Ebix Inc (EBIXQ)

[bob smith]

good analysis, should be taken to heart when trading and following EBIX for the next 3 months!


http://www.moneyshow.com/investing/article/1/GURU-26614/3-Software-Plays-with-Charts-in-the-Clouds/?aid=guru-26614&iid=GURU&page=1

Ebix (EBIX) is another smaller enterprise software name that’s been showing good technical strength. It’s up almost 5% so far in February, its fifth month in a row with gains.

The company makes software for the insurance industry. It’s posted a strong track record of earnings and revenue growth in recent quarters, although analysts see an income decline of 2% in 2012, to $1.41 per share.

Ebix has a market cap of around $926 million. It has decent liquidity for a small stock, moving around 467,000 shares per day on average.

However, like many small caps, it tends to trade in a volatile fashion. Its beta is currently 1.73, a sign of that volatility vs. the broader market. That means that investors need to use more caution than they would with a blue chip, which might have longer staying power in a portfolio.

While smaller stocks often pull back harder than the broader market in a downturn, they can also post bigger price gains in a bull rally. These are often stocks that should be sold to pocket gains, rather than held, during corrections.

At the moment, Ebix is still emerging from a steep base. It corrected 57% between March and October of last year, and still has some work to do before regaining previous highs.

The stock flashed a technical buy signal in December, when its ten-week line crossed above its 40-week. Since then, it has not pulled back to the ten-week for an alternate entry point. However, it appears to be digesting gains in the past two weeks, and may stop for a breather, allowing new buyers to grab shares.

The company reports earnings next month. As usual, guidance that’s better or worse than what’s expected could send the stock moving sharply in one direction or the other.


gl