The Xero Limited (ASX: XRO) share price has often been the quiet achiever amongst the WAAAX stocks.
Afterpay Ltd (ASX: APT) continues to rocket higher and WiseTech Global Ltd (ASX: WTC) has grabbed headlines with its ongoing short-seller battle.
You even hear more about Appen Ltd (ASX: APX) and Altium Limited (ASX: ALU) than Xero.
However, the Xero share price has rocketed 96.35% higher in 2019 to be sitting behind only Afterpay for year-to-date performance.
But can the accounting software group double again next year, or is the stock overvalued right now?
Why the Xero share price exploded this year
The key to Xero's success this year has been strong earnings and new contracts.
The Xero share price rocketed higher in November after reporting strong revenue growth and further customer acquisition.
For the 6 months ended 30 September, Xero reported a 32% increase in operating revenue to NZ$338.7 million.
The Kiwi software group increased annualised monthly recurring revenue by 30% on the prior corresponding period to NZ$764.1 million.
Earnings before interest, tax, depreciation and amortisation excluding impairments more than doubled Xero's 1H 2018 numbers and totalled NZ$65.9 million. On the bottom line, net profit after tax increased by a sizeable NZ$29.9 million to NZ$1.3 million.
Pleasingly, the company delivered positive free cash flow. That came in at NZ$4.8 million, compared to free cash outflow of NZ$9.8 million a year earlier.
Xero also landed top-1o accounting firm RSM Australia in October, which sent the Xero share price surging higher to a 52-week high.
Can Xero double again next year?
Xero has led the way for the Aussie WAAAX shares despite staying out of the spotlight. Afterpay was hit by the Senate inquiry earlier in the year and WiseTech shares remain under pressure in December.
I think Xero has been a quiet achiever and if the expansion continues, its current $82.37 valuation could be a bargain.
