Mr. Markets Alternative Christmas Present?

Just a quick heads up on a stock which Mr. Market seems to be offering up again this year, much like Christmases in the past. So if you want to treat yourself or your loved one to an alternative Christmas present then I think it might be worth checking this one out.

The title of this piece is also a play on the name of this one - Alternative Networks (AN.) which is a £200m Aim listed Telecom and It solutions provider to businesses and which I have written on earlier this year. I say Christmas present as this one has sold off in much the same way as it has in the last couple of years and on each occasion in the past it has then rallied sharply in December ahead of Christmas. Since this one is a September year end it reports its finals in December which helps to explain the price moves.

Referring back to my notes in the link above from April their update at that time suggested that there would be a second half weighting to their results this year. Since then we have had the interims and In their last trading update issued on the 8th October just after their year end, which seemed to read OK they said they expected to publish full year results on 9th December.

I note that estimates have edged down a little since then, but on checking this reflects Investec, their financial advisers, downgrading, while their corporate broker, FinnCap kept their estimates the same. Thus if they match the corporate brokers figures of 30.7p then they will come in ahead of the new consensus for earnings of 29.2p. On the dividend they have already guided to at least 10% growth which should mean at least a 16p dividend (10.5p final) or 16.3p as per the consensus if they match the growth in the interim at the final stage.

Summary & Conclusion
This is a bit of a contrarian idea as the chart looks horrible and technical analysts might say it is breaking down and could go as low as 350p to 400 perhaps which I guess is possible if the results should disappoint. However, as I observed at the start, this seems to be a pattern with this one and given it is a small fairly illiquid stock with a catalyst due, I suspect there is scope for it to rally from its current over sold  position if the results are OK.

On fundamentals I think they also look reasonable down here at 420p which leaves them on around 12.5x with a 4.5% yield for the year to September 2016 based on current consensus forecasts. The only thing to bear in mind if you should chose to put some under your tree this year is that there is a 10p or 2.4% spread on this one (difference between the bid and offer prices) but you may be able to get inside that. If not it will be interesting to see what Wednesday's results bring, buy, bye.