Technology has had a poor October, it being one of the worse performing sectors during the month. Most stocks in the sector have either missed on the revenue side and/or issued disappointing guidance. However, one high yielding tech stock bucked the trend this morning and is up substantially in early trading as a result. It is ClickSoftware Technologies (CKSW) which is underfollowed but looks like it is going higher. It could make a good addition to growth and/or income portfolios at these levels.
Key highlights from CKSW's earnings report:
- Earnings came in at 9 cents a share, two cents above consensus estimates.
- Total revenues came in at $27.3mm, up 18% Y/Y.
- Software license sales increased even more at a 24% annual clip to $11mm.
- Management reiterated the previously provided full year 2012 guidance of revenues in the range of $98 to $103 million, representing about 13% to 18% growth over 2011.
ClickSoftware Technologies provides software products and solutions for workforce management and optimization in the Americas, Israel, the Asia Pacific, Europe, the Middle East, and Africa.
7 additional reasons to buy CKSW at under $8 a share:
- The company has approximately $50mm in net cash on the balance sheet which amounts to more than 20% of market capitalization at current levels.
- CKSW provides a generous dividend yield of 4.5%.
- The company is experiencing solid revenue growth this fiscal year and analysts expect faster growth of over 18% in FY2013.
- The median price target held by analysts that cover the stock is $10 a share, more than 25% above the current stock price.
- The stock is selling near the bottom of its five year valuation range based on P/B, P/S and P/CF.
- The company has grown earnings at better than a 20% annual rate over the past five years and is selling at just over 15x forward earnings.
- It is has solid long term technical support just below its current stock price (See Chart)