Asure Software Has Plenty of Room to Rise
In the past several weeks, I have highlighted several small cloud-based productivity stocks with excellent upside price appreciation potential for the aggressive trader. My research yielded another cloud play in Asure Software Inc (NASDAQ:ASUR), with a current stock value of around $14.80 and a market cap of around $216.0 million.
The stock price is up a staggering 75% in 2017 and more than 200% year-over-year.
ASUR stock set a new record of $16.44 on June 7, which is an impressive 20-fold increase from $0.80 on March 13, 2009, when the current bull market started to take off. Yet, despite this big move in the Asure Software stock price, it may only be the beginning of a much bigger bull run for the stock.
The chart of ASUR stock shows the presence of a bullish golden cross pattern, a technical situation in which the 50-day moving average is above the 200-day moving average. The formation is a pretty decent indicator of a higher stock price down the road.
Chart courtesy of StockCharts.com
Asure Software is intriguing because it actually makes software that is in high demand around the world. The company produces cloud-based workplace productivity and facilities management platform use to manage mobile workforce and workplace assets.
The company already has its software used by over 5,000 small to large customers in areas such as business services, financial services, government, higher education, healthcare, and manufacturing.
My Fundamental Bull Case for ASUR Stock
The direction of a stock is only as good as the supporting metrics. In the case of Asure Software, the company has managed to drive up sequential revenue growth in consecutive years beginning with almost $25.5 million in 2013 to $35.54 million in 2016.
The 32% growth in 2016 is well above the recent average, which is something you want to see in small growing companies.
For 2017, analysts’ average estimate is that revenues will ramp up to $53.58 million. Their average estimate is also that revenue will grow to $67.57 million in 2018. (Source: “Asure Software, Inc. (ASUR),” Yahoo! Finance, last accessed July 13, 2017.)
Asure Software has also managed to control the cost side after recording adjusted earnings in 2016 for the first time.
The positive earnings for Asure Software are expected to continue into 2017 and 2018. There is a high estimate of $0.83 per diluted share for 2018.
In the first quarter, revenue growth was strong at 60%, due to key acquisitions. Also important was the recurring revenue metric surging to 85% while cloud revenues jumped 103%. (Source: “Asure Software Reports Strong 2017 First Quarter Financial Results and Increases Full Year Guidance,” Asure Software Inc, May 11, 2017.)
Clearly the sell-side folks have taken notice of ASUR stock, with four higher earnings-per-share (EPS) revisions for 2017 and 2018 during the past few weeks. A situation where the EPS trend is positive is a bullish sign.
Now, while ASUR stock has already staged a massive upside move, the multiple of 17.69-times its 2018 EPS and a price/earnings-to-growth (PEG) ratio of 1.26 suggest that another 50% advance (or more) would be reasonable.