Taptica International (TAP.L) offers data-focused marketing solutions that drive execution and brand insight in mobile, leveraging video, native, and display to reach the users for every application, service, and brand. The technology is based on artificial intelligence and machine learning at big data scale. The company works with more than 450 advertisers, including Amazon, Disney, Facebook, Twitter, OpenTable, Expedia, and Zynga, and more than 50,000 supply and publishing partners worldwide.
On March 20 2017, TAP published FY results for the twelve months ended Dec 31 2016. Adjusted EBITDA rocketed to $25.7m from $7.4m, on revenues 66% higher at $125.9m. Cash and bank deposits stood at $21.5m, up from $9.5m on June 30 2016, and after making three cash payments of $16.5m for the acquisition of AreaOne, a share buyback and dividend payment. The final dividend for 2016 of $0.0432 per share resulted in a total dividend for the year of $0.1011 ($0.00784 in 2015). CEO Hagai Tal said: “Taptica entered 2017 at a run rate significantly higher than at the equivalent period last year as it continues to benefit from the investment being made into mobile advertising by corporates and advertising agencies . . . As a result, the Board remains confident of delivering strong year-on-year revenue growth in the year ahead.”
While the latent growth potential in the TAP model is clear to see, VectorVest had initially identified the potential in the run up to the trading update in May 2016. TAP was flagged early across the GRT (Earnings Growth Rate) metric, which reflects a company’s one to three year forecasted earnings growth rate in percent per year. TAP currently has an excellent forecasted GRT of 24%. The VST (VST-Vector) is the master indicator for ranking every stock in the VectorVest database. Here TAP has a VST rating of 1.29, which is very good on a scale of 0.00 to 2.00. TAP.L has a low Relative Safety (RS) metric of 0.92 on a scale between 0 and 2. The opportunity should be considered by seasoned traders well versed in position sizing and risk management.
The chart of TAP.L is shown above with the price in candlestick format. The green line study is the VectorVest valuation which is significantly above the traded price on the 20th March 2017. Earnings per share (EPS) and volume traded are shown in separate windows below the price plot. The share has been on a BUY recommendation on VectorVest from the 9th March 2017. Since the Buy recommendation the price has risen strongly on high volume and then moved sideways on very low volume. Charles Dow wrote that the characteristic of a bull market was that prices advanced on rising volumes and pulled back on falling volumes. At the moment the price is breaking to new highs on high volume which is a strongly bullish sign.
Summary: TAP has already delivered spectacular growth for its early stage shareholders, and while it would not be unreasonable to expect a period of consolidation, it is clear the company is in serious growth mode, as indicated by the CEO in the results statement on March 20. VectorVest currently values TAP at 436.90p per share, and while not without risk, the stock continues to offer considerable upside potential from the current 295.00p per share.
March 21st 2017
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