Don’t you just love ‘Tech’? Churning out irresistible growth rates, profit margins and cashflows, allied to robust visibility and high client retention. A compelling mix. The only problem is that many others do as well, pushing valuations to often nose-bleed levels.
However, what if it was possible to find a company, expanding at >10% pa (see below), yet trading at a mere 1.1x EV/sales vs 2x-4x for the wider sector. Interested? I was too on coming across ClearStar Inc (AIM: CLSU). A little-known £16m market cap stock, providing automated job screening and alcohol/drug testing services. Areas enjoying buoyant demand from the rise of the ‘gig’ economy (Uber/Deliveroo), government clampdowns on illegal workers and ongoing healthy employment levels. In fact, I was so impressed that I snapped up a 3.6% stake earlier this year (RNS).