Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, business software specialist CDC Software (Nasdaq: CDCS ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at CDC's business and see what CAPS investors are saying about the stock right now.
|Headquarters (Founded)||Central, Hong Kong|
|Market Cap||$227.9 million|
|Trailing-12-Month Revenue||$206.06 million|
|Management||CEO Peter Hak Yung Yip (since 2009)
CFO Stephen Dexter (since 2010)
|Trailing-12-Month Return on Equity||7.4%|
|Cash/Debt||$29.9 million / $19.3 million|
|Competitors||Microsoft (Nasdaq: MSFT )
Oracle (Nasdaq: ORCL )
salesforce.com (NYSE: CRM )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 98% of the 232 members who have rated CDC believe the stock will outperform the S&P 500 going forward. These bulls include irishred1 and All-Star TSIF, who is ranked in the top 0.5% of our community.
Late last month, irishred1 tapped CDC as particularly cheap way to go for growth: "Purely a value pick as this is a growing company selling at a bargain basement price."
Despite having the unenviable task of battling enterprise software behemoths, many Fools think CDC is simply too cheap to ignore. The CDC (Nasdaq: CHINA ) subsidiary currently sports a PEG ratio of 0.4, representing a massive discount to giant rivals Microsoft (1.05), Oracle (0.98), and Salesforce (3.2). Of course, if CDC's offerings are as decent as CAPS All-Star TSIF thinks, that wide valuation gap should only close over time:
This software faces steep competition, but generally client loyalty is high as the cost to change vendors can be high in dollars, down time, and training. ... Margins are moderate, but with licensing it's the cash flow that's important. CDC is trading near book value which is rare for a software company and is growing customer base. It's forward P/E is sub 7. CDC is also growing it's portfolio through acquisitions. ...
I think CDC, Hong Kong or not, has the makings of strong growth company. Competition, rate of new customer sign-ups, reasonable acquisitions, etc, all need to be monitored, but for now CDC is a promising company that appears to be undervalued.
What do you think about CDC, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!