5-Star Stocks Poised to Pop: CDC Software

Based on the aggregated intelligence of 150,000-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.

CDC facts

Headquarters (Founded)

Hong Kong (2009)

Market Cap

$297 million

Industry

Application software

Trailing-12-Month Revenue

$204 million

Management

CEO Peter Hak Yung Yip
CFO Matthew Lavelle

Trailing-12-Month Return on Equity

10.1%

Cash/Debt

$41.4 million / $4.4 million

Competitors

Microsoft (Nasdaq: MSFT  )
salesforce.com (NYSE: CRM  )

Key Customers

PepsiCo (NYSE: PEP  )
Northwest Airlines

Other Highly Rated Enterprise Software Stocks

Oracle (Nasdaq: ORCL  )
IBM (NYSE: IBM  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 98% of the 104 members who have rated CDC believe the stock will outperform the S&P 500 going forward. These bulls include Subida and the seventh-ranked investor in all of CAPS, UltraLong.

Just this past Tuesday, Subida tapped CDC as a fast-growing stock flying under Wall Street's radar: "Undervalued software company. Too small for the big guns. Profitable and growing margins on both ends, balance sheet in check. Lot of room for growth in India."

In a pitch from one day earlier, UltraLong also gave Fools the spin on the stock:

CDC Software is a recent spin-off of CDC (Nasdaq: CHINA  ) and has been the consistent and primary growth vehicle of CDC for years. I honestly don't know what [CDC Software] has left to prove to investors before it gets the valuation it deserves. ...

They are trading under six times 2010 profit expectations with over $2 in net cash and revenues slated to grow at 10%. ... Top this off with a price to book of barely 1.1, a price to sales of 1.4 and adjusted EBITDA up 37% year over year and you can tell I'm pretty damn excited about this inexpensive stock price. CDC is firing on all cylinders and it doesn't make a difference if no one notices it, but I'll be looking down the mountain at a $22 stock by 2012.

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!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Microsoft is a Motley Fool Inside Value pick, PepsiCo is an Income Investor choice, and Salesforce is a recommendation of Rule Breakers. Motley Fool Options has recommended a diagonal call position on both Microsoft and PepsiCo. The Fool owns shares of Oracle. The Fool's disclosure policy always gets a perfect score.


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