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Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Gain to date: 11.4%
Original entry point: Buy at £24.11, 6 July 2017
Investors that swooped on XP Power (XPP) following our feature should rightly feel a bit chuffed. Barely a month later and the share price is ahead by modest double-digits and our suggestion that the company ‘has potential to beat earnings forecasts’ immediately looks sound.
Typically robust half year results from the power switching solutions designer beat previous estimates by around 6% and 7% respectively on the profit and revenue lines, say Investec analysts. Particularly encouraging is 18% sales growth, and that’s after stripping out favourable currencies, while the order backlog was 20% higher than at 31 December 2016. XP Power reports good demand from all end markets and geographies.
Cue a series of estimate upgrades for this year and next by about 7% or 8%, depending on which analyst you speak to. This implies around 140p of earnings per share next year to 31 December 2018, after this year’s anticipated 132p to 135p range, according to analysts.
That puts the 2018 price to earnings multiple at 19.2, with further forecast upgrade potential to come.
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