CXDO Overview

Breakout Stock Strategy: The article discusses an active investing strategy focused on identifying breakout stocks, which involves analyzing support and resistance levels to determine optimal buying and selling points.

Top Stock Picks: Featured breakout stocks include South Atlantic Bancshares, Inc. (SABK), Crexendo, Inc. (CXDO), and Hecla Mining Co. (HL), each with significant expected earnings growth rates for the current year.

Investment Risks: The primary risk in this strategy is the potential misidentification of breakout stocks, as a genuine breakout should see the previous resistance level become a new support level.

Research Tools: The article promotes the Research Wizard tool for investors to create and test their own strategies, emphasizing its user-friendly interface and the ability to analyze stock performance effectively.

Earnings Growth and Future Projections: Crexendo (CXDO) has achieved a 9.7% earnings growth over the past year, with analysts predicting a further annual growth of 27.33% and revenue expansion of 10.8%, surpassing the US market's expected growth.

Investment in AI and Cloud Technology: The company's significant investments in AI and cloud technology are expected to enhance revenue predictability and operational efficiencies, contributing to a more sustainable and profitable business model.

Valuation and Market Risks: Crexendo's current price-to-earnings ratio of 68.7x is significantly higher than industry averages, raising concerns about the sustainability of its elevated valuation amidst potential competition and international expansion challenges.

Share Dilution and Capital Investment: Analysts warn that projected share dilution and the need for ongoing capital investment in cloud and AI could hinder strong earnings per share growth and maintain high valuation multiples, necessitating favorable alignment of margins and earnings.

Earnings Performance: Crexendo (CXDO) reported quarterly earnings of $0.1 per share, exceeding the Zacks Consensus Estimate of $0.08, and showing a year-over-year increase from $0.06 per share. The company has surpassed earnings estimates in all four quarters of the past year.

Revenue Growth: The company generated revenues of $17.5 million for the quarter, surpassing the Zacks Consensus Estimate by 2.71% and increasing from $15.63 million a year ago, also achieving four consecutive quarters of revenue estimate beats.

Stock Outlook: Crexendo shares have risen approximately 33.5% year-to-date, outperforming the S&P 500's 16.5% gain, but the stock currently holds a Zacks Rank #3 (Hold), indicating expected performance in line with the market.

Industry Context: The Internet - Services industry, where Crexendo operates, ranks in the top 37% of Zacks industries, suggesting that industry performance can significantly influence Crexendo's stock performance moving forward.

Momentum Investing Overview: Momentum investing involves buying stocks that are trending upwards, with the expectation that they will continue to rise. The Zacks Momentum Style Score helps identify stocks with strong momentum characteristics, such as price changes and earnings estimate revisions.

Crexendo's Performance: Crexendo (CXDO) has a Momentum Style Score of A and a Zacks Rank of #2 (Buy). The stock has shown significant price increases, outperforming both its industry and the S&P 500 over various time frames, making it a strong candidate for momentum investing.

Industry Overview: The Internet Services industry, which includes major players like Alphabet and emerging companies such as Dropbox and Crexendo, operates on ad-based and subscription models, showing diverse performance influenced by macroeconomic factors. The Zacks Industry Rank indicates a positive shift, with the industry now in the top 40% of classified sectors.

Stock Performance and Recommendations: The industry has experienced volatility but achieved a 29.9% gain over the past year, outperforming the broader technology sector. Analysts recommend stocks like Dropbox and Crexendo, both rated as "Buy," due to their growth potential and recent positive earnings revisions.

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