Banks suffer more than most businesses from high IT costs. Make or by, inhouse or external are important questions for controlling costs.
This is where Tieto Oyi comes in, our stock tip of the week.They are a global player in the IT service industry, with branches all over the world.
Like Nokia, Tieto is from Finland and is home in the high-tech industry.
However, unlike Nokia, Tieto is doing very well these days. They are competing for the top 3 spots in different markets with the largest IT providers from India.
The company was founded in Helsinki all the way back in 1968, when they provided IT services for the owners at the time, mainly the Union Bank of Finland.
With globalisation in the 90s and the connected offshoring of IT, competition got fiercer.
As a consequence, Tieto developed into a broadly-positioned IT service provider and went public in 1999. Today, their roughly 14,000 employees generate annual profits of 1.5 billion euros. Their own offshore service centers are located cheaply in Eastern Europe and Asia.
Even though the stock is a long way from its peak of 2000, before the dot-com bubble burst, it is still a tip to buy.
Its performance has been increasing since 2009, along with the markets. During this time, the value of the Tieto stock has almost tripled.
In February this year, the stock reached its peak with around 24 euros and has been slightly falling since. Yesterday, Tieto closed at 21.44 euros.
In our ratings, Tieto is convincing in two out of three categories. The stock is currently very cheap compared to the average, and it offers investors a high degree of security.
One drawback on the other hand is that no substantial growth can be expected from the company.