ATLANTA (TheStreet) -- Software-company investments can be sketchy.
Many companies look promising based on cutting-edge software that make claims to revolutionize some industry or another. More often than not, the realization doesn't match expectations. Atlanta-based Ebix (EBIX) is the other sort of software company, the kind that actually follows through on the promise.
Over the past year, Ebix's stock has risen 165%, with a return on equity of 39% and net income that has increased with every accounting period. Ebix has found a profitable niche and is exploiting it.
With a range of software offerings, support and consultancy that benefit the insurance industry, Ebix isn't the first company to come to mind when considering business software or determining which companies may thrive during a recession. Ebix has managed to sell the cost-saving advantages of its software well enough to thrive despite the slump in business spending.Ebix may not appear cheap after its impressive run. Its price-to-earnings ratio has crept up to just over 22, but when compared with other business-software companies, such as Wipro (WIT) and Citrix (CTXS), it indeed looks inexpensive. Wipro has a P/E ratio of 35 and Citrix's is 48. The average for business IT companies is 38. Analysts project 2010 earnings will hit $3.63 a share, an increase of $1.70 over this year's expectations. At that level, Ebix's valuation would support a future share price of about $80, an increase of 23%.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV