Stockchase Opinions

The Panic-Proof Portfolio (Stockchase Research) Softchoice SFTC-T TOP PICK Mar 28, 2024

Stockchase Research Editor: Michael O’Reilly

The company is striving to bring AI integration to customers thru the Copilot platform of Microsoft across multiple platforms including AWS and Google Cloud.  Recently reported cash from operations was $100 million,  allowing cash reserves to grow while debt is retired and shares bought back.  It trades at 17x earnings and supports a ROE over 90%.  Its modest dividend is backed by a payout ratio under 50% of cash flow.  We recommend setting a stop-loss at $14, looking to achieve $22 — upside potential of 22%.  Yield 1.9%

(Analysts’ price target is $22.08)
$17.880

Stock price when the opinion was issued

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DON'T BUY
Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

SFTC has been relatively flat over the last year and part fo the reason could be attributed to lower hardware demand that is forecasted to rebound in 2024. Despite declining revenues in 2023, SMTC's gross profit margins have improved which is a good sign. Growth forecast for the next two years for revenue is quite marginal for revenue over the next two years while EPS growth is similar. We don't see SFTC having a huge growth profile going forward but the stock could still perform well in 2024. We think there are other more intriguing options.
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WEAK BUY

The re-sell Microsoft products into companies. Really likes this. Is a tech services and not a software company. Well-run, pays a 2.5% dividend and 28x PE. This year may be choppy because he's unsure what corporate spending on tech will be like.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

TOP PICK
Stockchase Research Editor: Michael O'Reilly

We reiterate this company that is bringing AI integration to customers of Microsoft across multiple platforms including AWS and Google Cloud.  We like that cash reserves are growing, whiles shares are aggressively bought back and debt is retired.  It trades at 17x earnings and supports a ROE over 90%.  Its modest dividend is backed by a payout ratio under 50% of cash flow.  We recommend trailing up the stop (from $14.00) to $15.50, looking to achieve $22 — upside potential of 22%.  Yield 2.8%

(Analysts’ price target is $21.75)
PARTIAL BUY

They re-sell a lot of Microsoft product. Though the stock has disappointed in recent years, operations are solid and shares should improve.

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This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Apr 25/24, Up 0.7%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with SFTC is progressing well.  To remain disciplined, we recommend trailing up the stop (from $15.50) to $16.25 at this time.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Apr 25/24, Up 17.6%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with SFTC is progressing well.  To remain disciplined, we recommend trailing up the stop (from $16.25) to $18.00 at this time.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Apr 25/24, Up 23.7%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with SFTC has achieved its target at $22.  To remain disciplined, we recommend covering half the position at this time and maintaining the stop at $18.

premium

This is a Panic-proof Portfolio opinion which is available only for Premium members

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK
(A Top Pick Apr 25/24, Up 1.2%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with SFTC has triggered its stop at $18.  To remain disciplined, we recommend covering the position at this time.  When combined with previous guidance, this will result in a net investment gain of 12%  

HOLD

Great small-cap. Management is diligent, disciplined, ethical. Returns capital to shareholders. Earlier this year, paid shareholders a big special dividend. Underlying results have been very good. Core business. Not going anywhere.