7investing Lead Advisor Anirban Mahanti’s August recommendation is a software company that is capitalizing on multiple trends including cybersecurity, cloud transformation, and hybrid work models. The business continues to grow at a high rate and it boasts of a committed backlog of over $2.5 Billion, which shows how crucial this company has become for its customers. With the stock having pulled back significantly from its Covid-19 highs, we have an opportunity to add growth at value-like prices.  

Transcript

Hi, I’m Anirban Mahanti. The software company I’m recommending for August has seen its share price, year to date, decline by more than 50%. It’s trading at close to a third of the price that it hit during the COVID 19 pandemic highs.

And while the share price action might make one think that perhaps something is wrong with the company, the results quarter after quarter suggest steady execution. This founder-run business has delivered 40% or more sales growth in recent times and its dollar best net retention rate sits in the 100% range — indicating land and expand is well and truly alive and thriving. And importantly, customers need its product so badly that they have committed contracts now well over $2.5 billion.

Nothing is really wrong with this business. The only thing that has changed is the share price. The pullback in share price means we have an opportunity to buy a high quality software name at almost value like prices.

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