Amcom – Increase to position (AMM)

I’ve been singing Amcom’s praises since I first got in at 20c nearly 2 years ago.  Since then, the company has gone from strength to strength, growing organically, making smart acquisitions, and winning big new contracts.  Importantly, they’ve also divested their IInet position and built a broader product offering which complements the existing core fibre business.

This has prompted me to review my position in Amcom.  My original post stated a price of 20 times earnings to be a reasonable sell point, and at a current P/E of around 13 with double digit growth anticipated for FY11, I’d be letting go too cheaply at this price.  What I will be doing is increasing my holding by another 50%.

Barring an irrationally exuberant price increase, Amcom is a forever stock for me.  The only other foreseeable reason to sell would be major problems integrating an acquisition.  Given that L7 should contribute $4m EBITDA in FY13, and Amcom’s cloud and voice business have both shown strong growth, I am likely to hold for at least the next 2 years.