Costs from the UK acquisition and setting up a US sales infrastructure also dampened the result. This is one of CDS's key risks. Then there is the competition from established and new players that will surely be attracted to the industry's growth prospects. But right now the market is focusing on profits, and it will still be two to three years before we see any meaningful profit growth. The other big risk is liquidity - CDS's three largest shareholders control more than 60 per cent of the company's issued shares.
Turnover is low.
But if you sensibly allocate no more than 10 per cent of your portfolio to speculative stocks, want exposure to green technology and can hold the stock for at least three years, CDS is worth following, particularly if it gets dragged lower with the Nasdaq in the next few months. While it is hard to see any speculative tech stock in this market, CDS is capable of strong gains in the medium term. Success depends on CDS's push into global markets. In fact, CDS expects to earn 100 per cent of its profits from its overseas operations in its next fiscal year. CDS forecasts revenue growth of 50 per cent per annum in the next two years.