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Can the Cerillion share price continue to outperform the market?

Tue 7:17am by Jack Brumby

Stockopedia’s ‘High Flyers’ are the stock market superstars. These companies tend to be the ones that fund managers jostle and barter over. They are high quality, growing stocks with a history of beating estimates - and Cerillion (LON:CER)is one of them.

Cerillion is a small cap stock in the Software industry. When we analyse Cerillion from a factor perspective, we find that it has a Quality Rank of 94, a Momentum Rank of 84, but a Value Rank of only 29. This is the classic factor profile of a High Flyer.

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A combination of high quality, high momentum and low value is great when earnings go up but a bad place to be when things go wrong. The higher they rise the harder they can fall, after all.

GET MORE DATA-DRIVEN INSIGHTS INTO LON:CER »

What kind of High Flying stock is ?

So, High Flyers tend to be riskier and more volatile than the market average. But is this true of Cerillion?

We can find out quickly by applying Stockopedia’s RiskRatings system, which splits the stock market into five buckets according to stock price volatility. The five classifications (from least to most volatile) are:

  • Conservative (10% of the market)
  • Balanced (15% of the market)
  • Adventurous (20% of the market)
  • Speculative (25% of the market)
  • Highly Speculative (30% of the market)

Cerillion is an adventurous stock. This means that the group is in the riskier part of the market. The fact that the group is on the smaller side, with a market cap of £59.3m, might further add to this volatility. That said, Cerillion has a positive one-year relative strength of 30.3%, meaning it has outperformed the market.

Not only that, but we can see from Cerillion’s above average five-year return on capital employed figure of 11.9% that the group has been highly profitable over multiple years. This suggests that Cerillion can back up its favourable factor exposures and volatility characteristics with some kind of economic moat.

Find the rockstars of the stock market

High Flyers are great stocks to have in your portfolio if you think you need more momentum or quality - just look out for signs that momentum might be changing. If you want to see which other stocks qualify as High Flyers, you can find a comprehensive list on Stockopedia's StockRanks page.

Simple tools can help us better measure and understand the risks we take. That's why the Stockopedia team has been busy building new ways of understanding investment risks and company characteristics. In this webinar, we talk about two or our most popular innovations: StockRank Styles and RiskRatings. These indicators transform a ton of vital financial information into intuitive classifications, allowing you to get an instant feel for any company on any market - sign up for a free trial to see how your stocks stack up.

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Share Price
206.5p
Change Today
-2.13%
Cerillion ( )

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