Cartrade Tech downgraded to 'Sell' by MarketsMOJO due to expensive valuation.

Cartrade Tech, a smallcap IT software company, has recently been downgraded to a 'Sell' by MarketsMOJO on September 2, 2024. This decision was based on the company's ROE of 3.2, which indicates an expensive valuation with a price to book value of 1.9. Additionally, the stock is currently trading at a discount compared to its average historical valuations.
Despite generating a return of 49.49% in the past year, the company's profits have only risen by 70.5%, resulting in a PEG ratio of 0.8. This suggests that the stock may be overvalued and not a good investment option at this time.

However, there are some positive factors to consider. Cartrade Tech has a low debt to equity ratio and has shown healthy long-term growth with net sales increasing by an annual rate of 26.35% and operating profit at 45.27%. The company has also declared positive results for the last 9 consecutive quarters, with the latest quarter showing a growth of 57.46% in net sales and a ROCE of 7.76%.

On the technical front, the stock's trend is currently sideways, indicating no clear price momentum. The technical trend has also deteriorated since September 2, 2024, generating a return of -1.31% since then.

It is worth noting that Cartrade Tech has a high institutional holding of 72.22%, which suggests that these investors have better capability and resources to analyze the company's fundamentals compared to retail investors.

In the past year, Cartrade Tech has outperformed the market (BSE 500) with a return of 49.49%, while the market has only generated a return of 38.49%. However, with the recent downgrade and expensive valuation, it may be wise to approach this stock with caution.