Linx makes its mark

SMALLER COMPANIES

SO LONG as you have a good grasp of the underlying technology, investing in hi-tech stocks can be a great way of building up an exciting as well as profitable investment portfolio, writes Richard Phillips.

And finding little gems among smaller companies often confers a greater sense of ownership than holding shares in the giants. Linx Printing Technologies makes continuous inkjet and laser printers, as well as distributing its own inks. Its printers are used for production lines that print sell-by dates and serial numbers on foodstuffs, beverages and pharmaceuticals. Interims saw another glowing set of figures - a seventh successive increase in profits.

Sales of pounds 11.3m produced pre-tax profits up 18 per cent at pounds 1.48m. Earnings per share rose 23 per cent to 6.6p, matched by the same rise in the dividend to 1.6p. Growth rests on further penetration of overseas markets and improvements in technology. Because Linx has a reputation for reliability at reasonable prices, it is well placed to build new customers overseas. It is committed to spend 9 per cent of turnover on research and development, a tactic which has paid off with some leading-edge products.

On the basis that the shares are trading at just over 11 times forecast earnings for 1998, they look inexpensive. Buy.