Cerence: A Conversational AI Automotive Specialist With Multiple Tailwinds Going For It
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The Alpha Sieve4.73K FollowersFollow5ShareSavePlay(12min)CommentsSummaryCerence Inc., noted for its expertise in conversational AI solutions for the automotive industry, appeals to us due to a whole host of factors.Backlog growth, a measure of forward revenue, is growing at 23%, even as CRNC steps up its efforts in the nonautomotive space, particularly in IP monetization.CRNC's asset base is generating its highest cadence of free cash since listing, and that is helping bring down the level of debt on the balance sheet.At the current market cap, CRNC offers a double-digit forward FCF yield, while its forward EBITDA multiple of 12x is more than justified, given that it is on course to deliver 25% EBITDA growth.The stock is trending well and above all its key moving averages as it approaches a potential breakout point. Fabio Principe/iStock via Getty Images Investment Thesis Cerence Inc. (CRNC), a specialist in the field of conversational AI for the automotive industry is competing against larger tech behemoths but is still growing its backlog (a measure of revenue potentialThis article was written byThe Alpha Sieve4.73K FollowersFollowInvestment research, primarily oriented towards uncelebrated/under-covered stocks and ETFs, across North America, Latin America, Europe and Asia. Seeks to combine both fundamental and technical disciplines while making an investment/trading proposition.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You