55

9.10

5.48

(0.74)

Profit After Tax

31.86

12.63

7.68

3.99

0.06

As a result, the shares traded as high as 1,191p in December last year. However, since the turn of the year they had begun to trend downwards along with many technology stocks from its high, until mid June when it was trading around 750p. Then, on 17 June, the company put out a profit warning — the shares fell to 500p, and continued to fall: they are now trading at around 245p. The profit warning indicated that revenue for 2014 is projected to be approximately £130 million and that margins were under pressure.

Since the profit warning, though, the CEO has bought in excess of 20,000 shares, the financial director has bought almost 7,000 and the R&D Director (thin film) 40,000 shares. While it is clearly not proof, it does suggest that key people in the business with inside knowledge do see the future as positive. For now, it is not enough to get this Fool buying, but it is enough to get the company on my watch list…

If you're looking for a growth share with excellent prospects that's still undervalued by the market, then you really need to read our special FREE report, "The Motley Fool's Top Growth Share For 2014". Click here now to read up on this small cap!

The writer of this article currently holds no shares in Xaar, but will be considering them for future purchases.