Farewell underperformers
Recommendation
The environment for recruitment stocks has changed since late 1999. Sure, the industry continues to grow, fuelled by an outsourcing of the recruitment function by many organisations and a boom in employment in areas such as accounting and information technology.
Failed stocks
The number of listed recruiters has boomed accordingly, with a result of some stocks failing. Ambition Group (AMB - $0.82) has been cursed since it listed late in 1999 with an abnormally low level of trading interest, mainly because it listed almost as soon as it was founded with hardly any business to speak of.
We thought in issue 42 that there was little merit in the story and haven't deviated from that view. There's BETTER VALUE ELSEWHERE.
Recruiters Australia (RAL - $0.22) has had some bad luck, missing prospectus earnings forecasts and now experiencing trading results significantly short of its own expectations. The company isn't about to go bust but isn't powering ahead either. Having lost market credibility we think it's better to SELL AND STOP LOSSES.
Gaming subsidiary
Coms 21 (CMZ - $0.11) was a stock we became interested in a couple of years ago when it was preparing to float off ebet (EBT - $0.17) its internet gaming subsidiary, and was offering Coms 21 shareholders priority in the float.
We still like ebet - it now moves to the GTS Report - however Coms21 has suffered what we consider to be something of an attention deficit disorder. It's now metamophising into eGlobal, an SAP software provider. With the company now distributing its ebet shares to its shareholders, we think it's best to wait until the distribution is completed, probably next month, and then SELL.
Another group of companies - seven in all - are too small to warrant coverage in The Intelligent Investor, and are better covered in its sister publication The GTS Report.