Home » VectorVest » Buy Taptica (TAP) – Not without risk, but in serious growth mode, says VectorVest

Buy Taptica (TAP) – Not without risk, but in serious growth mode, says VectorVest

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.

David Paul

March 21st 2017

Readers can examine trading opportunities on TAP and a host of other similar stocks for a single payment of £5.95. This gives access to the VectorVest Risk Free 5-week trial, where members enjoy unlimited access to VectorVest UK & U.S., plus VectorVest University for on-demand strategies and training. Link here to view.

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European Financial Publishing Limited T/A VectorVest UK (VectorVest) is authorised and regulated by the Financial Conduct Authority under register number 543038. You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back the amount that you invest. Past performance is not a reliable guide to the future. This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. If investors are in any doubt of the suitability of an investment given their individual circumstances, they are recommended to contact an investment manager or independent financial adviser who may be able to provide tailored advice. Opinions expressed whether in general or both on the performance of individual securities and in a wider economic context represent the views of VectorVest at the time of preparation. They are subject to change and should not be interpreted as investment advice. VectorVest and connected companies, clients, directors, employees and other associates, may have a position in any security, or related financial instrument, issued by a company or organisation mentioned on this site. European Financial Publishing Limited is a company incorporated in Scotland under Company Number SC357322 with its registered address at Exchange Tower, 19 Canning Street, Edinburgh EH3 8EH. Email: support@VectorVest.com

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