Shares to buy: Smartgroup Corporation Ltd (SIQ)
Posted on October 20, 2017
SmartgroupCorporation Limited engages in the provision of employee benefits and workforce optimization services. We covered SIQ in our April stock picks document. At that time it was trading around $6.50 and we had a price target on it of $7.50. It is now trading around $9.
Whilst the stock has performed well, the company remains highly cash-generative with strong returns, and we can’t see any signs of earnings quality deteriorating. There is also evidence of management buying.
So, the fundamental story remains strong and we’re confident SIQ can continue to deliver.
After popping higher in August, the stock has spent the past few weeks consolidating around the $9 level. We’re comfortable buying towards this $9 level, with targets to $11.