Canaccord Genuity on Technology/Enterprise Software: Weekly Musing - So Far, So Good

Canaccord Genuity on Technology/Enterprise Software: Weekly Musing - So Far, So Good

Analyst, Richard Davis, said, "Investors bullish. Investors were grumpy at year-end because software pretty much faded every day following the M&A pop off of the RightNow and SuccessFactors (Nasdaq: SFSF) acquisitions. Oracle (Nasdaq: ORCL) was not an indicator of impending doom, and this fact has begun to seep into investors’ expectations. In fact, software fundamentals are quite strong."

"We agree, but would be careful not to chase stocks too aggressively. Corrections happen. Remember that the average software stock dropped 25%+ from early July to October last year – on no deterioration of fundamentals. Therefore, we’re recommending buying partial positions in hopes of a correction."

"Observation: Why low interest rates are good for software stocks. Low interest expense means higher corporate profits that are recycled into software purchases, faster growth for companies, high P/Es and an ability to re-invest in more growth. A Golden Age for Software – just don’t say Bubble."

"We have been around long enough to know that few markets go straight up, especially when investors en masse shift from pretty bearish in late December to “Quick, give me something to buy now.” Therefore, our list of solid fundamentals, partial-position stocks to add to on a correction would include: Salesforce.com (NYSE: CRM)(BUY), Nuance (Nasdaq: NUAN)(BUY), Constant Contact – at least on a trade (Nasdaq: CTCT)(BUY), AspenTech (Nasdaq: AZPN)(BUY), Ansys (Nasdaq: ANSS)(BUY), Autodesk (Nasdaq: ADSK)(BUY), Descartes (Nasdaq: DSGX)(BUY) and Bottomline Technologies (Nasdaq: EPAY)(BUY)."

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