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Ebix The Road To Automatic Gains?

|Includes: Ebix Inc (EBIX)

 Warren Buffet has openly admitted that he doesn't invest in tech yet he also

admits that it does hold some great opportunities. In my opinion one of these great

chances to profit is a small company that handles insurance automation and

creating exchanges for the insurance industry. Ebix looks pricey on the surface

however it is their young ambitious CEO and profitable niche with plenty of room to

grow that makes it quite compelling. At 4 times book  value and 17 times earnings it is not cheap on the surface but could very well be cheaper than you realize.

I did a discounted cash flow analysis and came up with a fair value of 35 dollars a

share that is a 30% below todays price or a 70 cent dollar.

So the company is cheap compared to growth why should I invest you ask?

The reasons as I will state below:


CEO Robin Raina turned around a dot com bust and has been steadily

taking market share from competitors. Return on Equity is 25 percent, return on

investments 23% and book value has consistently grown every year.

Valuation Vs Growth

The company is consistently growing at 40% and 15% organically and yet trades

at less than 20 times earnings. With a price to earnings growth ratio below .5 this

is a deeply undervalued security that is screaming to be bought.


If you are looking for a Peter Lynch type

investment that you have to break some rules to put your money in this might very

well be the place to look.

Disclosure: I am long EBIX.