Fleetmatics: Driving Profits

04/27/2015 7:00 am EST


Nicholas Vardy

ETF Strategist, Oxford Club

Our latest featured recommendation—which is based in Ireland—develops Web-based and mobile fleet management software for small- and medium-sized businesses; the company has been growing by leaps and bounds, explains Nicholas Vardy, editor of Triple Digit Trader.

Fleetmatics Group (FLTX) helps corporate users track mileage, driving speed, vehicle location, and other useful data regarding their vehicle fleets.

In doing so, its software helps improve operational efficiency and lower costs. At the close of 2014, Fleetmatics served more than 25,000 customers with 552,000 subscribed vehicles worldwide.

Fleetmatics recently announced a deal to buy the French firm Ornicar SAS. Like Fleetmatics, Ornicar is a SaaS (Software as a Service) expert in managing fleets of commercial vehicles.

The firm’s entry into France, the largest market for light commercial vehicles in Europe, was a logical step in its ambition to become a serious player in the EuroZone.

Fleetmatics is a classic growth stock. The company boasts a three-year compound profit growth rate of 68% and a three-year sales growth rate of 37%. Profit last quarter jumped 91% to 44 cents a share.

Sales over the same period rose 28%. Profits are expected to rise 18% to $1.29 a share this year followed by a 27% increase in 2016. Both estimates have been recently revised higher.

Fleetmatics’ strong profit growth also has been helped by a lower corporate tax in its tax home of Ireland.

In addition, Fleetmatics is gaining a following among mutual funds, with the highly regarded Columbia Acorn and Fidelity Balanced funds both buying shares over the past two quarters.

Technically, the stock has been locked in a trading range for the past month or so. At the same time, it is technically oversold based on slow stochastics and is ripe for a breakout to the upside.

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