When I wrote a series of articles late last year arguing that Ainsworth Game Technology Limited (ASX: AGI) was undervalued, I didn't expect its value would change the way it did.
After those articles were published, Ainsworth sank from $3.50 to lows of $2.03 in December with no real change to the company's fundamentals.
Since the last week of December, shares subsequently shot up some 40% to today's price of $2.81 at the time of writing.
Shares actually jumped 15% to over $3 in early trade this morning, before lapsing to their current levels – again, on no news.
It's hard to escape the conclusion that someone thinks Ainsworth is a good buy at its current prices, and volumes have been elevated over the past month also.
There are several reasons that Ainsworth could suddenly appear attractive.
The first and foremost reason in my opinion is the company's increasingly attractive international earnings.
Ainsworth grew international revenues by 37% in 2014, has ample prospects for continued rapid growth, and when you factor in the fall in the Australian dollar during that time, the company is seeing its already rapid growth multiplied further by currency effects.
Second, is Ainsworth's continued appeal as a growth share. Some of the share price decline recently appears to be due to concerns over the company's ability to maintain its past growth levels going forwards.
This scepticism has been borne out by the announcement at the Annual General Meeting (AGM) that Ainsworth's profit would be lower in the first half of 2015 than in 2014.
However this is primarily 'due to timing as we (Ainsworth) progress product approvals and is expected to be largely regained in the second half of FY15 (financial year 2015) resulting in similar levels being achieved compared to the previous 2014 year'.
Furthermore management announced that they expect to deliver continued growth in the international arena – particularly the US – which should excite investors, as will the news that the company expects to be adding limited franking credits to dividends from the current financial year onwards.
Despite the recent struggles of its share price, Ainsworth continues to look like a great growth investment, and even more so while it's still trading under $3.
