Daily Stock Pick: Magic Software
This week, I'm looking for the third technology sector representative of six for my Ivy portfolio.
That technology sector has nineteen industries ranging from communication equipment, computers, consumer electronics, and contract manufacturing, to health, information technology and services, internet, scientific instruments, software, solar, and all such techno-marvels.
Today I'm reviewing a small cap software - application firm named Magic Software Enterprises Ltd. Its ticker symbol is MGIC.
Magic Software Enterprises Ltd is a software development company. It provides application development and business process integration platforms, vertical software solutions and professional services to develop mobile and cloud-based business applications. In addition, it also provides IT outsourcing software services. Its software platforms consist of Magic xpa, AppBuilder, and Magic xpi.
The company's segments consist of software solutions and IT professional services. Most of the revenues are derived from IT consulting services in the areas of infrastructure design and delivery, application development, technology planning, and implementation services.
It serves oil and gas, telecommunications, financial, healthcare, and industrial sectors, as well as public institutions and international agencies.
The company was formerly known as Mashov Software Export (1983) Ltd. and changed its name to Magic Software Enterprises Ltd. in 1991. Magic Software Enterprises Ltd. was founded in 1983 and is headquartered in Or Yehuda, Israel.
I use three key data points to gauge the value of any dividend equity-like Magic Software Enterprises Ltd:
(1) Price
(2) Dividends
(3) Returns
Besides those three, several other keys will finally unlock an equity or fund in which to invest.
Those first three primary keys, however, best tell whether a company has made, is making, and will make money.
MGIC Price
Magic's price per share closed at $8.73 yesterday. A year ago its price was $8.12. Price rose $0.61 per share last year, or over 7.5%.
Assuming Magic's stock trades in the range of $7 to $11 this year, Magic's recent $8.73 price could rise by $1.27 and go to $10.00 by early-March, 2020.
MGIC Dividends
Magic's most recent Semi-Annual dividend was $0.15 declared March 5th and payable March 27th.
That $0.15 SA dividend equates to a $0.30 annual payout and a yield of 3.36% at yesterday's $8.73 closing price.
Gains For MGIC?
Adding the $0.30 annual estimated dividend to my $1.27 Magic estimated price upside shows a $1.57 potential gross annual gain, per share, which will be reduced by costs to trade those shares.
Say we put a little over $1,000.00 today at the $8.73 recent stock price would buy us 115 Magic Software Enterprises Ltd shares.
A $10 broker fee paid half at purchase and half at sale costs $0.09 per share.
Subtract that $0.09 brokerage cost from the estimated $1.57 gross annual gain leaves a net gain of $1.48 X 115 shares
= $170.20 or nearly 17% net gain on a $1,003.95 investment.
Therefore, Magic Software Enterprises Ltd whose trading ticker symbol is MGIC now shows a possible net gain of 17% including a 3.36% dividend yield.
Three brokers cover this stock:
One says "buy" MGIC.
MGIC will "outperform" peers.
Therefore, you can look at Magic Software Enterprises Ltd and see it has made money, is making money, and could throw a net gain of 17% including a 3.36% dividend yield. It could be more, it could be less.
The above speculation is based on past year performance. The actual results remain to be seen to determine if Magic Software Enterprises Ltd is worth your time and money.
Disclosure: This article was compiled by Rydlun & Co., LLC from data derived from www.ycharts. com; www.finance.yahoo.com; analyst median target price by YCharts
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