The Insider: City deals uncovered

Struggling StatPro shares worth 100p

StatPro has developed portfolio analysis and asset pricing software for the asset management industry. It's clever stuff, and the business traded as expected during the third-quarter. StatPro products are also now being rolled out across a selection of funds at Prudential in South Africa, too, following a five-year deal signed earlier this year. Yet, the share price has slumped since early September and has just tested significant technical support at 70p, a five-year low. That's too low for top brass.

"The shares have been caught up in recent sector weakness and a sell-off in growth stocks," explains broker Panmure Gordon. "Given our view that downside earnings risk is limited, we think this creates a buying opportunity."

Chief executive Justin Wheatley certainly thinks so. He's just bought 55,000 shares at 74.5p each and stuck them in his SIPP. He now owns 11% of the company. Non-executive director Mark Adorian is bullish, too, snapping up 82,600 shares at 71p each. In all, the pair has spent almost £100,000 building their stakes.

(click to enlarge)

Panmure reckons there's little downside risk to earnings and forecasts earnings per share (EPS) of 2.9p in 2014, rising to 3.6p next year. "The application of conservative multiples to the different revenue lines comfortably suggests a valuation north of 100p on an 'as is' sum-of-the-parts basis," says the broker. "Exogenous shocks aside, we doubt there will be a better time to buy if the migration strategy continues to plan."

CVS shares are worth vetting

AIM-listed vets network CVS Group has been a star performer in recent years. The shares have been on an upward trend since 2011, trading above both its 50-day and 200-day moving average for much of the period. Calling time on that rally prematurely has caught out many an investor, but now at an all-time high, is there any more left in the tank?

Yes, reckons non-executive director Mike McCollum. Also a solicitor and chief executive at funerals group Dignity, McCollum has more than doubled his stake in CVS after buying 30,000 shares at 370p. He now owns 50,000 of them.

Spending £111,000 on shares near a record high certainly implies uber-confidence. Clearly, McCollum was driven by September's full-year results which showed like-for-like sales up 7% and adjusted pre-tax profit surging by 18% to £14.3 million. Spending £12.4m on another 18 surgeries, through the acquisition of 10 practices, and taking over a third crematorium certainly helped. It’s bought another seven since the June year-end.

(click to enlarge)

Investec Securities said it would upgrade earnings per share (EPS) forecasts in response, perhaps by 5% to about 21p. That puts CVS on a forward price/earnings (P/E) ratio of over 17. There is, however, plenty of room to grow earnings further through initiatives like referrals, out-of-hours, equine and large animal services. Own-label and internet sales should pick up too.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.