Tech outfit shows how to swim against the tide

FINDING a stock that seems to act independently of the current waves of panic and euphoria that are driving the sharemarket is not easy. But this week Rob Shelley, director of Total Trading Concepts and a councillor with the Australian Technical Analysts Association, draws our attention to Hansen Technologies, a smallish software company that develops, integrates and services billing systems for the telecommunications and utilities sectors.

By InvestSMART · 25 Oct 2011

By InvestSMART ·
25 Oct 2011

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Strong stocks, Shelley says, can retain an uptrend even when the market is going to the dogs. Hansen has made a pretty good fist of doing that this year, having continued to rise in what he describes as a "confirmed uptrend". A brief dive in March notwithstanding, Hansen has turned the 80? level (red line on the graph), which was a resistance level last year, into a support level during 2011.

It is now moving in a sideways consolidation pattern, trading between 80? and $1. If the stock breaks through $1, the chart shows it will head to $1.20, Shelley says. But on the downside, if it falls back through 80? then 60? will be the new floor level. Rising volumes through 2011 are a bullish sign, indicating support in the market, he says.

Earnings per share for Hansen have been growing over the past six years and are forecast to grow for the next three years. Profit for 2011 was up 20 per cent, and return on equity is a better than average 25 per cent.

The company has returned shareholders

35.2 per cent in the past year, 48.4 per cent annually over the past three years and a stunning annual 51.6 per cent for those fortunate enough to hold it for five years.

The dividend yield is a healthy 6.5 per cent compared with 5.5 per cent for the overall market and

5.6 per cent for its sector. The price-earnings ratio is about 10 per cent.

Hansen is an international operation with offices in Australasia, Britain and the US. Along with servicing telcos and utilities, it offers IT outsourcing services and development of applications for companies with highly individualised needs.

The founding Hansen family still holds 60 per cent of the company. Founder Ken Hansen recently stood down as chairman but is still on the board. His son Andrew is chief executive and the new chairman is well known broking identity David Trude.

This column is not to be read as financial advice. Those wishing to invest should seek professional counsel and do some homework.

rodmyr@ozemail.com.au

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Frequently Asked Questions about this Article…

What does Hansen Technologies do and what markets does it serve?

Hansen Technologies is a software company that develops, integrates and services billing systems primarily for the telecommunications and utilities sectors. It also offers IT outsourcing and develops bespoke applications for companies with highly individualised needs, and operates internationally with offices in Australasia, Britain and the US.

How has the Hansen Technologies share price performed recently?

According to the article, Hansen has shown a confirmed uptrend this year despite broader market volatility. After a brief dip in March it turned the 80c level from resistance into support and has been trading in a sideways consolidation between about 80c and $1. Rising volumes through 2011 were noted as a bullish sign.

What are the key technical price levels and chart targets for Hansen stock?

The article highlights 80c as an important support level and about $1 as the current ceiling. A successful break above $1 could see the share price move toward $1.20, while a fall back through 80c would put 60c in focus as the next floor. Rising trading volume was cited as a positive technical indicator.

Is Hansen Technologies growing its earnings and profitability?

Yes. The article states Hansen's earnings per share have grown over the past six years and are forecast to grow for the next three years. Profit in 2011 was up 20%, and return on equity was reported at a stronger-than-average 25%.

What returns and income have Hansen shareholders seen?

Hansen has delivered strong shareholder returns: 35.2% over the past year, an annualised 48.4% over the past three years, and an annualised 51.6% for five-year holders. The dividend yield was cited at a healthy 6.5%, compared with about 5.5% for the overall market and 5.6% for its sector. The price-earnings ratio was reported at around 10.

Who owns and runs Hansen Technologies?

The founding Hansen family still holds about 60% of the company. Founder Ken Hansen stepped down as chairman but remains on the board, his son Andrew Hansen is chief executive, and the new chairman is broking identity David Trude.

Does Hansen Technologies operate outside Australia?

Yes. The article notes Hansen is an international operation with offices in Australasia, Britain and the United States, reflecting a client base that includes telcos and utilities across those regions.

Should I buy Hansen Technologies stock based on this article?

The article provides positive technical and fundamental points about Hansen but expressly says it is not financial advice. It recommends that anyone considering investment should seek professional counsel and do their own homework before making a decision.