Wednesday tips round-up: Asos, Iomart

When something seems too good to be true, it probably is. Shares of on-line fashion retailer Asos are trading at a price-to-earnings ratio of 54.3 versus a rating of between 30-35 times profits for well-established and successful technology firms such as ARM Holdings. Furthermore, while the company has maintained its growth target for sales next year at between 15% to 20%, that masks what should be an easy fourth quarter due to the fire at its depot at Barnsley this year. Then there is the no small matter of its accounting treatment for the insurance pay-out it received for the above incident. Simply put, it puzzled several analysts. On top of that, one should carefully ponder the implications of the slowdown seen in the firm's international sales. The shares are best avoided, writes The Times's Tempus.Scottish data centre and computing outfit Iomart has been left behind by the wave of private-equity funded purchases of UK tech firms this year. The underlying business is doing well enough however, with first half revenues expanding at a 28% clip and pre-tax profits up by 27%. Yet investors were not impressed by those numbers, sending the shares sharply into reverse. Even so, analyst at FinnCap believe the company will eventually find a home, hence its 285p target price for the company's shares. Furthermore, the stock now changes hands at just 14 times forward earnings. Nevertheless, it may prove a bumpy ride until the above analysts are proved correct. So hold on tight says Tempus.