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Bull of the Day: Asure Software (ASUR)

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Asure Software (ASUR - Free Report) , a Zacks Rank #1 (Strong Buy), has been widely outperforming since bottoming out last October. A new bullish phase has begun for the stock as it has been hitting a series of 52-week highs this year on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.

ASUR is ranked favorably by our Zacks Style Scores with a best-in-class ‘A’ rating in each of our Zacks Growth and Momentum categories, indicating further upside is likely. The company is part of the Zacks Internet – Delivery Services industry group, which currently ranks in the top 4% out of approximately 250 Zacks Ranked Industries. Because this group is in the top half of all industries, we expect it to outperform the market over the next 3 to 6 months.

Also note the favorable characteristics for this industry group below:

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Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.

Company Description

Asure Software provides cloud-based human capital management (HCM) software and services. The company helps small and medium-sized businesses to build productive teams and allocate resources efficiently. ASUR offers payroll, tax, and human resources software to the payroll service industry along with mid-market and large corporate employers.  

Asure Marketplace helps automate interactions between the company’s HCM systems and third-party providers. ASUR was incorporated in 1985 and based in Austin, TX.

Earnings Trends and Future Estimates

ASUR has surpassed earnings estimates in each of the past four quarters, with an average earnings surprise of 445.8%. The software firm most recently reported fourth-quarter earnings back in February of $0.17/share, beating the Zacks Consensus Estimate of $0.01 by 1,600%.

Asure software has witnessed improving earnings estimate revisions. Looking into the current year, analysts have raised their 2023 EPS estimates by 25% in the past 60 days. The ‘23 Zacks Consensus Estimate now stands at $0.35/share.

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Let’s Get Technical

ASUR shares have advanced more than 170% off the bottom from last year. Only stocks that are in extremely powerful uptrends are able to make this type of price move while the general market remains volatile. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.

Image Source: StockCharts

Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs. With both strong fundamentals and technicals, ASUR is poised to continue its outperformance.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Asure Software has recently witnessed positive revisions. As long as this trend remains intact (and ASUR continues to deliver earnings beats), the stock will likely continue its bullish run this year.  

Bottom Line

ASUR has vastly outperformed its software peers, and increasing volume throughout the year adds to the bullish sentiment.

Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Backed by a leading industry group and healthy history of earnings beats, it’s not difficult to see why this company is a compelling investment. Investors would be wise to consider ASUR as a portfolio candidate if they haven’t already done so.

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