Synety - A very promising speculative stock?

Synety, a UK software and telco company specialising in the provision of cloud based telephone call-control systems looks a very interesting speculative investment, and relatively recently I added this company to my current portfolio of shares, although I might add that it was a fairly modest purchase.

On many levels the company doesn't meet my usual criteria, not least because at the interim stage of this year the company made an operating loss of £1.3m and revenues were just shy of £200,000. At first glance, not exactly mouth watering I'll admit.

So why did I buy shares in this outfit? Well firstly, on the day of the interim results, I noticed that they had also raised £2.1m in a placing with institutional investors for the following reasons:-

"The net proceeds of the Placing will be used to expand the Company's UK sales force and customer services team, expand and strengthen the technology platform with disaster recovery features and provide general working capital for the Company to capitalise on its first-mover advantage and land grab a market niche where the Directors believe there is limited competition and significant potential."

The placing was at 150p per share, and the sentence highlighted in bold and subsequent developments enticed me to invest at about these same levels.

The trading update in September was very encouraging where they said that there had been a 30% increase in recurring revenue in 2 months, and growth is expected to continue at a faster pace.

Simon Cleaver the Executive Chairman said, "In the 6 months since we provided a trading update at the time of the Company's 2012 preliminary results statement, we have begun to see a much clearer, and very exciting picture emerging of market demand and potential for CloudCall."

The key performance indicators in the two months from June 2013 to August 2013 do look very impressive indeed, and annualised recurring revenue is now running at close to £500,000.

Cleaver finishes the update with the following:-

"There is every indication, as I have reported before, that we have a product offering that is capable of extensive rollout. Consequently, we have considerable confidence in both the short and longer term prospects for the Company."

To back up his confidence in the company, Cleaver and two other Directors have been recent buyers of the shares.

The company appears to have hit a very rich vein of growth, and if they are successful with their "land grab" opportunity then this could be a stellar performer.

With a market cap. of just £11m, whilst it doesn't look immediately cheap on fundamentals, in the context of it's growth potential and when compared to the valuations of many "trendy" tech companies at the moment, the current share price of 180p may well prove to be somewhat of a snip. We shall see.

As ever, no advice intended or given.