Employment growth remains strong despite continued interest rate hikes by the Federal Reserve. Stocks with sound fundamentals: Salesforce (CRM), Progress Software (PRGS), Photronics (PLAB), Forrester Research (FORR) have a long-term outlook as market uncertainty and risks obscure hopes and optimism It may be wise to invest in Keep reading…
A strong labor market and high inflation could keep the stock market under pressure for some time, as the Federal Reserve (Fed) has delivered higher-than-expected rate hikes this year. Under these circumstances, we believe it is prudent to buy Salesforce stocks with strong fundamentals (CRM), Progress Software Inc. (PRGS), Phototronics Corporation (PLAB), and Forrester Research, Inc. (FORR).
Despite the Federal Reserve’s efforts to slow the economy and keep inflation in check, the latest jobs data has beaten expectations. Employment growth slowed compared to January, but Nonfarm payrolls increased by 311,000 in February, higher than estimates of 225,000, indicating a tight labor market. However, the unemployment rate rose to 3.6% last month, up from 3.4% in January.
Given the strong labor market, investors are poised for a more aggressive 0.50% rate hike. higher than previously expected.”
John Lynch, chief investment officer at Comerica Wealth Management, said: “Nevertheless, given the recent strength of the economy and the reliance on next week’s consumer price index (CPI) report, March’s “There’s 50 basis points left on the policy meeting table.”
Given the stalling disinflationary process, headline CPI 6% YoY in Februarydown from 6.4% in January, and core CPI is expected to rise 5.5% year-on-year, compared to 5.6% in February.
triggered by Turmoil hits the banking sector, the CBOE Volatility Index is up 58.8% over the last 5 days. Given the near-term uncertainty, the economy appears to be moving away from a soft landing.
In this situation, it may be wise to buy a CRM, PRGS, PLAB, FORR with sound fundamentals. Given their solid growth and high profitability over the past few years, these stocks could help grow your portfolio over the next decade.
Sales Force Inc. (CRM)
CRM provides a customer relationship management platform that connects businesses and customers globally. The company’s Customer 360 platform provides a source to connect customer data across systems, applications and devices to help businesses sell, service, market and commerce from anywhere.
On March 7, the company launched Einstein GPT, the world’s first generative AI CRM technology. It delivers AI-generated content at hyperscale across every sales, service, marketing, commerce, and IT interaction. With this new introduction, the company aims to transform every customer experience with generative AI.
We also announced the launch of a $250 million generative AI fund from Salesforce Ventures. The fund is expected to strengthen the startup ecosystem and the development of responsible generative AI.
CRM revenue and EBIT grew at a CAGR of 22.4% and 58.9% over the past three years. Similarly, net profit grew at a CAGR of 18.2% over the same period.
In terms of gross margin over the last 12 months, CRM’s 73.34% is 49.9% higher than the industry average of 48.94%. Similarly, the trailing 12-month leveraged FCF margin of 30.62% is 378.5% higher than the industry average of 6.81%.
CRM total revenue increased 14.4% year-over-year to $8.38 billion in the fourth quarter ended January 31, 2023. Gross profit increased 18.3% from the prior year period to $6.28 billion and non-GAAP operating income increased 123.3% from the prior year period to $2.45 billion.
Additionally, non-GAAP net income and adjusted net income per share were $1.66 billion and $1.68, up 96.4% and 100% year-over-year, respectively.
consensus EPS The estimated $1.61 in the first quarter (ending April 2023) represents a 64.5% year-over-year improvement. Consensus revenue for the quarter is estimated at $8.17 billion, representing a 10.2% year-over-year increase. The company has been performing amazingly, beating his EPS and earnings estimates in each of the last four quarters.
The stock is up 32.1% over the past three months and 30.6% year-to-date, closing its last trading session at $173.18.
CRM’s POWR rating It reflects a solid outlook. The stock has an overall rating of B, which is equivalent to a buy in our proprietary rating system. The POWR Rating is calculated by considering 118 different factors, with each factor being optimally weighted.
Growth and emotional grade is A. Out of 134 shares software application It ranks 17th in the industry. To see other CRM ratings for Value, Momentum, Stability, and Quality, click here.
Progress Software Co., Ltd. (PRGS)
PRGS provides software products for developing, deploying and managing high-impact business applications. Its offerings include OpenEdge, Developer Tools, Sitefinity, Corticon, DataDirect Connect, MOVEit, Chef, WhatsUp Gold, Kemp Loadmaster and Kemp Flowmon Network Visibility to help drive business innovation and momentum.
On February 7, PRGS acquired MarkLogic, a leader in complex data and semantic metadata management and a Vector Capital portfolio company. The acquisition expands the company’s industry-leading product portfolio and continues to contribute to its overall growth strategy.
PRGS total revenue increased 12.1% year-over-year to $157.13 million in the fourth quarter ended November 30, 2022. Adjusted operating income increased 20.1% year-over-year to $61.98 million. Over the same period, the company’s non-GAAP net income and non-GAAP EPS were $49.24 million and $1.12, respectively, up 19.2% and 21.7% year over year.
Analysts expect PRGS’ first-quarter EPS and earnings to grow 8.3% and 7.6% year-over-year to $1.05 million and $158.77 million, respectively, in the first quarter (ending February 2023). The company has outperformed consensus his EPS estimates in each of his four subsequent quarters.
PRGS’ net income and EBITDA grew at a CAGR of 53.3% and 12.6% respectively over the past three years, while EPS grew at a CAGR of 54.8%.
The trailing 12-month leverage FCF margin for the stock was 33.78%, 395.8% above the industry average of 6.81%. And over the last 12 months, ROCE and ROTA are 23.45% and 6.74%, respectively, which match industry averages of 4.85% and 1.56%.
Over the past year, the stock has gained 29.1% and closed its last trading session at $56.20.
PRGS’ strong fundamentals are reflected in its POWR rating. The stock has an overall rating of A, which translates to a strong buy in our proprietary rating system. There is an A grade for quality and a B grade for growth and value. Ranked 3rd in the industry.
In addition to the above, we also assessed PRGS momentum, stability and sentiment.Get all PRGS ratings here.
Phototronics Inc. (PLAB)
Together with its subsidiaries, PLAB manufactures and markets photomask products and services in the United States, Taiwan, China, Korea, Europe, and internationally.
In terms of 12-month EBIT margin, PLAB’s 27.15% is 361.7% higher than the industry average of 5.88%, and its 12.97% 12-month net profit margin is 344.6% higher than the industry average of 2.92%.
PLAB’s total revenue increased slightly year-over-year to $211.09 million in the first quarter of the fiscal year ended January 29, 2023. The company’s non-GAAP net income and non-GAAP EPS were $24.36 million and $0.40, respectively, for the same period. .
Additionally, its total liquid assets were $708.2 million for the period ending January 29, 2023, compared to $644.65 million for the period ending October 31, 2022. Long-term debt was $27.32 million against $32.31. one million dollars.
Street expects revenue to grow 3.2% year over year to $211 million in the second quarter ending April 30, 2023. EPS is expected to grow at an annual rate of 10% over the next five years. Exceeded earnings expectations in all of the last four quarters.
Over the past three years, PLAB’s net income and EBIT grew at a CAGR of 46.6% and 56.1%, respectively. Moreover, its EPS grew at a 50.9% CAGR over the same period.
PLAB is up 4.7% over the past six months to close the final trading day at $16.65.
PLAB’s POWR rating reflects this promising outlook. The stock has an overall rating of B, which converts to a buy in the POWR rating system.
It also has a B grade for value, momentum and quality. It ranks 14th out of 91 stocks with a B rating. Semiconductor/wireless chip industry. click here To see other PLAB ratings for growth, stability, and sentiment.
Forrester Research (FORR)
FORR is an independent research and advisory firm that operates through research. consulting; event segment; Its leading subscription research product provides clients with access to research designed to inform strategic decision-making.
On January 23, 2023, FORR introduced Partner Ecosystem Marketing Services. This is the next generation of the Forrester Decisions for Channel Marketing service. This enhanced offering is designed to help B2B organizations modernize, develop, and optimize their existing partner programs.
Maria Chien, vice president and research director at FORR, said: MarketingHer leaders will have access to the research and tools they need to fully leverage PartnerHer’s ecosystem to drive business growth. “
For the fourth quarter of the fiscal year ended December 31, 2022, FORR’s net revenues increased 2.4% year-over-year to $136.89 million. During the same period, adjusted net income and non-GAAP EPS were $8.51 million and $0.45, respectively. Additionally, outstanding debt stood at $50 million as of December 31, 2022, down 33.3% year-on-year.
Analysts expect FORR’s fiscal 2024 EPS and earnings to grow 14.1% and 5.4% year-over-year to $2.67 million and $556.91 million, respectively. FORR’s revenue has grown at a CAGR of 5.2% and 9.8% over the last 3 and 5 years, respectively. Also, EBIT has grown at a CAGR of 74.7% over the past three years.
The stock’s last 12-month gross margin was 58.39%, 101.1% higher than the industry average of 29.03%. Similarly, the leveraged FCF margin over the last 12 months was 11.01%, 179.2% higher than the industry average of 3.94%.
The stock rose slightly last month to close the last trading session at $31.84.
It’s no surprise that FORR has an overall A rating. This corresponds to a strong buy in our unique rating system. There is an A grade for quality and a B grade for value and emotion. out of 101 shares Financial Services (Enterprise) No. 1 in the industry.
In addition to the POWR ratings above, we also give FORR ratings for growth, momentum, and stability.Get all FORR ratings here.
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CRM shares traded at $174.39 per share on Monday afternoon, up $1.21 (+0.70%). Year-to-date, the CRM is up 31.53% of him, while the S&P 500 index is up 1.08% of him over the same period.
About the Author: Shweta Kumari
Shweta’s deep interest in financial research and quantitative analysis led him to pursue a career as an investment analyst. She uses her knowledge to help her private investors make informed investment decisions.
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