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InterQuest & Avesco – share tip of the year updates

By Steve Moore | Friday 26 August 2016

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

I previously updated on my share tips of the year just after the Brexit vote – see HERE. The following updates on developments since…

That previous piece saw me apologising following a profit warning from specialist recruiter InterQuest (ITQ) seeing its shares declining towards 50p. They went on to briefly slide below 40p, but then recovered – and this has continued following an announcement earlier this month of an acquisition of a majority interest in Rees Draper Wright, with the right to acquire the remaining shares.

Rees Draper Wright is an executive search firm operating out of London and New York, with InterQuest considering it “an excellent fit… strengthening our reputation in the global consulting sector and providing a platform to grow the groups existing business in the US”.

The shares are now just below 60p, representing a decent recovery from July lows but a level I still consider half-year results could show as undemanding on the business continuing to generate cash and pay down manageable debt. There’s not long to wait to see – with the results scheduled for 6th September and, ahead of then, my stance remains hold.

My update on international media services group Avesco (AVS) meanwhile noted that its most recent full-year results statement (to 30th September 2015) showed approaching 47% of revenue (and its main profit contributor) being from the US, with circa 34% from the UK, 8% from ‘mainland Europe’ and the remaining approximately 11% from ‘Rest of the World’ and that this income profile should help mitigate the current post EU referendum result uncertainty here.

There have been no subsequent announcements from the company – and the share price maintained its relative calm to early this month, closing on 4th August at 207p, comparing to 214p on my previous writing. However, there has since been some positive momentum to take the shares to around 230p. However, I regard this as still much too harsh given the outlook following June’s half-year results.

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