Can the Catapult Group share price bounce back from its recent 40% decline?

The Catapult Group International Ltd (ASX: CAT) share price has plunged 38% over the past 6 months, and is down nearly 50% from July’s high of $4.06 per share.

Investors were seemingly disappointed with the company’s results last year – revenue of $18 million and a loss of $3.5 million after tax – despite 63% growth in the total number of units sold. I agree that at $4 the company’s market capitalisation (~$700 million) looked rather high. However, with Catapult shares now trading at a 52-week low, it might be time for another look at the business.

Revenue growth in the core business remains modest, and is forecast to grow between 21% and 30% for the full year. However, several acquisitions were made recently and the company’s statutory results will be much higher. This has also broadened the company’s analytical capability and should allow for some up-selling or cross-selling.

Is Catapult a buy?

At today’s prices, and still unprofitable, Catapult is not a conventional ‘value’ business – investors are effectively paying for the growth that Catapult could deliver. Fortunately, continued strong uptake from pro sporting teams suggests that Catapult has a product that really works, and increased penetration globally (more players, more teams, and more leagues) gives a fair amount of room to grow.

I am less keen on the ‘prosumer’ segment, which is oriented to more regular sportspeople, although I can’t deny that there is definitely an underserved market when it comes to retail customer access to analytic data. This is another opportunity for Catapult to leverage its existing technology and should not overlooked.

While the company continues to grow and makes progress towards generating positive cash-flow and breaking even, there is a good case to be made for including Catapult as a small, higher-risk part of your portfolio.

Top 3 ASX Blue Chips To Buy In 2017

For many, blue chip stocks means stability, profitability and regular dividends, often full franked..

But knowing which blue chips to buy, and when, can often be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2017."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

If you're expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you'll be sorely disappointed. Not only are their dividends growing at a snail's pace, their profits are under pressure too due to the increasing competitive environment.

The contrast to these "new breed" blue chips couldn't be greater... especially the very real prospect of significant share price gains, something that's looking less likely from the usual blue chip suspects.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Sean O'Neill 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.