Can Sopheon Plc Build On Thursday’s 40% Share Price Jump?

Harvey Jones develops a soft spot for super soaraway software specialist Sopheon (LON: SPE)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

AIM-listed software developer Sopheon (LSE: SPE) is making a name for itself today after the share price rose whopping 40% this morning.

Sopheon’s World

The international software and services provider may not have appeared on your radar before, but it makes its money helping its corporate customers boost their revenues and profits by bringing new products to market faster and improving their success rate. Investors have a soft spot for Sopheon after it published its full-year results for 2015, showing it has swung into profit, with management sounding increasingly confident about the future.

Sopheon posted 2015 revenues of $20.9m, a rise of 14.2% on the $18.3m it generated in 2014. It also made a pre-tax profit of $1.2m, turning around the previous year’s loss of $1.5m. EBITDA more than tripled from $1.2m to $4.1m. The outlook for 2016 also looks promising, with full-year revenue visibility of more than $12m, up 17.6% on the 2015 pipeline of $10.2m.

Uber-Mence

Chairman Barry Mence hailed his company’sstrong momentum and pipeline for further advancement in 2016“, which was helped by the release of new software platforms and investments in software services, including its new out-of-the-box Express solution. It has gained market recognition from industry voices such as Gartner, CIMdata and CGT magazine, all of which help drive the share price up to around 98p at time of writing. 

Investors in smaller companies like Sopheon, which has a market cap of just £7.06m must brace themselves for swings like these. Its share price is still below its 52-week high of 107.75p, while volatility is demonstrated by a year-low of 45p last August. Revenues may have risen to $20.9m in 2015 but that followed a dip last year. In 2013, revenues stood at $20.84m, almost identical to 2015. Effectively, they are flat over three years.

I am always wary of buying stocks on the back of a spike like this one. In October last year, for example, the share price leapt from 59p to almost 90p in a couple of weeks, shortly after it released its Accolade Enterprise Innovation Management solution, but it then yielded those gains over the next few weeks.

Licence To Thrill

Where the share price goes in the longer run depends on the success of its future product releases and continuing ability to secure licence transactions from new and existing customers. Revenues and profits may be volatile as a result. That said, Sopheon has an attractive offering, helping companies improve planning, governance and performance measurement on high-risk/high-reward initiatives.

Consumer Goods Technology (CGT) readers have named Sopheon a top provider of New Product Development & Introduction (NPDI) solutions for the consumer goods industry for the sixth consecutive year, which suggests a strong reputation and staying power.

I am also pleased happy to see that the company offers its services across a range of sectors, including defence, oil, high-technology, core consumer goods and chemical, protecting it from a downturn in any one of them. I won’t be diving in on the back of today’s share price bounce, there is always the danger of getting caught out by subsequent profit-taking, but will be adding it to my watchlist.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s how I’d follow Warren Buffett to start building passive income in 2025

Ben McPoland highlights one FTSE 250 firm with a strong competitive edge that he thinks can continue rewarding investors with…

Read more »

Investing Articles

Burberry shares: undervalued FTSE gems that are ready to rocket?

Burberry shares soared at the beginning of the week as the takeover rumour mill went into overdrive. Is Paul Summers…

Read more »

US Stock

Here are the latest share price forecasts for S&P 500 giant Amazon

Amazon has generated monster gains for investors over the last decade. And Wall Street analysts believe the S&P 500 stock…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

2 high-yield FTSE 250 shares I’d buy today — and 1 that I’d avoid

UK markets have felt some volatility after last week’s Budget and the FTSE 250 was no stranger to it. Our…

Read more »

Investing Articles

3 reasons the Rolls-Royce share price could soar over the next decade

Sustainable aviation fuel, narrow-body aircraft, and small nuclear reactors could all keep the Rolls-Royce share price climbing over the next…

Read more »

British flag, Big Ben, Houses of Parliament and British flag composition
Investing Articles

Here’s how much income I’d get if I invested my entire £20k ISA in cheap BT shares

BT shares are on the up but still cheap, while the FTSE 100 telecoms stock offers a good yield too.…

Read more »

Investing Articles

2 FTSE dividend shares yielding more than 6% with P/Es of less than 9!

Harvey Jones picks out two brilliant FTSE 100 dividend shares that yield more than 6% but are selling at strangely…

Read more »

Investing Articles

Up 105% in a year! Is this rocketing FTSE bank the perfect pick for my Stocks and Shares ISA?

Harvey Jones is drawing up a shortlist of stocks to purchase inside his Stocks and Shares ISA allowance. This FTSE…

Read more »