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Why Ellie Mae Is Poised to Pop

By Brian D. Pacampara, CFA - Apr 17, 2013 at 2:40PM

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Market-trouncing returns could be written in this 5-Star.

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, mortgage industry software specialist Ellie Mae (ELLI) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Ellie Mae and see what CAPS investors are saying about the stock right now.

Ellie Mae facts

Headquarters (founded)

Pleasanton, Calif. (1997)

Market Cap

$604.2 million

Industry

Application software

Trailing-12-Month Revenue

$101.9 million

Management

Co-Founder/Chairman/CEO Sigmund Anderman

President/COO Jonathan Corr

Return on Equity (average, past 3 years)

7.7%

Cash/Debt

$60.4 million / $0

Competitors

Fiserv

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 99% of the 151 members who have rated Ellie Mae believe the stock will outperform the S&P 500 going forward.

Earlier today, one of those Fools, TMFInnovator, succinctly summed up the Ellie Mae bull case for our community:

- Rapidly growing user base (+40% yr/yr) that is adopting the Encompass software solution.
-As users become more comfortable/familiar with Encompass, switching costs rise and # of transactions/user increases (revenues to ELLI).
-Asset-light business model that is easily scalable.
-Huge addressable market that is in flux due to increased regulations. Increased regulation is good for ELLI business.
-Network Effect: The Ellie Mae Network becomes more valuable as more users subscribe.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

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Stocks Mentioned

Ellie Mae, Inc. Stock Quote
Ellie Mae, Inc.
ELLI
Fiserv, Inc. Stock Quote
Fiserv, Inc.
FISV
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