- CRM (Salesforce)
Do you know CAT WMN?When we say “CAT WMN” we do not mean the love/hate fem foil to Batman! We are talking about the clever new acronym for some strong companies that have been identified as poised for healthy growth stock prospects. Namely CRM (Salesforce), Adobe, Twilio, Workday, Microsoft and Now (Service Now). These companies are quite simply positioned to own the future. This transition has only been sped up by the effects of the pandemic. Wall street analysts of stocks sometimes come up with fun and creative acronyms to capture a basket of strong high performing company stocks. The most famous example over the last 6 years plus has been the FANG stocks. Jim Cramer came up with the name, which of course stands for Facebook, Amazon, Netflix, and Google. This new fun acronym for some great companies comes from Alex Zukin at Piper Jaffray. The FANG stocks represented big tech companies that have been huge drivers of growth in the stock market over the last decade. Owning them over the last decade has done very well for investors. But, just like in life, all things start to come to an end or evolve into something different. The FANG stocks are still powerful companies that could make good investments. In general, we advocate for owning broad S&P 500 Index Funds and ETF’s for most assets on the path to FIRE. But as I laid out recently in an article, after maxing out traditional IRA accounts, you may want to take investing to another level. Therefore this article represents another way to take investing to the next level! That next level could be investing in high quality companies and creating a dividend portfolio separate from your other accounts. This is just another way to create a mini passive income machine. And over time, these passive income machines add up to real money that one can live on. They may also server as other pots of assets to draw from for what ever life throws our way. Keep in mind, investing has risk. Investing in any one stock is a kind of a gamble. Therefore, we tend to simply follow the lead of great investors like Warren Buffett or others. And I do not see any shame in that. Regardless, I am only using 5% of assets to play around with stocks, build dividend income and learn about great companies. Most assets are simply tucked away in traditional IRA’s in broad index fund type vehicles utilizing the investing trifecta for maximum growth! The other thing to keep in mind is that most of these CAT WMN stocks do not offer a dividend, with the exception of Microsoft. Therefore these are growth plays and one is betting that the companies will add value and profit well into the future.
Batman’s Love/Hate RelationshipAlex Zukin, managing director and senior research analyst at Piper Jaffray, has come up with a new basket of great company stocks he cleverly calls “CAT WMN”!
- CRM, (Salesforce’s ticker)
- Adobe (ADBE)
- Twilio TWLO)
- Workday (WDAY)
- NOW (ServiceNow)
1. Salesforce (CRM)Customer Relationship Management, also known commonly as CRM, is a technology system that enables you to better manage your interactions, communications and share information with your customers. CRM is critical to a business’ livelihood. Salesforce is the company that develops the tools for companies to effectively manage customer relationship. No relationship is more important, even between Batman and Cat Woman. Salesforce.com, Inc. is an American cloud-based software company headquartered in San Francisco, California. Though the bulk of its revenue comes from a customer relationship management (CRM) product, Salesforce also sells a complementary suite of enterprise applications focused on customer service, marketing automation, etc. With the increasingly growing digital world, companies will require tools provided by Salesforce to drive efficiency and effectiveness. CRM: $214/share, we originally profiled it at $157/share
2. Adobe (ADBE)Anyone who has been involved in creative or publishing software knows Adobe. The next generation of Creative Cloud is here. New apps. New features. New ways to create. It’s everything you need to go from dreaming to doing. Adobe is known for its amazing suite of software for creative professionals. If you think about it, everything in the world is design. The whole modern world is designed using amazing software. Every product and built environment is designed. Every website and blog, etc. They have amazing products like Photoshop, Lightroom, Illustrator, Adobe Stock, etc. I have personal experience with these products as an illustrator and being married to a designer. ADBE: $460/share, $253/share when we first covered it.
3. Twillio (TWLO)Twillio is a cloud communications platform company. It’s a service company based in San Francisco, California. Twilio allows software developers to programmatically make and receive phone calls, send and receive text messages, and perform other communication functions using its web service APIs. To me this sounds a lot like AI type functioning and communications. Which will probably grow over time. The future will be exciting and different as computers and artificial intelligence grow in application, sophistication and use. The Twillio platform has now clearly emerged as a winner, and management is taking all the right steps to improve the platform even further and getting it further ahead of the competition.
Another reason to be bullish on the company is that 90% of the world’s contact center infrastructure is still on-premise, so there is enormous growth potential ahead.TWLO: $113/share
4. Workday (WDAY)This human resources software maker recently won a large contract with Accenture Consulting. The news pushed Workday stock firmly into a buy zone. Pleasanton, Calif.-based Workday has been selling human capital management software such as payroll tools for years. It is expanding into financial management software.
Workday closed a $1.55 billion purchase of Adaptive Insights on Aug. 1 2018. Adaptive Insights specializes in financial planning software which appears to be there next growth business.WDAY: $188/share
5. Microsoft (MSFT)
A deep dive into the tools Microsoft Azure provide and the benefits for developers seems to be a glimpse into Microsofts future. Azure is Microsoft’s flagship Machine Learning studio. Microsoft recently acquired GitHub, a web based software development platform. Most recently Microsoft achieved a major acceleration in growth in its commercial business – with bookings rising by 22%. Commercial is now close to 70% of revenues.
Microsoft’s success is well known. It can be difficult to evolve a venerable and iconic institution such as Microsoft. The company appears to be pulling off a strategic pivot not yet captured in its valuation. One area of interest is the Azure machine learning software and tools which displays some exciting future capabilities. Most software companies talk about their transformation and their ability to survive in the new cloud based/subscription-based word. Microsoft is actually executing the pivot. The company is growing and generating cash!MSFT: $106/share, 1.74% div yield
6. Service Now (NOW)All businesses, especially large ones, require efficient tech service operations. In other words, what if an employee’s computer won’t boot up? What if someone needs a new computer or hard driver? What if an employee needs access to a software system? These are just a few examples of potential IT-related problems employees face every day. I know I do! Managing and resolving these problems can be a complex process that frequently frustrates both the employee and IT manager. This is where the company Service Now comes into play.
ServiceNow offers cloud-based service portal, categorization, routing, and assignment software for IT, HR, and customer-facing service departments.With the ever growing ubiquity of tech in almost every aspect of business and life, many more companies in the future will require the types of services provided by NOW. And hey, what a name, when you need your work computer to function properly, you typically need it Now!!!!NOW: $225/share These are all clearly exciting companies that to me feel like the future. We all can see that an exciting technologically driven future is coming if not already here. Companies that utilize artificial intelligence, cloud computing, software, etc. to drive efficiencies are poised for obvious reasons to profit.
- This is not investment advice for anyone. See a fiduciary financial professional with specific questions.