Northland Capital initiated coverage of ClickSoftware Technologies Ltd. (NASDAQ:CKSW) in October 2013, with an outperform rating. This spelled good news for a company with lots of potential that had been largely overlooked by investors. ClickSoftware Technologies Ltd. is an Israeli company listed on the Nasdaq that provides human resource cloud computing solutions to enterprises in various sectors. The company's products have global outreach with a growing clientele base in emerging markets. ClickSoftware Technologies Ltd. has been described as one of the stars of emerging stocks and there is great good reason to believe it.
Sales Growth Strong
Over the last three years, the company has seen phenomenal growth. Revenues at the end of 2012 stood at $100 million compared to $71 million in 2010. Looking at quarterly sales this year so far, sales may surpass those of last year, although at a slower pace than before. It is also likely the company will end the year in the red. Increasing costs in research and development and general SGA have cut into the company's profits. This has seen the CKSW posting losses during the last two consecutive quarters. Key to assessing the health of this company is whether these cost increases are non-recurring, which means the company may return to profit within a short space of time. Otherwise, some restructuring will be required in order to stem the company's growing costs. Like other software companies, ClickSoftware Technologies Ltd. has been hurt by the market move from desktop to cloud based software. The change was rapid and most firms in the industry have yet to firmly embrace it from a strategic point of view. Nevertheless, the company is in a healthy financial position in general. It has no debt and is sitting on $54.6 million of cash.
The year 2013 has not been a very good one for ClickSoftware Technologies Ltd. Shares are down by 14 percent since the beginning of the year. They are now trading at just half of the all-time high price reached in April 2012. $6 appears to be the support price while resistance is at $8. Any investor wishing to buy into this stock will do so with a long-term focus. Research firm Maxim Group updated the stock from hold to buy. With one broker following this stock, it has been given a price target of $8.50 and has a strong buy recommendation.
Looking forward, expect this stock to almost double in 2014. The reason being that the company is going through a transition in which it is going to emerge stronger. Added to that is a string of new high profile contracts that the company has been announcing during the last couple of months. The cloud computing unit, the company's main source of revenue, has seen the number of clients double over the last six months. ClickSoftware Technologies Ltd. software is a perfect fit for an investor who wants to invest long-term. It has low volatility, making it also less risky as compared to other stocks on this side of the market.