Telit Communications PLC is a UK based technological company operating in the Communications and Networking industry. In short, it specialises in the development, manufacture and distribution of communication modules which allow machines, devices and vehicles to communicate on wireless networks. Telit has been a constituent of the AIM portfolio since its inception in January 2015, and it is a company which we continue to view favourably going forward.
Telit Communications is our favoured pick from last quarter as a result of the stock’s dramatic change in its fortunes since the beginning of 2016, culminating in a year-to-date return so far of 30%. At the end of 2015, the company was identified as one of two underperforming companies within the AIM portfolio, and was subjected to close scrutiny from our investment team. Based on our analysis at the time, we still saw potential for the company to perform well over the long term and viewed the stock as an undervalued opportunity. Since then, the company has gone from strength to strength with continued growth and innovation.
Telit Communication’s half-year results released in August showed a marked increase in revenues and profits on last year’s results. This comes as acquisitions and partnerships made by the company continue to enhance its product portfolio. Despite this positive performance, the company’s operational growth for the first half of 2016 was held back somewhat by unexpected delays in certification in the US for a particular product line during the period. It has since been highlighted by CEO Oozi Cats that these certifications have been dealt with, and the effected product lines will be operational in the second half of the year.
Looking at the company’s financial accounts, Telit Communications is in a solid financial position as well as a strong competitive position within the industry as a global leader in machine-to-machine communications, and the chief enabler technology area for the Internet of Things. This company represents a prime example of the way stock prices can be volatile within the market, and of the importance in sometimes waiting out the storm in long term investing. The turnaround of this stock reinforces our methodology that picking good companies based on smart business plans and solid fundamentals can prevail in the long term.
Opinions constitute our judgment as of this date and are subject to change without warning. The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment. Past performance is not a reliable indicator of future results and forecasts are not a reliable indicator of future performance. Nothing contained on this website constitutes investment, legal, tax or other advice and is not to be relied upon in making an investment or other decision. The information in this document was correct as of 01/10/2016.