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- เผยแพร่เมื่อ 27 พ.ย. 2024
- Software-as-a-service or SaaS stocks trade at a premium because they enjoy consistently growing revenue streams that are typically high margin. If you're trying to find the best SaaS stocks, you'll need to understand basic SaaS metrics such as run rate, net retention rate, and gross retention rate. We show you how to invest in SaaS companies effectively by explaining how SaaS business models work simply.
RESEARCH PIECES USED IN THIS VIDEO:
1. The Best SaaS Stocks and How to Find Them
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2. Finding Tech Stocks That Will Survive a Bear Market
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3. The Nanalyze Disruptive Tech Investing Methodology
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Great video, Joe! SaaS companies are wonderful businesses to invest in.
Appreciate the feedback as always!
@@Nanalyze
Joe, I am doing some research on a local company that can be a pure SaaS (Rapid7). it is a competitive sector, and only the best businesses will survive.
Cybersecurity is a pretty broad niche which we've largely shied away from for that reason. That said, we've had a lot of requests to cover cybersecurity and we have published a fair number of article on the topic here: www.nanalyze.com/tag/cybersecurity/
@@Nanalyze
Wow! A lot of publications!
Thank you for this insightful video
You're welcome. Thank you for taking the time to leave feedback.
I'm looking at several Saas companies in Tikr. I found two names SPLK ($3B in LT debt) and CFLT ($1B in LT debt) that are holding LT debt. When looking at Saas companies for investment when does LT debt become an issue? Thanks.
That's a very good question. We had noted Splunk's debt and discussed it before briefly in this piece (www.nanalyze.com/2021/04/splunk-stock-falling-revenues-why/). We like to consider net debt. For example, Confluent has $1.9 billion in cash and $1.1 billion in debt, so net debt is zero. Companies will often carry debt to act as a tax shield - it's something they teach you about in bee school and gets confusing in a hurry. Analysis of debt needs to focus on serviceability which relies on a path to profitability. Profitable companies that can service their debt are the least concerning. We've written quite a few pieces on Splunk and Confluent so be sure to check them out. We'll think about how we might be able to do a piece on debt for growth companies. Good question.
Adobe looks attractive at today's valuations for a Saas company. They have really nailed the model, and have a customer base that doesn't readily migrate to other platforms.
I think there is an opportunity in the Gaming/entertainment industry. It will be whatever company is able to deliver there platform as a SaaS. I think both Apple Arcade and Google Stadia have failed to find the right combination. It will be interesting to see if Meta can move the Multiverse into some sort of SaaS
Great suggestion - simple valuation ratio of eight. Our methodology focuses on finding firms earlier on and harvesting when the surpass a $100 billion market cap (based on weighting rules). We exit when growth stops or thesis changes. Adobe seems to be quite large already - $142 billion MC - and we'd ideally like to invest below $100 billion cutoff as a general rule. Methodology here -> www.nanalyze.com/nanalyze-premium-articles/
How do you feel about $VERI
We've discussed Veritone briefly on our Discord which our premium subscribers have access to ;) We may look to publish a video on it if there's enough interest there.
How can I invest in SAAS Capitol or index
Their website lists the entire index on a downloadable Excel file. You could use this list as a starting point and tailor it to your own investment guidelines (similar to what we do in our "finding the next Intel or NVIDIA" video.) www.saas-capital.com/the-saas-capital-index/
Can you do cloud flare?
We're working on a way for paying subscribers to request coverage for companies that fall within scope. We haven't covered Cloudflare at all, but we use their product offering here at Nanalyze and it could be relevant. Noted and thank you for the suggestion.
Overvalued
$17 Billion market-cap on revenue less than $1 Billion, over paying for future growth potential, like pouring money down the drain.
Revenue $650 million and earnings last year 2021 - negative 250 million. Likely to run out of money before signs of profitability.
@@davidbest8912 Thank you for the comment David. Yep, with a simple valuation ratio of 19 it's overvalued relative to other tech stocks. Gross margin was 77% in 2021 so healthy business if they can trim some fat. $1.8 billion in cash so a decent runway if they're burning $250 million a year.