Cloud computing has been hot for a few years now, but the dilemma these days is about finding ASX shares that haven't already blown up in value.
When everyone knows cloud and software-as-a-service is the way of the future, a lot of money has already been ploughed into stocks that are involved in that area.
This is why Clare Capital's report this week was interesting.
The Wellington investment firm put together a list of all publicly listed software-as-a-service from Australia and New Zealand, then analysed their multiples.
Looking at the enterprise value to last 12 months' revenue ratio, there were some very expensive businesses.
Pointerra Ltd (ASX: 3DP) topped the list at 55 times multiple, while both Dubber Corp Ltd (ASX: DUB) and Serko Ltd (ASX: SKO) were notable for exceeding 40. For context, the median multiple was 8.
But you're not interested in those. You want to know what the cheapies are, so that you can pick up some possible cloud bargains.
Here are the 4 ASX shares with the lowest multiples:
'Tide now turning' for the cheapest ASX cloud software share
Shares for finance software provider Bravura Solutions Ltd (ASX: BVS), which has had 2 different lives on the ASX, are going for just 2 times its last 12 months revenue.
Even though the stock has doubled since its relisting 5 years ago, the price has fallen more than 56% since the pre-COVID high seen in February 2020.
The shares were changing hands for $2.50 on Wednesday afternoon.
While analyst coverage is scarce for Bravura, at least Goldman Sachs is bullish on it.
"The broker reiterated its buy rating and $3.70 price target on the wealth management technology company's shares," The Motley Fool's James Mickleboro reported last month.
"With the tide now turning, Goldman appears to believe investors should be jumping on board before it's too late."
Sure it's cheap, but is it a trap?
Faring not much better than Bravura are shares for analytics firm Nuix Ltd (ASX: NXL).
The company has unfortunately become the poster child for overhyped initial public offers.
After listing on the ASX one year ago, a series of financial downgrades and governance scandals have sent the stock down from a high of $11.86 to $2.11 on Wednesday afternoon.
That valuation now equates to roughly 3 times the last 12 months revenue, according to Clare Capital.
With its own shareholders starting 2 separate class actions against the business, there is much more to play out before Nuix regains the confidence of the market.
2 ASX shares that hit all-time highs this year
Shares for billing solutions provider Hansen Technologies Limited (ASX: HSN) and finance software maker Iress Ltd (ASX: IRE) are both trading at 4 times their revenue.
This year has been a wild ride for Iress shareholders, as the stock hit all-time highs in August. But it's come off the boil since then, dropping 17.5%.
Professional stock pickers are divided on the company. According to CMC Markets, 2 out of 6 analysts are each divided on "buy", "hold" or "sell".
The Hansen share price also hit all-time highs just last month, but it's sunk more than 21% in a few weeks.
Analyst coverage is scarce, but CMC Markets reports 2 professionals think Hansen is a "strong buy" while one thinks it's a "hold".
