Cerillion Share Discussion Threads

[tole] 07/9/2021 20:11

https://www.fool.co.uk/investing/2021/09/07/here-is-1-tech-stock-from-my-best-stocks-to-buy-now-list/Here is 1 tech stock from my best stocks to buy now listJabran Khan | Tuesday, 7th September, 2021 | More on: CERThe Covid-19 pandemic has accelerated the demand for technology. I have a dedicated tech section on my best stocks to buy now list. One pick I really like is Cerillion (LSE:CER). Should I add shares to my portfolio at current levels?FTSE AIM starFounded in 1999, Cerillion is a provider of billing, charging, and customer management systems based in the UK. It focuses on providing its products and services primarily to the telecoms industry as well as others too. It has many customers across the world but some of its more recognisable names to the UK market are G4S and mobile network Three.My best stocks to buy now are usually on an upward trajectory and Cerillion is no different. Its share price has increased in the past 12 months by over 160%. This time last year, shares were trading for 295p per share. As I write, shares are trading for 784p per share. So, what has contributed to this sudden share price explosion for the tech provider?My best stocks to buy now perform consistentlyCerillion's fiscal year runs from September to September. Full-year results are expected around November. In its most recent trading update released in May, it covered the six months to March as a half-year update. These results made for excellent reading in my opinion.Cerillion reported record performance for new orders in H1, up 148% compared to 2020 levels. It also reported its largest ever contract win. Revenue rose by 25% compared to 2020 levels. Recurring revenue also rose an impressive 26%. In addition to all this, profit before tax was up 124% compared to the same period last year too. Net cash also rose by 60% too.I understand that past performance is not a guarantee for the future. I personally use this as a gauge when assessing investment viability. Cerillion does have a favourable track record. In the past four years, revenue has been increasing year-on-year. In the same period, gross profit and net income have also been increasing year-on-year too. Most of my best stocks to buy now have good historic track records. Risk and my verdictI have two main concerns with Cerillion and its investment viability. First, at current levels it is valued a bit high. With a price-to-earnings ratio of over 50, it could be susceptible to a share price drop on the back of negative news. In addition to this, recurring revenue has not always been its strong point. Recurring revenue can be a good combatant to top line uncertainty but despite increasing recently, Cerillion could do more to secure recurring revenue for the future.There is a lot to like about Cerillion hence why I place it on my best stocks to buy now list. It has a strong balance sheet as well as a favourable performance track record. It also pays a dividend which would help me make a passive income if I invested. Furthermore, it also has a strong pipeline of future business ahead too which will help boost performance further.Right now, I would be willing to buy shares at current levels. I believe full-year results will be favourable and result in a further share price rise. I would be willing to add shares to my portfolio at current levels and keep an eye out for full-year results and future performance too

[cfro] 01/9/2021 18:05

Re Algy Hall - one thing he said in the article is this:

"And not wanting to be too churlish, but margins could be viewed as looking too healthy for what one would typically expect from a rapidly-growing, jam-tomorrow small-cap."

It's like eh what?!

[oregano] 01/9/2021 10:51

it was expensive at £4, so you missed out on alot by selling it then.

Key is whether they can carry on landing progressively larger contracts.

Stocks like Kainos, which is a largely a projects business that have "made it" in the markets eyes trade on 40x EV/EBITDA, so no reason why CER should not replicate that if they continue to win increasingly large deals.

[holmol] 01/9/2021 10:13

Having studiously ignored Cerillion as it rose from £2 to £9 ,IC at last publish an article stating it is overpriced .
On the past performance of that magazine , we can expect it to double in the next year .
The quality of IC and its interest to the average investor has declined even further r with the new format .I have cancelled my subscription . Stockopedia & Momentum Investor are of much more use .

[jockthescot75] 29/8/2021 09:52

A double page write up by Algy Hall in this weeks IC for any subscribers out there.

Jock

[boadicea] 28/7/2021 13:19

RE: My 177 - Sp is showing remarkable resilience.
Will I be happily proved wrong about my 800p resistance speculation?

[boadicea] 20/7/2021 10:15

There have been a number of chunky sells in the past week and judging by today's drop another one (or more) is in delayed mode waiting to appear. All part of the problem of adjusting holdings in low-liquidity shares, I suppose. However, the seller will presumably have made a healthy gain. So my top-slicing was probably a sensible move after all!
The price/revenue ratio is quite high - implies good margin business - but that can attract honey-pot competition and they will have to keep their game up.

The proceeds of my top-slicing have mostly been reinvested in lower rated operators in broadly the same sector.

[swiss paul] 13/7/2021 13:49

Yes I did, wish I had the moolah to get the ones Gresham disposed today

[boadicea] 09/7/2021 16:31

Yes Paul - Did you top up?
Climbing back towards 800p (more or less as I anticipated), but will it now be resistance or become support?
Resistance point looks more probable as 800p will have become an obvious target level for those looking to top-slice or even to exit.

[swiss paul] 09/7/2021 15:22

Some tree shake that

[swiss paul] 08/7/2021 16:36

Thanks All - so this might be a 'top up ' opportunity then?

[cfro] 08/7/2021 13:17

A pull-back in the share price has been over-due for a long time. You have to expect one at some point. Nothing goes up in a straight line.

Any news on new major contract wins might well propel the share price back up again. This from the interim results just two months ago:

Looking ahead over the balance of the current financial year, we are very confident of continuing progress, supported by our strong back order book. We are also in a good position with potential major new orders.

...And this...


Equally significantly, a key channel partner relationship yielded its first contract in early March 2021, worth GBP5m, for a publicly-owned network operator in the Middle East. We expect to see further contracts come through in due course from this important channel partner relationship. These high profile orders continue to demonstrate the quality of both our product offering and support capability and will help to drive new business in the future.

[boadicea] 08/7/2021 13:01

Paul - It had more than doubled since late March based mainly on one large 10-year contract and a good interim report in April. My opinion was that it looked distinctly exuberant (see my 169 above) and would require a continuing supply of good news to sustain it. A director sale is not necessarily bad news - after all, a director who is careful with his own finances/risk profile is better than one who gambles on a continuation of best outcomes - so I wouldn't mark it down as a company on that score. However it coud be taken as a hint to do the same and the market being what it is, there was likely to be a strong reaction in the circumstances.

Further good news would possibly stabilise it around 800p - failing that, the floor looks reasonably solid at a pessimistic 600p. Being now in free carry I am feeling reasonably relaxed and taking the longer term view - even on today's further decline.

[swiss paul] 08/7/2021 12:05

WTF is goimng on - why the collapse in price?

[renaissance] 06/7/2021 16:37

Not sure if that is a good or a bad thing but at least it explains the drop!

[cfro] 06/7/2021 16:05

Another management team share sale with the Asia director selling 15k.

..and first pull-back in share price for ages..

[boadicea] 25/6/2021 17:51

When I bought into CER in Nov 2019 at ~188p, it looked sound and relatively cheap but had an unexciting record. Fortunately, in a moment of unusual exuberance for which I cannot now account, I bought a fair number (by my standards.) I have top-sliced several times on the way up and am now in free ride. It now looks hitorically expensive and will need to continue with a succession of sparkling results to justify the rating, imho. The market seems to think this will happen and probably knows more than I do!
I have made the mistake of a premature exit several times in the past (notably with Softcat, SCT). Software solutions are extremely scalable and can (and do) work wonders on the share price of smaller companies. The historic price/sales ratio of CER (according to advfn) is over 12 which is exceptional, compared to others in the sector which generally run in the range 3 to 7. There is an even higher outlier at the top end, DOTD (historic ~15). In contrast at the lower end we have Shearwater, SWG (~1.6).
I would not suggest using the Price/Sales measure to assess what is likley. However, I do take note of it as an indication of what is perhaps possible or altenatively, unlikely.

[cfro] 04/6/2021 17:54

Closed the week on a new high. Share price certainly has a tailwind behind it right now.

[cfro] 02/6/2021 13:51

Thanks for the PI world video links..

I see the share price up again today despite all those recent director sales.

[tomps2] 02/6/2021 11:24

Here's the £CER H1 presentation given last week. A super set of results delivered by Louis Hall, CEO and Oliver Gilchrist, CFO.

Video:

Podcast:

[swiss paul] 28/5/2021 19:40

That ---- or a takeover

[boadicea] 27/5/2021 18:02

I said I wouldn't top slice any more - but recently did! A few more would have put it into free carry territory (which is always comforting but technically irrelevant.)

Is it expensive?
From a historical view - Yes. But future results are what we are buying or holding for.

[cfro] 27/5/2021 16:03

Some more director sales but who can blame them for taking some off the table.

Valuation looks high on the face of it but business has never been so good with record profits, record orders etc.

Already intimated of more, perhaps larger, contract wins to come too.

[texaschaser] 25/5/2021 11:28

no bags left. too much competition in crm space