Questor share tip: Rule change could net big profit for Group NBT - Telegraph.co.uk

According to analysts, the new domain names are unlikely to come cheap, costing more than £100,000. These costs could be even higher as the most popular domains, where a number of companies can successfully argue their claim to the suffix, will be decided by auction.

The paperwork is also expected to be extensive and more complex, which is a good opportunity for NBT to win extra business providing services and consultancy.

NBT manages domain names for blue-chip clients, as well as internet hosting and corporate protection services. Indeed, NBT currently acts on behalf of 30pc of the companies in the FTSE 100 in some capacity and there is a continuing trend for outsourcing of domain management to third- party professionals.

The group also bought French peer Indom last year, which makes NBT the leading provider of domain services to the French market. Half of the companies in the CAC 40, the French blue-chip index, are clients of Indom.

Questor likes the recurring nature of the revenues in this business, with contracts being for one to three years. The company is also diversified. For example, Unilever is the company's largest client, but this makes up just one-hundredth of NBT's revenues.

NBT has posted growth and revenues every year for the past decade and is active in a market that is growing at about 6pc a year.

An interesting part of the group's operation that could show good growth is its services, helping companies protect their brands by monitoring web traffic and pursuing criminal activity such as fake luxury goods items.

After the ICANN statement, NBT said that it was already working with a number of large companies throughout Europe which are preparing to make applications to use their brands and names as domain name extensions.

"This will enable them to improve their visibility on the internet and change the way in which they market their services online," NBT said.

The shares are trading on a June 2011 earnings multiple of 16.7 times, falling to 14.7 in 2012. This is a premium rating but it reflects the recurring nature of the group's revenues, the relatively bullish backdrop and the group's blue-chip client base. The yield is not spectacular at 1.1pc.

Questor first recommended the shares as a buy on March 12 2009, at 214½p and they are up 109pc since then compared with a FTSE 100 up 61pc.

The shares remain a buy.