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).

5 Companies we like better than Citadel Group

When ace stock picker Scott Phillips has a buy recommendation, history suggests it can pay to listen.

Scott recently revealed what he believes are the five best ASX stocks for investors to buy right now… and Citadel Group wasn’t one of them! That’s right — he thinks these 5 stocks are even better buys.

See the 5 stocks

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.

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.