MENU

Is this the best small cap tech share on the ASX to buy today?

The Citadel Group Ltd (ASX: CGL) share price has been a strong performer on the Australian share market on Monday.

The shares of the software and services company specialising in information and data management finished the day over 6% higher at $8.21.

At one stage they were up as much as 9.5% at $8.45.

Why did the Citadel Group share price rocket higher today?

This morning Citadel announced the acquisition of Gruden Pty Ltd from IncentiaPay for $1.65 million.

According to the release, management believes the acquisition of Gruden, a government software-as-a-service business, further strengthens its platform capabilities and provides new government panel arrangements.

Gruden has developed and supports scalable software-as-a-service platforms, predominately in the eProcurement space, used by key government agencies across Australia.

Although it is just small acquisition, Citadel’s CEO believes it will be a valuable one.

Darren Stanley said: “The acquisition of Gruden provides Citadel with valuable new SaaS platform capabilities and panel arrangements that we will leverage into new areas of government and private industry as we continue to execute on our strategy of managing information in complex environments.”

The transaction was funded from the company’s available cash and will be immediately earnings accretive.

In addition to this, the company revealed that it has been experiencing strong demand for its key product offering – Citadel-IX.

So far in FY 2019 the company has experienced a growing number of Citadel-IX users.

The good news is that it expects this trend to continue in the coming months as demand builds for the leading enterprise information management product.

Should you invest?

Although its shares are up 31% since the start of the year, at 20x earnings I don’t believe it is too late to invest in this exciting tech company.

Given the importance of information management and the growing amount of data being created, I believe the company is likely to benefit from increasing demand for its software and services for the foreseeable future.

This could make it worth considering alongside fellow small cap tech shares ELMO Software Ltd (ASX: ELO) and Bravura Solutions Ltd (ASX: BVS).

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ELMOSFTWRE FPO. The Motley Fool Australia owns shares of Bravura Solutions Ltd and Citadel Group Ltd. The Motley Fool Australia has recommended ELMOSFTWRE FPO. 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 Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!