TOP 100 FREEWARE AND SHAREWARE SITES
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| Six Attractive Online Gaming and Infrastructure Software Stocks Naveen Selvaraj submits:Continuing with the my earlier article on hardware picks, I now present my top software picks. Before coming to the list of recommended stocks, a brief note on the criteria used and the rationale behind using the criteria: Rather than looking at recent quarterly growth, I emphasize the 3-year CAGR figure as I prefer companies which grow but also grow continually in this space. More emphasis on organic growth rather than 'acquired' growth as this sector is prone to large acquisitions which generally destroy shareholder value. If P/E is close to/lesser than prior growth rates, such stocks are preferred as expensive valuations (not matched by topline growth) in these sectors which have no 'tangible' assets are dangerous. The 'entire' value in a company in this sector can reside in a 'technology/feature' advantage in a single product which is always a risk as this sector is highly prone to disruptive innovations. Hence companies where 'intangible assets' have grown to a disproportionate size of their market value have also been ignored. The rationale behind this is that the assets acquired might have been expensive and though they have could have contributed to top-line in the last year or so, their contribution to bottom-lines will largely be negative. This also eliminates companies which have grown largely due to to acquisitions (point 2). Free cash flow is an important metric for software companies. Companies with a lower price to free cash flow ratio are attractive as their 'cash yield' will be attractive for conservative investors. Cash flow from operations should have increased (10% or more) in the last year indicating that even in tough times, these companies have managed to grow cash by better management. TTM operating margins have also been used as an important screening criterion. Since most of the write-offs/one-time costs related to 'expensive' acquisitions/ headcount reductions have been taken in the last year or so, having a stringent GAAP operating margin (on a TTM basis) of at least 20% ensures that such companies (which could have grown revenues inorganically) are filtered out. Companies which had such one-time costs but still generated margins of >20% are naturally included as this indicates a more robust business model which can absorb such one-time shocks. Dividend yield is a welcome feature as such companies generate enough cash and investors can earn consistent returns irrespective of stock market conditions which impact stock prices. Stocks which have run up more than 50% in the last year (until Sep09 quarter) have also been filtered out as upside potential in the medium term could be negligible in such cases. (Google (GOOG) is one such stock eliminated in this filter.) (Click to enlarge image)Complete Story » seekingalpha.com |
3M MPro150 Projector Doubles as Laptop 3M this week at CES is showing the 3M MPro150, a portable projector that it says will remove the need for business people to carry both a laptop and a projector.. feeds.pcworld.com |
HTC HD 2 Leads Smartphone Debuts at CES HTC's HD 2 smartphone got its big North American debut at the Consumer Electronics Show this week and will be released this spring. feeds.pcworld.com |
Firm Claims Proof of 50 Apple Test Tablets Apple has been testing a tablet computer on an advanced version of the iPhone operating system, firm claims. feeds.pcworld.com |
Search Engine Use Explodes in December Users conducted 46 percent more online searches -- 131 billion worldwide -- last month compared to December 2008. feeds.pcworld.com |