Is it too late to buy WiseTech shares?

With its share price up nearly 25% over the past month and almost 80% since Christmas, is it too late to buy into WiseTech Global Ltd (ASX: WTC)?

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The WiseTech Global Ltd (ASX: WTC) share price has been on yet another tear, up nearly 25% over the past month and almost 80% since Christmas. WiseTech is the 'W' in the trendiest club on the ASX – WAAAX. Although the WAAAX acronym conjures images of high-flying tech start-ups, WiseTech has actually been around since grunge and Kurt Cobain (1994 to be exact).

What do WiseTech do?

WiseTech specialises in providing an end-to-end, cloud-based software solutions for the logistics industry, both locally and globally.

The company has grown to a truly global scale, with over 40 offices across Australia, Asia, Europe and the Americas. WiseTech boasts that its flagship product – CargoWise One "forms an integral link in the global supply chain" and with good reason: more than 12,000 logistics organisations use WiseTech's software across 130 countries. Talk about a home-grown success story.

It gets even better – WiseTech has managed to grow revenue 44% in 2018 compared to the previous year (to $221.6 million). Earnings (EBITDA) also grew by 45% over the same period. When a company's revenue graph looks like a steep set of stairs, you know things are looking good.

What is truly promising about the company though is the stickiness of its product – WiseTech reports that its customer attrition rate every year for the past 6 years has been less than 1%. The company is constantly innovating and 'trying new things' – 34% of revenue currently goes into R&D and product development investment for the future, which is also very promising.

Is it too late to buy in?

However, this brings us to the price – it's not a good look for anyone wanting to get in. WiseTech shares are currently trading for around the $27.80 mark – which gives WiseTech a price-to-earnings (P/E) ratio of 200 (ouch). This means that if current earnings stay flat, it would take 200 years to recoup your investment! Of course, with a knockout company like WiseTech, revenue is almost certain to grow at a healthy rate for many years. But the price is leaving WiseTech absolutely no room for error and that's not something I personally like to see in a stock price.

Foolish takeaway

A fantastic company like WiseTech deserves a forward-looking share price, but for me, anything approaching a century, let alone two, is too long to wait! Long story short, at these prices, it is indeed too late to buy WiseTech (at least for me) and I personally will be watching the stock for a far more reasonable buying opportunity in the future.

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. 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 Scott Phillips.

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