Fairpoint (previously known as Debt Free Direct) is the leader in IVA packages for personal insolvency - likely to be a continuous growth area. However, banks have squeezed IVA providers and previous super-large margins are unlikely to be repeated. Moreover, results and trading statements have too often been longer on hype and 'exciting changes' than facts and delivery; simply too risky in a market downturn.
Debt Free Direct (DFD) is the market leader in the UK in the provision of advice & Individual Voluntary Arrangements (IVA's) to over-indebted individuals. This market has been growing rapidly for several years and last year DFD doubled its revenues and quadrupled its operating profits. Importantly it is the most mature company in the sector with a proven successful business model, and has gone through the investment for growth phase and other "growing pains" necessary to position itself to cope with future growth. The company has net cash on its balance sheet and is expected to pay a maiden dividend in the coming financial year. With the market likely to stay buoyant as we enter a consumer downturn and potential changes to legislation actually set to benefit DFD by increasing the potential market size, we see continued high revenue and profit growth rates of over 50% continuing for several years. With DFD trading on a forward earnings multiple of just 15x the stock is cheap given such earnings growth.
| Sedol |
Type |
Price |
Date |
| 3236028 |
Sell |
£ 1.752 |
11/01/2008 |
| 3236028 |
Buy |
£ 4.563 |
07/11/2006 |
| 3236028 |
Buy |
£ 2.00 |
24/08/2005 |
| 3236028 |
Buy |
£ 1.96 |
23/08/2005 | | 
