When it comes to high-growth industries, it’s hard to look past cybersecurity. In today’s digital world, cybercriminals are absolutely relentless. By 2021, the total cost of cybercrime is predicted to hit $6trn – more than the total proceeds of all illegal drugs combined.
One sub-sector of the cybersecurity market that is booming is identity management. Across the world, identity fraud is a serious problem today. In the UK, nearly 200,000 cases of identity theft were reported in 2018. Meanwhile, in the US, there were over 650,000 cases of identity theft last year.
Given the scale of the problem, companies that can help protect individuals and businesses from identity fraud are likely to experience strong growth in the years ahead, in my view. With that in mind, today I want to highlight a FTSE company that operates in the identity management space. I believe this company has enormous potential in the long run.
FTSE company poised for strong growth
GB Group (LSE: GBG) is an identity management company that helps businesses better understand who their customers and employees really are.
Working with over 200 data partners, it uses cutting-edge technology such as machine learning and facial recognition to verify people’s identities. Currently, it has the ability to verify over 4.4bn people across 72 countries (nearly 60% of the world’s population). Its clients include a broad range of blue-chip organisations including the likes of IBM, HSBC, Nike and Tesco.
The company is listed on the Alternative Investment Market (AIM) and is a member of the FTSE AIM 100 index.
Excellent full-year results
GB Group has grown at a prolific pace in recent years (five-year revenue growth of 250%), and full-year results for FY20 released earlier this week showed further progress.
For the year ended 31 March, revenue increased 38.7% to £199.1m. This was ahead of market expectations. Meanwhile, adjusted operating profit surged 49.7% to £47.9m, and adjusted earnings per share jumped 19.8% to 21.8p. This earnings figure was well ahead of the consensus estimate of 17.9p.
Looking ahead, the company sounded confident about the future. Chairman David Rasche said: “We remain confident in the longer-term prospects of the Group, thanks to a combination of a well-established growth strategy, a strong balance sheet, significant market opportunity, diversified sectors and customer base and world-class products.” Meanwhile, CEO Chris Clark commented: “Fundamentally, I believe that our long-term prospects in a post-Covid-19 environment remain as attractive as before.”
Significant growth potential
In terms of valuation, GB Group shares currently trade on a trailing P/E ratio of about 31. I think that’s a very reasonable valuation for a high-growth company like this.
All things considered, I believe GB Group is one of the most exciting stocks listed on the London Stock Exchange. I own this FTSE stock myself and plan to hold it for the long term, as I see significant growth potential ahead.
The post I think this FTSE share has huge potential appeared first on The Motley Fool UK.
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Edward Sheldon owns shares in GB Group. The Motley Fool UK owns shares of and has recommended Nike. The Motley Fool UK has recommended HSBC Holdings and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020