redflex versus adacel, page-2

Ousia, this is a fascinating question, and one where, fortunately for those taking part, there is hardly ever a clear result. To put it simply, in an allegedly efficient market, why are people prepared to pay more for stock A than for stock B, given that they are superficially similar?

In the case of Adacel and Redflex, I suspect the similarities are more apparent than real. Sure, they are clssified in the same sector, but that really does not mean much. Both are excellent companies in their field, with, as you point out, good prospects. But the business models are very different. RDF, largely as a result of that model, is not a technology stock, but an infrastructure investment.

Further, it is operating in a market which appears to be about 5% penetrated, and, more important, to have a dominant position (with 50% of the market) in the largest market in the world, namely, the US.

Could it be that these factors may be weighing more heavily in investors' minds?