Back from a recent post-results high of 955p to 833p, Axon shares have that ‘buy me’ look to them. This is an opportunity to climb aboard one of the fastest-growing business software houses in the world – one with a clear-cut strategy, terrific operational controls and hard-wired growth hormones in the shape of a link with SAP, the world’s leading provider of enterprise, resource, planning (ERP) software.

Now, I would not normally look at a company of Axon’s size (it is capitalised at a fraction under £500 million). But in the current market conditions, I believe it pays to look at more liquid stocks. In Axon’s case, the numbers are compelling.

The company focuses on delivering what it calls ‘business transformation programmes’ to SAP customers. With SAP’s ERP systems now recognised as a ‘must have’ for just about every blue-chip entity in the world – and a lot of public sector organisations too – Axon has a worldwide market of about £12 billion a year to aim at. In the half-year to the end of June, it booked £97 million of turnover, up from £62 million in the comparable period of 2006. Although it is already the largest consultancy focusing purely on SAP-enabled solutions, there is still a lot of headroom for growth there.

Axon has been highly acquisitional. It has concentrated on picking up relatively small players and using them as the conduit through which to pitch to large organisations. This strategy has proven highly effective. A third of the business is now in the States and Axon is working hard to build its Asian operations. It recently won a major deal with Boeing China. Non-UK revenues doubled in the first half of this year. With strong operational controls, Axon achieves high margins. At the last count it was also in net cash – to the tune of £14.5 million.

At 833p, the shares are not exactly cheap, but then they are not going to be. Earnings nearly doubled in the first half (to 17p a share) and you are going to be paying more than 20 times earnings to get a stake in this business. But there are big buyers out there and without the recent market turmoil, the shares would probably be nearer £10 than £8. Buy.

Axon Group	LSE	0pm	p	p
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