Home » VectorVest » VectorVest – Adventurous investors should buy STM Group #STM in the run up to full year results.

VectorVest – Adventurous investors should buy STM Group #STM in the run up to full year results.

AIM listed STM Group (STM.L) is a multi jurisdictional financial services group, which specialises in the delivery of a wide range of financial service products to professional intermediaries. The group also undertakes the administration of assets for international clients in relation to retirement, estate and succession planning and wealth structuring. Today, STM has operations in UK, Malta, Jersey, Spain and Gibraltar. The Group is looking to expand through the development of additional products and services that it’s ever more sophisticated clients demand. STM has developed a specialist international pensions division, which specialises in UK SIPPs, Qualifying Recognised Overseas Pension Schemes (QROPS) and Qualifying Non UK Pension Schemes (QNUPS). STM has a Gibraltar Life Insurance Company, STM Life plc, which provides life insurance bonds – wrappers in which a variety of investments, including investment funds, can be held.

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On January 24th 2018, STM published a pre-close trading update for the year to 31 Dec 2017, and said it expects to deliver a pre-tax profit of not less than £3.8m (2016: £2.8m). STM said a key component enabling the delivery of record PBT was the International SIPP (ISIPP) product launch, post the March 2017 UK budget announcement. This, along with an annual recurring revenue stream makes up over 70% of STM revenues, giving predictability over the underlying monthly performance. Subsequently on February 24th STM subsidiary STM Malta Ltd announced it had completed the acquisition of Harbour Pensions Ltd. CEO Alan Kentish said investment in the repositioning of STM’s business “brings opportunities in 2018 to improve our profit margins.” Full year results will be published on March 27th 2018.

In January 2018, the VectorVest RT (Relative Timing) metric leapt higher, alerting members to a growth opportunity. RT is a fast, smart, accurate indicator of a stock’s price trend, and despite the stock rocketing from 35p to 54p over a few days, STM still logs a current rating of 1.48 on this metric, which is excellent on a scale of 0.00 – 2.00. Other high scoring metrics include a GRT (Earnings Growth Rate) of 21%, which VectorVest considers excellent. Cautious investors may want to looks elsewhere, as STM currently scores a lowly 0.84 on the RS (Relative Safety) metric (scale of 0.00 to 2.00), but despite this, trading at 50p the stock is still considerably undervalued against a current VectorVest valuation of 65.5p per share.

A weekly candlestick chart of STM.L is shown above over the last three years. The blue line study in the window below price is Earnings Per Share (EPS) which has grown significantly over the period. Since August 2016 the share has charted a treble bottom formation which is positive for the share. STM.L is on a BUY recomdendation on VectorVest.

Summary: Niche finance groups are regularly flagged as buying opportunities across the VectorVest stock analysis and portfolio management system and STM is no exception. This diversified financial services operator continues to develop and expand its portfolio of services for a sophisticated client base, and despite some challenges during 2017, management have not only delivered a record PBT result, but see further opportunities to grow profit margins in the current year. As such, for adventurous investors VectorVest rates the stock as a buy in the run up to FY results at the end of March 2018

Dr David Paul

March 14th 2018

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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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