One of the most important trends in technology in the past few years has been moving data and software to the Cloud. This move saves money on in-house storage and gives better connections to all kinds of networks.
Computer users in the U.S. turn to companies like Amazon and Rackspace. In Europe, however, more and more customers are turning to Netherlands-based InterXion Holding (INXN).
InterXion�s data hubs offer excellent connectivity choices, with 32 data centers in 13 cities across 11 countries, giving close proximity to over 75% of Europe�s GDP.
These hubs feature connectivity with over 400 voice and data carriers that have a direct presence, and the company�s carrier neutrality allows customers unhindered choices among them.
InterXion has over 1,200 customers, including the London data and trading activities of the Nasdaq exchange. The company�s history shows strong customer relationships, with average monthly churn of less than 0.6%. The company�s data centers have stable utilization rates of over 70%.
Revenue growth has been strong, remaining in double digits even during the 2009�2010 slowdown. Revenue grew by 22% in 2011 and earnings grew from 30 cents per share to 52% per share. After-tax profit margins have topped 11% for the last five quarters.
InterXion 's Q3 earnings report on November 8 was in line with expectations on both revenue and earnings, and guidance for 2013 that indicates further expansion and momentum.
In the longer run, INXN has been climbing since early August 2011, running from 11 then to around 24 in recent trading, with four substantial corrections along the way.
We like the story of expansion during a difficult period for European growth. The upside potential when the 'Mediterranean Muddle' is finally resolved and the Continent resumes its growth is significant. We think that taking a partial position in INXN below $24 makes sense.
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