Adacel Technologies Limited shares soar, is this growth rocket a buy?

So far today one of the best performing shares on the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) has been air traffic control software provider Adacel Technologies Limited (ASX: ADA).

Its shares were up by around 6% in morning trade, before dropping back a touch to be around 5% higher in afternoon trading.

Although there was no news out of the fast-growing company, investors have been fighting to get their hands on its shares since the company released an upbeat investor presentation earlier this month. Since that release the share price has risen by over 12% and it’s really not hard to see why in my opinion.

Management has advised that the opening order book for FY 2017 has been the strongest opening in the company’s history. I believe this could well be setting Adacel Technologies up for yet another impressive performance this year.

In FY 2016 the company posted a massive 134% increase in net profit after tax to $9.2 million. This came in well ahead of even management’s own expectations. Pleasingly it also led to strong cash flow of $8.1 million, which was an increase of 50% over the prior corresponding period.

It will come as no surprise to learn that its share price has risen by a whopping 175% in the last 12 months. So is it too late to invest in this fast-growing software company?

I don’t believe it is. Unlike other excellent Australian software companies such as Aconex Ltd (ASX: ACX) and Myob Group Ltd (ASX: MYO), Adacel Technologies’ shares are trading on a reasonable multiple of just 22x full year earnings.

Considering its strong start to the year and management’s confidence in further earnings growth in FY 2017, I feel Adacel Technologies could prove to be an excellent investment at the current share price.

But before making an investment in Adacel or any other companies I would highly recommend taking a look to see if you own either of these three wealth destroying ASX shares. Each could be harming your portfolio and might be best swapped out.

3 Rotten Shares to Sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.