Cambridge Technology Enterprises' Stock Upgraded to 'Hold' After Positive Results and Bullish Technical Trend

Cambridge Technology Enterprises, a microcap IT software company, has recently caught the attention of investors as its stock call has been upgraded to 'Hold' by MarketsMOJO on April 8, 2024. This upgrade comes after the company declared positive results in December 2023, following two consecutive negative quarters.
The company's net sales for the past 9 months have shown a growth of 23.92%, reaching Rs 149.16 crore. Its PBDIT (quarterly) has also reached its highest at Rs 13.31 crore, with operating profit to net sales (quarterly) at its peak of 25.17%. These positive numbers have contributed to the stock's technical trend, which has improved from mildly bullish to bullish on April 8, 2024.

Furthermore, multiple factors such as MACD, Bollinger Band, and KST have also shown a bullish trend for the stock. However, it is worth noting that the majority of the shareholders are non-institutional, which may affect the stock's stability in the long run.

In terms of performance, Cambridge Technology Enterprises has outperformed the BSE 500 in the last 3 years, 1 year, and 3 months, generating a return of 88.25% in the last year alone. However, the company's long-term fundamental strength is weak, with a -22.68% CAGR growth in operating profits over the last 5 years. This signifies low profitability per unit of total capital (equity and debt).

Moreover, with a ROCE of -3.5, the company's valuation is considered very expensive, with an enterprise value to capital employed ratio of 1.7. This is trading at a premium compared to its average historical valuations. Additionally, while the stock has shown a return of 88.25% in the past year, its profits have declined by -86.5%.

In conclusion, while Cambridge Technology Enterprises has shown positive growth in the recent quarter and has a bullish technical trend, its long-term fundamental strength and expensive valuation may be a cause for concern for investors. It is important to carefully consider all factors before making any investment decisions.