Avantel's Stock Upgraded to 'Buy' by MarketsMOJO, Showing Strong Financials and Consistent Growth

Avantel, a smallcap IT hardware company, has recently caught the attention of investors as its stock has been upgraded to 'Buy' by MarketsMOJO on April 23, 2024. This upgrade is based on the company's strong ability to service debt, with a low Debt to EBITDA ratio of 0.58 times. Additionally, Avantel has shown healthy long-term growth, with an annual growth rate of 64.11% in Net Sales and 34.08% in Operating profit.
In December 2023, Avantel declared very positive results, with a growth in Net Sales of 9.2%. This trend has continued for the last 4 consecutive quarters, making it a promising investment option. The company's Net Sales have grown at a rate of 51.67%, with a highest ROCE of 42.26% and Operating profit to Interest ratio of 28.10 times.

From a technical standpoint, Avantel's stock is currently in a bullish range, with the technical trend improving from mildly bullish on April 23, 2024. Multiple factors, such as MACD, Bollinger Band, and KST, indicate a bullish outlook for the stock.

Avantel has also shown consistent returns over the last 3 years, outperforming BSE 500 in each of the last 3 annual periods. In the last 1 year alone, the stock has generated a return of 279.90%.

However, there are some risks associated with investing in Avantel. With a ROCE of 43.5, the company has a very expensive valuation, with an Enterprise value to Capital Employed ratio of 20.9. The stock is also trading at a premium compared to its average historical valuations. Additionally, while the stock has generated a high return of 279.90% in the last year, its profits have only risen by 115.1%, resulting in a PEG ratio of 0.5.

Another risk to consider is that despite being a smallcap company, domestic mutual funds hold only 0% of Avantel's stock. This could signify that they are not comfortable with the current price or the business, as domestic mutual funds have the capability to conduct in-depth research on companies.

In conclusion, Avantel's stock has been upgraded to 'Buy' based on its strong financials and positive performance in the last few quarters. However, investors should also consider the risks associated with the stock before making any investment decisions.