Businesses have been updating their processes to keep pace with the market’s shifting expectations and to enhance user experiences. Many companies are considering significant new investments in advanced software solutions. Furthermore…
hybrid cloud adoption is expected to accelerate next year to support employees and companies as the world’s dependence on software solutions increases.
The trends in cybersecurity measures, customer retention, low-code development adoption, and other software solutions should propel the industry’s growth. And investor optimism about the software industry is evident in the iShares Expanded Tech-Software Sector ETF’s (IGV) 19.2% returns over the past year.
Therefore, we think fundamentally strong small-cap software stocks CSG Systems International, Inc. (CSGS – Get Rating) and Magic Software Enterprises Ltd. (MGIC – Get Rating) could be ideal picks now. These stocks are also rated Strong Buy in our proprietary rating system.
Incorporated in 1994, CSGS in Englewood, Colo., is a provider of revenue management and digital monetization, payments, and customer engagement solutions. The company also provides managed services, professional services, and licenses various solutions, such as mediation, partner management, and charging. CSGS also serves financial services, healthcare, media and entertainment companies, and government markets. The company has a market capitalization of $1.85 billion.
CSGS’ revenue increased 7.8% year-over-year to $263.21 million in the third quarter, ended September 30, 2021. The company’s operating income grew 13.2% from its year-ago value to $32.76 million. Its net income rose 18.9% from the prior-year quarter to $16.13 million. Also, the company’s EPS increased 19% year-over-year to $0.5.
CSGS’ revenue is expected to increase 4.8% year-over-year to $967.6 million in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its EPS is expected to grow 6.7% in the current year. The stock has gained 25.8% in price year-to-date and 31.4% over the past year.
CSGS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Value, Quality, and Stability. We have also graded CSGS for Momentum, Sentiment, and Growth. Click here to access all CSGS’s ratings.
CSGS is ranked #3 of 60 stocks in the Software – Business industry.
Headquartered in Or Yehuda, Israel, MGIC has a market capitalization of $1.05 billion. The company provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services. MGIC operates in the Software Services segment and IT Professional Services segment. And the company’s subsidiaries include Mortgage Guaranty Insurance Corporation (MGIC) and MGIC Indemnity Corporation (MIC).
During the third quarter, ended September 30, 2021, MGIC’s revenues increased…
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