This week on Buy, Hold, Sell Centennial Fund's Matthew Kidman asks Mark Whittaker from Investors Mutual, and Joe Magyer from Lakehouse Capital, about software services stocks.

Altium

Mark Whittaker: It's a sell for us,

Matthew. I think the quality of the franchise is probably pretty good, so I don't dispute that, but valuation, I think it's 25 times going into next year, yield's not that attractive, and the earnings history hasn't been great in terms of beating expectations, so I think for us it's a sell.

Joe Magyer: It's buy. I think it's a great combination of growth and you've some yield at 2.4 per cent. Very rare situation where you've got rising retention rates, while they're pushing through price increases. I think it speaks very well to business. It's a business that's got multiple ways to win. They've got new products coming out, a big new partnership coming with Dassault, strong balance sheet, the CEO owns a lot of the business with think it's attractive.

Catapult

Mark Whittaker: Absolute sell. Cum capital raise, cum acquisitions, yet to see any profits or substantial cash flow. Show me the money. It's not there. It's a sell for us.

Joe Magyer: I think it's a buy. The stock's down from $4.29 to $1.60, I think you were paying for a lot of optimism at that price, but you're not today. Very loyal customer base, a lot of growth still ahead.  

Gentrack

Mark Whittaker: It's a sell. Again, valuation grounds, it's got a good year ahead of it in terms of growth, but we don't think the earnings are as recurring as we'd like them to be, so at these levels, we think it's a sell.

Joe Magyer: Buy. Gentrack is boring but very beautiful. Airports, utilities, very loyal, sticky customers, long lives. Nice little yield. 2017 yield terms, but still attractive and I like the business.

Bravura Solutions

Mark Whittaker: As a value manager, we like Bravura, BVS. Trading on sub 13 times for next year, yield approaching 5.5 per cent. Offshore exposure, UK predominantly. Good growth in front of it. Good pipeline of development, and good management. We like it a lot.

This is an edited transcript from Livewire's weekly Buy, Hold, Sell video series. The moderator was Matthew Kidman, Centennial Asset Management. The panel: Mark Whittaker from Investors Mutual, and Joe Magyer from Lakehouse Capital, 

Disclaimer: The information contained in this presentation is general in nature and should not be relied upon. Before making any investment of financial planning decisions, you should consult a licensed professional who can advise you whether the decision is appropriate for you. Contributors to this show may have commercial or financial interests in the companies mentioned.