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On one my "band of 5" companies which could potentially be in the FTSE100 in 5 years time: the others are GBG; KWS; SCH, and XLM.
http://www.fool.co.uk/investing/2017/07/31/could-these-rising-tech-stocks-help-you-retire-early/
Competitive advantage is tying people into a 2 year contract with threat of £20k fine for leaving anytime before 2 years. Subsequently don't have to pay market rate for employees and can offer clients a guaranteed period e.g. upto 2 years. The conversion to recruitment agency at the end of employees 2 years employment i.e. selling the former employee on when contract has expired is extremely dubious business practice
I bought in a couple of weeks ago at 447 after the TW recommendation (despite the fact his recommendations ALWAYS go down for a while as there's an investment consortium that thinks he's so bad they bet against him - know because I was invited onto it!). It must be said his judgement is flawed - he bought SGI and FOX and NIPT at their respective peaks (I dread to think what state his 'family fund' is in) BUT he does his research - it's simply that AIM does not respect research, only mood. In this case, mood and research match - FDM = hugely undervalued.
With FDM - based on the fundamentals, reviewing annual reports and looking at the market place there doesnt seem to be any negatives associated with them. The key for me is the fact that they seem to be the sole provider of Murex consultants at a time when Murex is the hottest thing in financial IT. Great business model and love the Vets training program. Just have to pick the right moment for this one now.....
"The group's unusual business model involves recruiting and training IT consultants called "Mounties" then deploying them to blue-chip clients, such as HSBC and Sky, that have the option to hire the consultants as their own permanent staff. The consultancy/recruitment model faces little competition" I would suggest that it faces no competition jange. If you make someone an employee for a 2 year fixed term contract, you cannot then become an employment business and sell the person on that you hired them out to. You are an employer or an employment business. To do this FDM would have to be an employment agency, but that would open a can of worms with this model https://www.gov.uk/employment-agencies-and-businesses/providing-nonwork-finding-services
FDM has shown it can deliver strong sales and profits and its shares promise a sizeable forward yield. Moreover, an improving recruitment industry and the well-publicised shortage of IT skills should act as tailwinds for the group. Investors should saddle up before FDM breaks into a gallop,but as always dyor and good luck.
The benefits of its flexible, adaptable business model can be seen worldwide. FDM deployed 950 Mounties in its core UK market last half - a 21 per cent rise – boosting its Mountie revenues by 15 per cent to about £30m. North America also performed well with Mountie revenues up about 64 per cent, while total sales grew 30 per cent in Asia Pacific, albeit from a small base. As those figures attest, FDM offers investors significant global exposure. For instance, it recently expanded into South Africa and mainland China, opened academies in Toronto and Glasgow and relocated its flagship London academy to larger premises. Expanding has also boosted capacity, allowing it to train over 1,500 Mounties annually. FDM’s shares might appear pricy, trading at 17 times forecast earnings for 2015, a premium to peer Computacenter’s rating of 13 times. But that's justified by its larger forecast 2015 yield of over 4 per cent and expected top-line growth of 15 per cent this year, compared to 2 per cent at Computacenter. Moreover, broker Investec - which has a 400p price target on FDM’s shares - expects mid-teen earnings growth both this year and next. Of course, FDM has encountered some rough terrain. Its decision to no longer provide freelancers resulted in a temporary knock-on 5 per cent slump in Mountie revenues in Europe, the Middle East and Africa. And it may be harder to recruit high-quality, dedicated graduates in a competitive, recovering economy.
Recently listed IT services and recruitment group FDM (FDM) offers that rare combination of high forecast growth with an attractive yield. The group's unusual business model involves recruiting and training IT consultants called "Mounties" then deploying them to blue-chip clients, such as HSBC and Sky, that have the option to hire the consultants as their own permanent staff. The consultancy/recruitment model faces little competition and more importantly is very popular with clients, with whom FDM tends to develop long-term relationships. What's more, the group stands to benefit from the widespread shortage of IT skills and a recovery in global recruitment demand. FDM, which was taken private in early 2010 then re-listed this June, operates in 11 countries and caters to a £10bn professional IT services market. Its Mounties are recruited from local graduate and ex-military populations and trained in areas such as data analysis and project management. They are then placed with clients for an average of 18 months, after which they are hired, rejoin FDM or leave. The group had over 1,300 Mounties working with clients at the end of last half – a quarter more than a year earlier – and broker Investec expects that figure to exceed 1,500 by the end of this year. FDM also employs around 300 freelancers, but is increasingly phasing them out in favour of Mounties which drive higher margins. The steady growth of FDM’s army of consultants has translated into financial gains. For instance, the group’s cash profits quadrupled to over £23m between 2009 and 2013. Moreover, in the first half of this year, its net fee income – Mountie revenues plus the gross margin on its freelancers – grew 19 per cent to about £43m. And its operating profit rose 10 per cent to £10.7m once one-off listing costs of about £5m are stripped out. FDM is highly selective in its choice of trainees – about 700 of 30,000 applicants became Mounties last year. That helps it to attract big-name customers and explains why one additional Mountie brings in an estimated £30,000 in annual gross profit. Moreover, its model lets customers "try before they buy" and encourages long-term partnerships, leading to further hiring for other projects, departments and locations. It’s also flexible, as FDM can tweak its training to focus on in-demand skills such as project management or ‘big data’ analysis and it charges a daily rate for its Mounties
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