Ergomed was pitched to the Stockopedia Staff Investment Club (SIC) on 5 May 2020 and we bought a position two days later at 418p per share.

After being stopped-out of our initial positions in the market pull-back in March, Ergomed was the third share to be added to the folio (after BOTB and Codemasters).

None of us knew it very well but it passed our initial filters and looked interesting because it had pivoted to a new model and was starting to become profitable. Yet the market (and analysts) seemed to be slow catching on.

It has been one of our better performing holdings since then, and while there are uncertainties, you could argue that it's still early days and deserves to be held in the folio.

As always, these notes are a way for us to chronicle and share some of the thinking in the SIC and are not investment recommendations.

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Pitch

Profile/Category/Style

Ergomed trades as ERGO on the AIM All Share Index (and is a constituent of the AIM 100 Index). It's in the Healthcare sector under Biotechnology & Medical Research and is classified as an Adventurous Mid-Cap.

Currently it trades at a share price of ~800p, giving it a market cap of ~£384.7 million. Between 1 May and 1 October 2020, the price rose from 405p to 760p, or ~88%. Average daily volume over 3 months is 219.7k (up from 119.9k back in May) - so average volume has been increasing recently. EMS is 3,000 shares. The free float is 66.8%

What is the opportunity style/type/classification?

This is a High quality, high momentum, low value - making this a High Flyer. Signs that it might be a misunderstood growth stock and that analyst earnings forecasts are perhaps struggling to keep up with it as the growth accelerates. Importantly, it appears to be high quality - and the early signs are that it is getting more and more profitable after changes that have been made in the business in recent years. Momentum is positive at the moment. It delivered three earnings forecasts beats last year and has already done the same in its recent H1 2020 results. Brokers have been consistently upping their EPS forecast upgrades - and Ergomed has got a nice (albeit short) record of beating them.

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Ergomed…

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