Sectorguard is a rapidly expanding company (huge increases in turnover, profits and net assets) and despite this the share price has stayed around the 2.75p level. The shares are bound to rise (in my opinion) but when? Does anyone have any opinions?

15 Jan'04

SectorGuard (AIM:SGD) 4.5p BUY

Manned guarding is a buzz phrase at the moment, thanks to President Bushs desire to put sky marshals on transatlantic flights, but for SectorGuard, it is business as usual.

Chief executive David Marks remains committed to keeping out of aeroplanes and airports, seeing more sustainable and higher returns elsewhere.

Marks is instead focusing on a three-pronged approach; targeting education, local authorities and residential guarding. In the education sector, his company already lists a string of successes, including contracts with Oxford Brookes University, Birkbeck College, the School of Oriental and African Studies and Henley Management College.

Following three years of negotiation, SectorGuard recently won preferred supplier status to the London Universities Procurement Service, which acts as a buyer for all the colleges within the capital.

SectorGuard now has a standard contract in place for all London colleges, ensuring that the negotiation phase is quicker, and that the company can be in there earning money faster.

Residential guarding, although very much a new idea in this country, has worked well in the US and has transferred to certain parts of the UK with relative ease.

The companys flagship scheme is in Hadley Wood in north London, where residents banded together following a spate of serious attacks. Marks explains that his guards act as on-site protection, working together with local police to ensure residents are safe.

More residents groups are starting to see the benefits of having security guards in the vicinity, and SectorGuard is well-placed to take advantage. Similarly, moves by local authorities to put street wardens on the beat and back up local police are working well in a number of London boroughs, where SectorGuard has existing relationships for building and estate protection.

The company recently released full-year profit figures showing pre-tax profits of 741,621 against half a million last year, together with healthy earnings. Marks made four acquisitions in the year to September, and the companys share capital is now twice the size it was at float. But the market capitalisation has grown from 5 million to 9.5 million.

Further acquisitions are in the pipeline and Marks has mooted the suggestion of a tie-up between SectorGuard and his privately-held SectorAlarm company, of which he and his family own 42%.

SectorAlarm would provide a good fit by providing electronic and CCTV security systems to manned guarding clients and vice versa. Marks has said he will abstain from any such decision, however, given his obvious interest in both companies. Watch this space.

Statistics

BUSINESS: Manned security.

Vital stats:
Market capitalisation: 9.5 million
Historic PE: 13.2
Prospective PE for 2004: 11.88
Prospective PE for 2005: 10.80
No dividend

from share mag

plenty of buyers around check them out and look good value at this level

And the warrants are moving.

bit of profit taking today 5x 100000 selers going thru has any sentiment changed ??? should we be worried ??

No! The accounts speak for themselves (T/O up 73% and retained profit up 53%).

Plus...There's lots more action to come.

Stick with these guys and you'll be well rewarded.

Have you seen the Independent article ?

http://money.independent.co.uk/personal_finance/invest_save/story.jsp?story=481815

'Forget the space-age gadgets. Use human security guards'
17 January 2004
Protecting people and chattels in this increasingly violent, ill-tempered age has, not surprisingly, become a high- profile growth industry. And it is not just obvious terrorist targets, such as airports, where security is required. An army of unofficial PC Plods patrols many sites regarded as vulnerable. Even schools, in my younger days left unoccupied once the elderly part-time caretaker had left for home, now feel the need to embrace this burgeoning branch of the support services business.

In the perennial war against crime and terrorism, the most sophisticated space-age gadgets are available. But security guards, in vehicles or on foot, are still essential and have never been busier.

The stock market already recognises the ability of the big security players such as Rentokil Initial, still best known as the royal rat-catcher, and Securicor. But lurking on the undercard, with a capitalisation of just 6.7m, is a company that is taking full advantage of the security boom. SectorGuard is among the smallest members of the quoted contingent but it is ambitious and achieving the sort of progress which indicates its shares could be worth accumulating.

This week it unlocked year's profits of 742,000 against 502,000 the year before. Further progress, perhaps to near 1m, should be possible this year. SectorGuard is ignoring the hi-tech electronic side of the security industry and sticking with its 670 security guards. With some 2,000 manned security firms, many little more than one man and his dog-type operations, dotted around the country, the SectorGuard chief executive David Marks is convinced there is plenty of opportunities for expansion.

Last year he put through four smallish deals and more are in the pipeline. As the industry, like so many others, is clamped in a growing regulatory environment, the desire of many of the smaller players to remain in what is becoming an increasingly tough game must be evaporating. There are also opportunities for organic growth. Last year the group captured new contracts.

Some were for education centres. SectorGuard now has such establishments as Birkbeck College, London, Brunel University and the Henley Management College on its books. All told, it takes in more than 50 schools and other seats of learning. Residential protection is another growth area.

Many security groups, including SectorGuard, are happy to offer the sort of service so many police forces fail lamentably to provide. Patrolling estates, where the residents are rich enough to pay for the service, and providing various forms of community policing, at, of course, a price, are becoming a major part of the security industry.

It would be foolish to pretend that SectorGuard has been hiding its light under a bushel. Its shares, not too long ago 1.75p, are 4p, down from a 4.75p peak. But, if the group continues to forge ahead, they still look cheap. Dividend payments are unlikely, with available cash earmarked for acquisitions. Mr Marks, a 43-year-old accountant, is not keen to surrender equity for expansion.

He started the operation in 1998 and has 18.3 per cent of the capital. An electronic security company, SectorAlarm, is also under his leadership. The two have a close working relationship and I would not be at all surprised if in the next year or so a merger is arranged.

But SectorGuard itself could be taken over. As an accountant, Mr Marks believes every business has its price. And I believe an offer must be a distinct possibility. With many service companies anxious to add manned guarding to their activities, it is possible his single-minded approach actually adds to SectorGuard's attractions.

its only a matter of time before this secret gets out too lowly rated

After big sells and a fall early in the week, this share has crept back up to the level it started the week at (5p), so hopefully it can carry this through to next week (as long as all the profit takers have sold up). I'm expecting the share to be at the least at the 5.5p level by this time next week.

I don't think the short term movement is anything like as interesting as the underlying fundamentals. Sectorguard are well placed to grow over the next 3+ years. A great example of a growth stock. Below 2.5p it was unnoticed, during the last year is has just started to be picked up on the radar screens. I think the wise money will get in below 10p and the rest is speculation but it could be a real flyer in future. IMHO

I have to agree Prophet, the company (ie. profts growth and cash) and management are looking very strong at the moment and they are in a growth market - what more could a growth investor wish for?. Anyone in at this level stands to make a substantial amount of profit within the 2-3 year timescale.

Wilco, good going to reach 5.5p on the first day eh?

It's very difficult to predict where this one will be in couple of months time, never mind at the end of the year. I have a feeling that we're not far away from some serious money piling in.

Latest from Investtech.com:

"SGD - Positive Candidate (Short term) - Jan 30, 2004

Has risen 78% since the bottom on 21 Oct 2003 at 3.00p. Has broken the rising trend up, which indicates an even stronger rising rate. Positive volume balance strengthens the stock further in the short term. The stock has support at 4.00p."

not going so well today ???

GG

Not a reflection on SGD. All of my small caps. have taken a plunge today, apart from OMH oddly enough (as this has historically been the first to stumble).

OG

It's gone quiet on this thread, what's the thinking on SGD? Now would seem to be a good time to buy-in / top-up.

This is a good a time as any - SGD aren't going to move until the next news comes along (but that could be tomorrow for all we know).

There's plenty of chatter about more acquisitions coming up this year, so that will help to highlight the company to more investors and should boost the price. The company is looking good on fundamentals and just needs to prove continued growth for a bit longer before it really takes off.

Thx. I'm looking for a couple of longer-term safe(ish) bets and have been watching SGD for a while so will probably dip in tomorrow.

I got in last year and still feel the party hasn't even started yet. All the news and info points higher and higher. If we hit a problem (not impossible) let's deal with it when it arises. This one to date has all the the signs of a real growth stock. I'm as happy as I could be with this one. I'll be the first to share my worries should the story change. I am up 133% in less than a year (1.95p 11/04/03). Hold on to your SGD and your trousers, we are set for take off.

Why the selling of SGD this morning, cant find any news, can anyone shed any light?

MMs trying to encourage buyers due to the lack of news. They'll be back up again on miniscule volume when the overall market regains its upward trend.