The Investment Column: Lynx finds the right

The Investment Column: Lynx finds the right IT niche

IF ANYONE was in any doubt that IT stocks are hot property the popularity of Computacenter's flotation has confirmed it. But it is not just the big computing groups which are riding the crest of the outsourcing wave. Lynx provides the likes of finance and car companies with all their IT needs. And it has developed a lucrative niche by teaming up with software groups to provide their clients with computers.

Lynx has enjoyed an explosive growth rate over the last few years, fuelled by judicious acquisitions and an acceleration in the trend for companies to farm out work to third parties.

Pre-tax profits rose 49 per cent to pounds 5.5m in the six months to March. An impressive organic earnings growth rate of 25 per cent was achieved despite a rise in wage costs due to a shortage of workers.

Lynx has had a storming run. Its shares have almost tripled since last August and closed up another 14.5p to 223.5p yesterday. House broker Henderson Crosthwaite forecasts current year profits of pounds 12.8m rising to pounds 15.46m in the next 12 months, putting the shares on a prospective p/e of 26 falling to 22. Lynx is not the bargain it once was but the shares still look attractive.