Gaining momentum again, page-21

On the bandwagon


While online classified companies are forging into new markets, the likes of G8 Education and Slater & Gordon are taking advantage of recent developments which are enabling them to grow quickly.
This gives them the potential to become dominant players in their respective markets, he says. In the case of personal injury law firm Slater & Gordon, changes to the ownership rules of law firms in the UK have paved the way for the company to grow through acquisition in the fragmented overseas market, Samson points out.
Meanwhile, he says, G8 is positioned to assume the mantle once held by ABC Learning through its purchase of businesses in the now fragmented childcare services segment.
ABC Learning was the incumbent childhood education services provider which reached a market capitalisation at its peak of more than $2.5 billion in 2006 before collapsing. However, the experts say the two companies are completely different beasts.
Andrew Mitchell, portfolio manager with small caps manager Ophir Asset Management, says he expects G8’s growth prospects and blue-chip potential will be enhanced not only by the company’s ability to grow within the segment through acquisition but also because of growth in the industry as a whole.
He says G8 will continue to find businesses motivated to sell as long as banks enforce the stringent lending practices that were put in place after the ABC collapse.
Mitchell expects the federal government to continue to support the childcare industry, given the positive impact that more women in the workforce will have on the country’s GDP.
G8 has the highest forecast EPS growth in our group of 10 future blue chips: above 60 per cent, according to the research compiled by Smart Investor in partnership with Lincoln Indicators.
Others on our list with forecast EPS growth of greater than 50 per cent include telecommunications provider TPG Telecom, G8 Education and veterinary services consolidator, Greencross