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In the realm of ASX dividend stocks represented by the S&P/ASX 200 Index (ASX:XJO), there's a company that, despite a 31.5% dip in its share price since October last year, could be an intriguing prospect for savvy investors. Intellectual property services provider IPH Ltd (ASX: IPH) may not grab headlines, but its current discounted share price, coupled with consistent dividends and potential catalysts, presents an opportunity that shouldn't be overlooked.
Shaw and Partners portfolio manager James Gerrish highlighted IPH's recent performance at its annual general meeting, noting that while the trading update was slightly ahead of consensus, it failed to excite investors. The key driver for a potential price-to-earnings (PE) re-rating, according to Gerrish, lies in the stabilization or improvement of the company's market share in Australia and New Zealand. This improvement could instill confidence in the sustainable organic growth outlook.
During the AGM, IPH's management hinted at potential corporate maneuvers that could impact the share price. Actively discussing further potential transactions and assessing mergers and acquisitions in Canada and other regions, the company showcased its commitment to strategic growth initiatives.
On Tuesday morning, IPH made a significant move, completing its third acquisition in Canada for $124 million. This aligns with the company's strategic goals and highlights its dedication to expanding its global footprint.
Considering these factors alongside the appealing dividend yield, Gerrish's analysts find IPH shares to be a tempting buy. With a 5% yield projected over the next 12 months and the current PE ratio of 15.5x, the current share price doesn't seem to factor in significant upside, making it relatively attractive, especially below $7 over the medium term.
Presently trading below that threshold, IPH emerges as a value buy, according to Gerrish. This sentiment is echoed by six out of nine analysts covering the stock, as per CMC Markets, who currently rate IPH as a buy. As IPH pursues strategic moves and aims for improved market share, investors may find this unassuming ASX dividend stock to be a hidden gem with considerable potential.
