What makes Avast shares a good buy right now?

July 5, 2021

first_img Enter Your Email Address Image source: Getty Images. Our 6 ‘Best Buys Now’ Shares See all posts by Muhammad Faizan Mallick Faizan Mallick has no position in any of the shares mentioned. The Motley Fool UK has recommended Avast. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Looking for new share ideas?Grab this FREE report now.Inside, you discover one FTSE company with a runaway snowball of profits.From 2015-2019…Revenues increased 38.6%.Its net income went up 19.7 times!Since 2012, revenues from regular users have almost DOUBLEDThe opportunity here really is astounding.In fact, one of its own board members recently snapped up 25,000 shares using their own money… So why sit on the side lines a minute longer?You could have the full details on this company right now. Muhammad Faizan Mallick | Wednesday, 26th May, 2021 | More on: AVST Grab your free report – while it’s online.center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Cybersecurity is a buzzword that is very much “in”, if you’d like. As a matter of fact, it has been for quite some time now. Tech has produced more stock market unicorns in the past 20 years than any other industry, and when you look at cybersecurity firms, their services are in demand. According to Statista, the revenue for the cybersecurity sector has grown from £5.7 billion to a staggering £8.9 billion since 2017. This rapid growth has caught my eye and I have been more than curious about finding a stock to invest in from this sector. This led me to studying Avast (LSE: AVST) shares.The company seems to be fairly popular for those into computers and tech, and the financials seem to be quite interesting. The company’s price per share at the time I was writing this stood at 453p and the past year has been somewhat of a rollercoaster. The price peaked at 600p, but the pandemic hasn’t done anyone (except a few) any good, has it?5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Fast forward, a year later since the first lockdown in the UK, there have been clear signs of recovery for Avast shares after the price plummeted to 420p in March 2021. But a dive into the company’s annual reports gives me an even better understanding of the company’s performance helping me find the answer to “should I invest in Avast or not?”A good-looking financial positionWhen looking at the financial position of a company, the leverage (or put simple, its debt ratio) is a particularly important indicator. Generally, too much debt equals a bad financial position. But this isn’t always the case. If we put dilution away for a second, debt can be a great way to reduce tax liability and raise capital. That’s exactly what I did while researching Avast’s shares. I looked at its cash and debt together to draw a clearer picture.Avast’s short-term liabilities stand at $623 million and long-term debt stands at $888.7 million. With the company’s receivables standing at $68.2 million and a cash balance of $175.7 million, it still is $1.27 billion short. Am I worried? Not yet. Avast has a total market cap of $6.80 billion, which puts any fatal risks due to liabilities out of question.Zoom in a little more and you can figure out that the company uses its operating income minus non-cash expenses (i.e., depreciation and amortisation) or more technically known as EBITDA rather gracefully, with its net debt being 1.6x of the EBITDA. This plus the fact that earnings over the past two fiscal years have been rather consistent, with the company reducing its total liability over these years, point towards positive financial performance.Avast hasn’t been shy of innovation either and with the demand for cybersecurity services on the rise, I most certainly expect its share price to rise further. This also depends on how effectively the company manages its cashflows in the coming years. Bear in mind, we are talking about generating liquid cash from profits to pay-off their debts and become less leveraged. This will certainly be a decisive factor in the coming years, but with the industry seeing growth and the company outperforming competitors in most departments, I like the look of Avast shares as one of my next investments. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. What makes Avast shares a good buy right now? One FTSE “Snowball Stock” With Runaway Revenues Simply click below to discover how you can take advantage of this.last_img

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