2015 was supposed to be the year that we all travelled on hoverboards. Now, while the technology exists, it's unlikely that we (or anyone if we're honest) is going to make any serious money off it this year.
I believe that investors should always be looking for reasonable stock ideas in an established and growing industry, rather that great stock ideas in a declining industry. For instance I can't see myself investing in a company like Nine Entertainment Co Holdings Ltd (ASX: NEC) when the local traditional media industry is struggling so much.
A Growing Industry
One industry that I view as heading in the completely opposite direction is known as business intelligence, or more simply "online business information management". Consider the impact that Facebook has had on traditional retail- once upon a time if a customer was unhappy with service or a company's policy all they could do is complain to the manager in-store or over the phone.
Now, they can jump on Facebook and write a post of their experience that's viewed by thousands! This sort of media attention, that grabs the attention of the masses, has the potential to kill a company- or at least hurt earnings.
A Great Company
A company that's addressing this market by providing a service to businesses that need to know what's being said about them online and in print is iSentia Group Ltd (ASX: ISD).
iSentia provides social and traditional media monitoring and analysis, media management, solutions for communication management, and media-release distribution services to some of Australia's largest businesses.
Companies value the service because they can be alerted to coverage and conversations that are relevant to them as soon as they take place using iSentia's proprietary software combined with human verification.
Large and Global
iSentia is roughly five times larger than its nearest competitor and is successfully expanding into Asia. Much like Veda Group Ltd (ASX: VED), the longer iSentia remains at the top and maintains good client relationships, the harder it becomes for customers to leave- an enduring position of power and earnings reliability.
Value
The company is currently trading on a forward P/E ratio of just over 20, with the share price increasing by around 40% since listing in June last year. Earnings are forecast to rise by 17% in the 2016 financial year, however there may be some upside potential to that. While not cheap, iSentia certainly looks like a decent long-term investment prospect as online reputation becomes ever more important to large companies.
