The broad-based pullback has hit stocks that are neither deeply impacted by the coronavirus nor too expensive, to begin with, especially NYSE YEXT at https://www.webull.com/quote/nyse-yext . The New York-based software company is helping companies manage their location data across the internet. It has fallen about 20% since the start of the pullback, despite a strong showing in the fourth quarter of fiscal 2020 that points to another strong year ahead. This investment strategy is remaining largely unchanged and buy high-quality growth businesses at an even more reasonable price. You can despite the recent roller coaster and Yext remain a core mainstay in my portfolio. The positive thesis for Yext, in view, resting on the following factors:
- Growth unique product
YEXT stock or YEXT stock news is still rightly considered a high-growth stock, with revenue growth clocking in at just under 30% y/y. These peers are the SaaS sector, very few companies that are focused on what Yext is doing, giving it thought leadership in its space and very little competition.
- High recurring revenue, high margin business
YEXT is deriving a stable base of recurring revenues from its customers, which is generally charged by location. So as franchises like Wendy’s expands its footprint and uses Yext to manage those locations, Yext’s billings grow. YEXT is generating strong ~75% gross margins, it is giving strong opportunities for operating leverage.
- New products driving wider TAM
YEXT is ramping up Yext Answers, which management is believing extends Yext’s TAM by $10 billion.
- Deep value
This is discussed Yext’s valuation in detail shortly, but Yext is currently one of the cheapest stocks in the software sector, despite its obvious fundamental strengths.
- M&A potential
With such a low valuation, it’s not implausible that acquirers are window shopping for Yext. Especially with the company’s deep integration with Google Maps (GOOG) (NASDAQ: GOOGL), it wouldn’t be out of the blue to see Google acquire Yext to augment its nascent cloud division.
- Key takeaways
Few software companies are offering the same growth as Yext at its unbeatable value of ~3.5x forward revenues. With a unique stable of software products are having virtually no copycats in the market like nasdaq wday at https://www.webull.com/quote/nasdaq-wday . YEXT is standing to benefit from the secular shifts toward data and automation, and it’s not unlikely that larger companies may be looking at Yext as a bolt-on acquisition.