Today has been another highly volatile day in the markets. Many high-growth stocks are getting hit hard, pushed lower by expectations of slower economic growth and higher interest rates. However, for investors in Exela Technologies (NASDAQ:XELA), today is a good day. Currently, XELA stock is up more than 38% on very heavy volume.
This Texas-based company provides a range of business solutions aimed at information technology and healthcare companies. These services include processing, IT management, document management and other business process services. Indeed, this company’s diversified range of products and solutions has made it a software company looked at as a high-leverage growth play.
Since hitting a high of nearly $8 this past year, shares of XELA stock have sunk to below 50 cents. Formerly a billion-dollar company, this has reduced Exela’s market cap to around $150 million.
Currently, Exela is soaring on some intriguing news about a contract renewal. Let’s dive into what the company announced, and why investors are getting bullish.
Why XELA Stock Is Taking Off Today
Today, Exela announced the company has renewed a key services contract with a “leading consulting firm.” This contract is reportedly a continuation of a 20-year relationship with said firm. Additionally, Exela announced this contract is worth $35 million, or roughly one-fifth of the company’s existing market capitalization.
Currently, Exela is not profitable. However, assuming the margins on this contract are decent, investors appear to be forecasting future profitability into Exela’s stock price. This deal reportedly provides digital mailroom solutions to more than 90,000 users. Should this contract proceed smoothly, investors seem keen on betting Exela can parlay this contract into additional work moving forward.
Exela operates in a competitive space, and is a growth stock looking to grow its market share presently. In this rising rate environment, such stocks are likely to have a difficult go moving forward. However, this news certainly improves the outlook for Exela. Accordingly, this is a stock that long-term growth investors may want to keep on their radar right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.