Redcentric (RCN:AIM) 126p

Gain to date: 12.5%

The managed data and network services provider has made undoubted progress so far this year. Management’s optimism for the future is backed up by a handful of key operating improvements, such as strong order wins, cash generation and confirmation of a debut interim payout set for February. A full-year dividend of 3p this year to end March 2015 implies a 2.4% yield.

While light on specific financial detail Redcentric’s (RCN:AIM) trading update (29 Sep) refers to a strong and ‘comfortably in-line’ first half with strong order intake and organic growth. Profitability has improved ‘substantially’ due to the InTechnology integration unlocking synergies.

The market is anticipating £90.9 million revenues this year and earnings before interest, tax, depreciation and amortisation (EBITDA) at £20.8 million, implying 20%-plus EBITDA margins.

Flagged in Shares on 31 July at 112p, there’s talk too of further acquisitions, something to excite investors since chief executive officer (CEO) Tony Weaver has a track record for extracting value by bolting businesses together.

A 150p share price target is reiterated by FinnCap which we believe could prove too conservative.