There have been a number of big gains on the All Ordinaries (Index: ^AXAO) (ASX: XAO) in 2017, but few come close to matching the gain that the Appen Ltd (ASX: APX) share price has made.
Since the turn of the year the data solutions and services provider's shares have rallied a whopping 70% higher.
Can its shares keep climbing higher?
Whilst I think that Appen's shares are about fair value today, I believe there could be significant upside for them over the next few years.
Due to the ever-increasing demand for machine learning and artificial intelligence services from global tech giants such as Microsoft and Facebook, I think Appen is in a position to continue its meteoric growth for a number of years to come.
In the first-half of FY 2017 it was this demand that helped its Content Relevance segment deliver a 52% increase in revenue to $53.3 million and a 47.5% increase in EBITDA to $9 million.
As this segment is its biggest by some distance, it ultimately played a key role in the company's 44% increase in first-half EBITDA.
Impressively, this explosive level of growth is expected to accelerate in the second-half. Management has provided full-year EBITDA growth guidance of the upper-end of its 40% to 50% guidance range.
Should you invest?
Based on its guidance I estimate that its shares are changing hands at approximately 28x forward earnings today.
Whilst this is not necessarily cheap, it is in-line with industry peer Altium Limited (ASX: ALU) and more than fair given its current growth profile.
In light of this, I would suggest investors look at snapping up shares in Appen on any share price weakness with a view for holding them for at least the next few years.
