Report
Dave Nicoski ...
  • Ross LaDuke
EUR 233.15 For Business Accounts Only

Insights: Bullish Software Stocks

CRM Upgrade Ignites The Software Space

Since October we have increasingly warmed up to software stocks. At the time, software had underperformed for three months amid the shift from growth to value. Since October, growth has reasserted itself as leadership, and software is leading the way considering it is basically the definition of “growth.” The recent Salesforce.com (CRM) upgrade to “top pick” by RBC has ignited the software space, with several stocks making significant bullish price and RS inflections over the past few trading days.

• After several months of price and RS consolidation, several software stocks are starting to break out topside bases or exhibit bullish price and RS inflections. This is depicted by the price breakout and bullish RS reversal in the iShares Tech-Software ETF (IGV)... see chart below. When bullish price action combines with bullish RS reversals at long-term RS uptrend support, it dramatically increases our confidence that the Group is poised for continued outperformance.

• In today's report we highlight our favorite technical setups, all offering compelling and timely opportunities to add exposure to at current levels. Buy: CRM, VRSN, TWLO, FICO, COUP, AZPN, PLAN, AVLR, FIVN, DSGX, RPD, PRO, SPNS, RUBI, and SSTI... see pages 2-9.
Underlyings
Anaplan

Anaplan provides a cloud-based connected planning platform that helps connect organizations and people to make decisions. The company delivers its application over the Internet as a subscription service using a software-as-a-service model. The company also provides services related to implementing and supporting its application.

Aspen Technology Inc.

Aspen Technology supplies asset optimization solutions for industrial environments. The company's aspenONE solutions are organized into three suites: engineering; manufacturing and supply chain; and asset performance management. The company's engineering software is used to develop process designs of new plants, re-vamp existing plants, and optimize existing processes. The company's manufacturing software is used to optimize processing activities. The company's supply chain management software enables process manufacturers to reduce inventory levels, respond to market demands and optimize supply chain operations. The company's asset performance management software is used to understand and predict the reliability of a system.

Avalara Inc

Avalara provides cloud-based solutions designed by automating the processes of determining taxability, identifying applicable tax rates, determining and collecting taxes, preparing and filing returns, remitting taxes, maintaining tax records, and managing compliance documents. The company's products and solutions include: AvaTax for Tax Determination, which is a solution for determining sales tax; Avalara Compliance Document Management, which provides compliance document management solutions that are either integrated into AvaTax or that function as a standalone solution; and Professional Services, which include nexus studies and analysis, voluntary compliance initiatives, and tax research.

Coupa Software Inc.

Coupa Software is a provider of business spend management (BSM) solutions. The company provides a cloud-based BSM platform that delivers a range of capabilities that would typically require the purchase and use of multiple disparate point applications. The company's main platform consists of procurement, invoicing, expense management and payments modules that form the transactional engine for managing a company's business spend. In addition, the company's platform provides supporting modules to help companies further manage their spend, including strategic sourcing, spend analysis, contract management, supplier management, and contingent workforce management.

Descartes Systems Group Inc.

Descartes Systems Group is a global provider of federated network and global logistics technology solutions that help customers make and receive shipments and manage related resources. Co.'s network-based solutions, which primarily consist of services and software, connect people to their trading partners and enable business document exchange (bookings, bills of lading, status messages); regulatory compliance and customs filing; route and resource planning, execution and monitoring; inventory and asset visibility; rate and transportation management; and warehouse operations.

FAIR ISAAC CORP

Fair Isaac is a provider of analytic, software and data management products and services. The company's segments are: Applications, which includes pre-configured decision management applications designed for business problem or process, such as marketing, account origination, customer management, fraud, collections and insurance claims management; Scores, which includes its business-to-business scoring solutions and services, its business-to-consumer scoring solutions and services including myFICO? solutions for consumers, and associated services; and Decision Management Software, which is composed of analytic and decision management software tools and the company's FICO? Decision Management Suite.

Five9 Inc.

Five9 is a provider of cloud software for contact centers. The company's Virtual Contact Center (VCC), cloud platform and applications, allows simultaneous management and optimization of customer interactions across voice, chat, email, web, social media and mobile channels, either directly or through its application programming interfaces. The company's VCC cloud platform matches each customer interaction with an appropriate agent resource and delivers customer data to the agent in real-time through integrations with adjacent enterprise applications, such as customer relationship management software. The company provides its solution through a software-as-a-service business model with recurring subscriptions.

PROS Holdings Inc.

PROS Holdings is a holding company. Through its subsidiaries, the company provides artificial intelligence solutions. The company's cloud-based software solutions provide companies with AI-based predictive and prescriptive guidance on key business decisions including product mix optimization, price forecasting, price optimization, product configuration recommendations, new sales opportunity recommendations, cross-sell recommendations and proactive attrition detection. The company's subscription services provide customers access to its software via the Internet. The company also provides other software-related services, including implementation and configuration services, consulting and training services.

Rapid7 Inc.

Rapid7 is focusing on security with visibility, analytics, and automation delivered through its Insight cloud. The company's Insight Platform product offerings include: InsightVM, which provides guidance based on customized threat models; InsightIDR, which is designed to enable organizations to detect and respond to cyber security incidents and breaches across physical, virtual and cloud assets; InsightAppSec, which provides application security testing that analyzes web applications for security vulnerabilities; and InsightConnect, which is used by security personnel to connect their various disparate solutions and automate workflows with which they can identify risk and respond to incidents.

Salesforce.com inc.

Salesforce.Com is engaged in customer relationship management technology. The company's Customer 360 is an integrated platform that unites sales, service, marketing, commerce, integration, analytics and more to give companies a single, shared view of their customers. Through its platform and other developer tools, the company also enables third parties to develop additional functionality and applications, or apps, that run on its platform, which are sold separately from or in conjunction with the company's service offerings. The company's cloud service offerings include sales cloud, service cloud, marketing and commerce cloud, and salesforce platform and other.

Sapiens International Corp. N.V.

Sapiens International is a global provider of software solutions for the insurance industry. Co.'s offerings include a broad range of software solutions and services, comprised of (i) core software solutions for the insurance industry, including Property & Casualty/General Insurance (“P&C”) and Life, Annuities and Pensions (“L&P”) products, and record keeping software solutions for providers of Retirement Services (ii) variety of technology based solution including business decision management solutions for the financial services industry, including insurance, banking and capital markets and (iii) global services including project delivery and implementation of Co.'s software solutions.

Shotspotter

ShotSpotter provides precision-policing and security solutions for law enforcement and security personnel to help deter gun violence. The company's solutions include: ShotSpotter Flex, which serves cities and municipalities seeking to identify, locate and deter gun violence by incorporating a real-time gunshot detection system into their policing systems; ShotSpotter Missions, which provides crime forecasting and mission planning to enable deployment of patrol resources and reports on mission activity and tactics for command staff; and ShotSpotter SecureCampus, which helps to mitigate risk and improve security by notifying authorities and first responders of an active-shooter event.

The Rubicon Project

Rubicon Project provides technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers. The company's platform features applications and services for digital advertising inventory sellers, including websites and other digital media properties, to sell their advertising inventory; applications and services for buyers, including advertisers, agencies and demand side platforms to buy advertising inventory; and a marketplace over which such transactions are executed. The company's solution enables buyers and sellers to purchase and sell: advertising units; that are transacted through real-time bidding; and that are displayed across across digital channels.

Twilio Inc. Class A

Twilio provides a cloud communications platform that enables developers to build, scale and operate communications within their software applications via the company's Application Programming Interfaces (APIs). The company's platform consists of three layers: Engagement Cloud, which provides functionality for a specific purpose, such as two-factor authentication or a contact center; Programmable Communications Cloud, which provides a range of products that enables developers to embed voice, messaging and video capabilities into their applications; and Super Network, which contains a set of API's giving the company's customers access to components of its platform.

VeriSign Inc.

Verisign is a provider of domain name registry services and internet infrastructure, enabling internet navigation for domain names. The company enables the security, stability, and resiliency of main internet infrastructure and services, including providing root zone maintainer services, operating internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce. The company operates the authoritative directory of and/or the back-end systems for all .com, .net, .cc, .tv, .gov, .jobs, .edu and .name domain names, among others. The company also provides internationalized domain name services.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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