Long term stocks: Infotrek Syscom

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Electronic waste management company Infotrek Syscom Limited is a "must buy" for long term investors who has vision and patience. This emerging sector (waste management) has huge business prospects and Infotrek is ideally positioned to capitalise on the new opportunities. It buys old computers from developed countries and sells them in developing countries after refurbishing and testing. Infotrek was once a software development company but now concentrated on electronic waste management through its subsidiary "Eco Recycling Limited" (Eco reco). Its peers in U.S are commanding huge valuations as many analysts are betting on this environment friendly sector.

Significant Positive trigger: Huge opportunities in WEEE (Waste Electrical and Electronic Equipment).

Infotrek Syscom stock price analysis:

CMP: 29.50 (BSE)
P/E: 12
1 Year high-low: 134-23
Book value: 20

Infotrek Syscom target price:

1 Year target: 60-70 (EPS of 6).
Ideal investment duration: 2-3 years to reap full benefits.

Why Infotrek is a must buy for long term:

1. Good results in the June quarter. Good improvement in profit margins. EPS is expected to rise to 6 in FY09 from FY08 EPS of 2.

2. Infotrek Syscom is a zero debt company which is a good thing in these high interest days.

3. Waste management has huge business prospects. Company will post huge growth in sales in the next two years due to its recent expansion plans.

4. Steep correction in the stock from 134 to 23 in the recent meltdown.

5. Infotrek stock is looking cheap on forward earnings basis (forward P/E of 5). It once commanded a valuation of 65 during Bull Run in 2007.

6. Infotrek Syscom signed an agreement with Madhya Pradesh Government for setting up recycling plants in Madhya Pradesh for plastic & electronic waste.

7. Infotrek is a member of many reputed e-waste management associations like International Association of Electronics Recyclers (IAER).

Final verdict: Infotrek Syscom is the only major organised player in the waste management sector in India which was dominated by unorganised players. Its new facility will come into operation from June, 2009 onwards. Next few years will see rise in awareness about waste management and Infotrek will play significant role in this emerging sector. Long term investors should buy Infotrek Syscom and forget about it for 3-4 years to get maximum benefits. Increase in awareness about polution and environment is another positive aspect.

Click here to download PowerPoint slide on Waste Management and Infotrek Syscom Limited.

Courtesy: Outlook Profit./Dr. Krishna (StockMarketGuide)