This week I’m looking at two stocks that are in the business of telephone solutions. There is possibly a more technical and correct term for this, such as communication technology, but telephone solutions seemed to make more sense to me. Communication technology can be anything.

Loopup (LOOP)

The first of these is LoopUp. 

Loopup is, according to Stockopedia, a “software-as-a-service provider of remote meetings” (there’s the more technical and correct term!). It’s the UK’s equivalent to Zoom and trading has been going splendidly. 

The company announced its Half-year Report on 23 September 2020. 

Here are the highlights:

  • Revenue growth of 43% to £31.9 million at a gross margin of 71.4%
  • EBITDA growth of 247% to £12.2 million at an EBITDA margin of 38.2%
  • Adjusted operating profit growth of 664% to £9.2 million
  • EPS growth of 1,164% to 13.9 pence
  • Strong cash position as at 30 June 2020 improved to £8.3 million
  • Materially-reduced net debt to £5.3 million

The company’s half-year ended in June. We went into lockdown at the end of March. I’d be willing to bet that leads surged once lockdown was confirmed. Remember, in January nobody cared about Coronavirus. Even in February equity markets were at all time highs. Then at the end of February came the brutalisation of many a portfolio and the general madness that ensued. 

Here are two questions: 

  1. How well was Loopup trading in January when nobody cared?

  2. How well could Loopup be trading now if the sales growth (which could be higher than stated) has continued?

However, these questions are for the more fundamentally talented. That’s not my bag, but I’d argue that it’s not completely unlikely that Loopup has continued to have a nice tailwind behind it.

Let’s look at the chart:

PKTknmYnwqUjwUAV0umHyJt3N0tLUKz6olbTm9Jt We can see that since the results the stock has consolidated a lot. In fairness, the results were already known as they’d been highlighted in a previous RNS, so there was nothing to surprise to the upside here. 

But to me this is starting to look like an ascending wedge. Notice how the stock has repeatedly failed to break out, yet the lows are printing higher and higher. That’s a good sign. It’s a good sign because that means there are market participants (traders and investors) watching the stock and bidding it up when it falls too low. 

There’s currently a seller in…

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