Saul, If you like software stocks may I recommend taking a look at TEAM (Atlassian)…Kevin
Hi Kevin, I got interested in Atlassian at your recommendation, and I discovered that my favorite author, Bert Hochfeld, did a write-up on it in May.
Here are some quotes (paraphrased in places) from his conclusions, but you should read the whole article if you are interested in the company.
Atlassian, which already has a revenue run-rate approaching a half-billion, has developed a fairly unique set of tools and developed a certain cachet. Its HipChat business is growing very rapidly at this point, and the company is almost certainly taking share in the ALM space. Its service desk business also is growing at greater than the company average. While none of the company’s products are particularly unique in isolation, the overall integration of its capabilities does seem to be unmatched by any of its many rivals.
The company has a quite unique business model which emphasizes development spending and de-emphasizes sales and marketing. That strategy, coupled with its hybrid revenue model, has allowed it to become profitable relatively quickly.
It has just started to sell to businesses outside of its base within the software development community. It has introduced a service desk product and HipChat is obviously not limited to the software development community.
I have to be a bit cautious in terms of forecasting growth because so much of that is dependent on the company’s new product initiatives. And I have to be more circumspect in forecasting margins as they transition from lots of maintenance revenue, to more subscription revenue. Despite those cautions, however, I expect TEAM’s shares to deliver alpha to investors over the coming years.