Mobile Streams Plc (MOS) licenses and distributes mobile content to mobile network operators and media companies. Its content portfolio includes games, music, pix, and video for mobile phones. The company retails its mobile content primarily through the mobile Internet in its Ringtones.com and MobileGaming.com superstores, mobile application stores and mobile opera
The company published a trading update on September 6, in regard to operations at its India subsidiary Mobile Streams India Private Limited. MSIP exceeded the important milestone of reaching 50,000 active subscribers, driven by subscription growth enabled by billing connections for the three largest local mobile phone operators. The Company said it expected to add additional billing connectivity to the next three largest network operators in India before the end of the calendar year. This has the potential to increase the addressable audience from the current c.600 million mobile users to around 900 million such users.
The growth at Mobile Streams had been picked up some time ago by UK stock screening company VectorVest. The system uses an Earnings Growth rate (GRT) calculation, which reflects a company’s one to three year forecasted earnings growth rate in percent per year. MOS has a forecasted Earnings Growth Rate of 23.00%, which VectorVest considers to be excellent
Another VectorVest metric is GPE (Growth to P/E Ratio), which compares earnings growth rate to P/E ratio. MOS.L has a GPE rating of 1.47. With long-term interest rates currently at 3.79%, the operative GPE ratio for MOS is 0.14, and therefore may be considered to be undervalued.
The chart of MOS.L is shown here. The value of the share is shown by the green line above the price. Sooner or later the price and valuation will coincide. Sometimes this occurs in a linear fashion but in smaller counters the move tends to be quick, explosive and news driven. The sudden jump in price was preceded and forecast by a jump in earnings growth rate (purple line in the window below price) from zero to an excellent 23% in the first three months of this year.
Since June 2016 the share has been sitting on support at 4p. The “tails” or “wicks” on the candles at that level are indicative of accumulation by insiders and those traders that have done their research. A Unisearch for undervalued shares that are showing a high rate of change in earnings growth will uncover many trading opportunities, easily, with a few mouse clicks.
In summary, MOS.L is undervalued compared to its Price of 9.5p per share, and despite offering somewhat below average safety, is currently rated a Buy.
7th September 2016
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