Education Development International - 41p

We last recommended the shares of this qualifications and assessments group last October when the share price stood at 36.5p.

Since then, they have been as high as 46p and the recent pullback in the share price now looks to have provided an excellent buying opportunity, especially in view of the latest results.

EDI is a leading provider of accredited qualifications and assessment services. In essence, it is rather like City and Guilds in offering a wide range of vocational qualifications, more than 350 in the case of EDI, and it processes over 140,000 candidates in the UK each year.

Overseas, the group offers 90 examinations under the London Chamber of Commerce and Industry brand, with the latter seen very much as a mark of competence, especially in Commonwealth countries.

Its key markets are Asia, where the focus is on finance and Europe, where English language qualifications are most popular.

The interim results, which cover the six months to March 31, showed useful increases in revenues, pre-tax profits and earnings per share. These results have benefited from the successful integration of the acquisitions which were made in 2007 and the second half of the current financial year will also see the full benefit of the ASET purchase made last November.

Revenue for the period on continuing operations rose by 39 per cent to £9.61m, whilst adjusted pre-tax profits rose to £0.92m from £0.34m in the comparable period in 2007.

Earnings per share on the same basis increased to 1.62p from 0.63p.Clearly the latest acquisitions have benefited these figures, but there was also a useful level of organic growth.

Looking ahead, the company has established a solid platform on which to grow further, both organically and by acquisition. The company will benefit from the UK Government initiatives which are designed to increase the number of young people who complete vocational qualifications, whilst employers are also being encouraged to increase the numbers of people they employ who have recognised qualifications.

The group has also strengthened its management team following the latest period of expansion with the appointment of a new finance director whilst senior appointments have also been made in marketing and sales.

The company is expected to make pre-tax profits in the year to September 30 of £3.1m, for earnings per share of 5.4p. This puts the shares on a very low p/e ratio of just 7.6x making the shares look cheap.

  • WARNING: Opinions expressed are the writers' judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.