The business — which provides visual merchandising and search services to online retailers — was more than 20% lower from the prior night’s close and, although off intra-day lows, remains 18% lower on the day.

Attraqt announced that the review launched following the appointment of Eric Dodd as finance director in September had caused it to cut down some of its sales forecasts.  

The AIM-quoted business advised that “due to inaccuracies in forecasting the timing of certain contracts and client ‘go-live’ dates,” revenues are expected to be around 10% lower for 2017 than it had  expected. It also warned that the lower revenue run rate endured at the end of 2017 will carry forward into next year.

On a brighter note, Attraqt did advise that it expected to report high-single-digit organic growth in 2017, and that it should be EBITDA-positive in the second half of the year and broadly break-even for the year as a whole.

Forecasts fall

Attraqt said that the delays to pipeline conversion were the result result of “a number of significant new contracts closing, but later than planned, and some other contract decisions being delayed,” although it advised that its sales pipeline “remains strong” and that it boasts an order book of £2m.

It added that it was confident the forecasting inaccuracies around the timing of contract wins has now been resolved, and that management is working on a plan to resolve delayed ‘go-live’ dates.

City brokers had been expecting it to finally bounce into the black after years of losses with earnings of 1p per share, but today’s announcement could put these hopes through the shredder.

And as a consequence, the tech titan’s high forward P/E ratio of 36 times is likely to bump even higher in the days ahead. I reckon Attraqt, despite the brilliant revenues opportunities created by an expanding online retail sector, remains a pretty-risky dip buy at current prices.

Retailer on the ropes

Topps Tiles (LSE: TPT) has also endured no shortage of turnover trouble in recent times and, with economic headwinds intensifying in the UK, I also reckon the risks outweigh potential rewards here too.

The Cheadle-based firm continues to slump in value, its share price collapsing 34% in less than six months, and the steady stream of disappointing trading releases suggests that further woe can be expected.

Topps announced just this month that like-for-like revenues dipped 2.9% during the 12 months to September as a result of a “challenging” trading environment and it suggested that further troubles could be around the corner, noting that it is taking a “prudent view on market conditions for the year ahead.”

The City is expecting earnings to fall 5% in fiscal 2019, carrying on from the predicted 15% slide last year. While this results in a very-cheap forward P/E rating of 9.9 times, the strong possibility of swingeing downgrades to earnings forecasts here too is encouraging me to stay well away.

The post Is there now a buying opportunity in this 20% stock-market sinker? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The market clearly warmed to the mega £12.5bn cash-and-shares acquisition (making BT the UK’s leading converged communications provider) in the expectation of enhanced future returns for shareholders. However, after a spate of costly problems in other areas of the group — including fraud in its Italian business and historical failings in its Openreach business — investor sentiment is now at a low ebb, with the shares trading at multi-year lows of under 300p.

Contrarian opportunity

Despite recent problems, management changes and an ongoing underfunded pension scheme, the fundamental investment case for BT isn’t radically different to when the shares were 500p. A current-year forecast P/E of 10.5 looks good value to my eye, with earnings growth forecast to resume the following year.

Likewise, a trailing dividend yield of 5.3% has considerable appeal, because the board has signalled its confidence in the future by retaining a progressive dividend policy, albeit with a current-year increase to be lower than the 10% previously targeted.

BT now looks to me like a classic contrarian opportunity and is a stock I would be happy to buy today on that basis.

A little-known growth stock

If the FTSE 100 telecoms giant gets back on track, it should deliver strong gains for investors from today’s sub-300p price. It may take a successful small growth stock to outperform it. Could Attraqt (LSE: ATQT) be such a stock?

This online visual merchandising company is probably unknown to most investors, despite having a client base of over 230 familiar retail names. At a share price of 48.5p — unchanged after the release of its half-year results today — AIM-listed Attraqt is valued at £52m.

Attraqtive

Having completed a major acquisition of complementary business Fredhopper in March, Attraqt today reported a 227% rise in revenue to £5.5m for the six months ended 30 June. It said the H1 annualised exit rate was £16.5m and that it has continued to see “significant sales momentum” since the period end.

Valued at just over three times running sales and comfortably below three times likely forward 12-month sales, the stock looks attractively priced for a company with promise of strong top-line growth. This promise is supported by 41 upgrades and over 100 client renewals during H1, a growing number of new names signed during and since the period end and rising new contract values.

Today’s results show a £3.2m pre-tax loss in H1, although £2.1m was down to exceptional costs related to the Fredhopper acquisition. Ahead of today, the one broker covering the stock (presumably the house broker) was forecasting underlying earnings per share of 1p for the full year, rising to 2p next year. The latter gives an earnings multiple of 24.25 at the current share price, which again looks attractive for the growth potential.

As such, I rate Attraqt a risky ‘buy’ — risky not only because it’s a small-cap, but also because the e-commerce software market is a rapidly evolving one.

The post Could this small growth stock outperform BT Group plc? appeared first on The Twelfth Magpie.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.