Never Have "One Of Those Days" Again
The Dynamic Wealth Report
July 9, 2010
by Corey Williams, Editor
Do you ever have “one of those days”? You know the kind, nothing
goes the way it should and everything is more complicated and time
consuming than it needs to be.
I had “one of those days” last Saturday.
It started out simply enough. Saturday morning I went to pick up a new
graphics card for my computer from a local electronics store. (I’ll keep
their name out of it because I still like the guys who run the store.)
I had ordered the item online through their website. But I elected to
pick it up at the store to save a few bucks on shipping and to have it
in my hands a little quicker.
I was in and out with my product in hand in under five minutes. I
thought, “Today is gonna be a good day.” I’ll have the installation done
in no time. And I’ll still have plenty of time to hit the pool and grill
some burgers.
Boy was I wrong…
Once I got the new card installed, it wouldn’t work. That’s when my day
turned into “one of those days”.
What really gets me is it didn’t have to turn into “one of those days”. If the company I bought the product from only used the software from
an
up and coming tech company, the whole mess could have been avoided. I’ll
get to them in a minute…
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But first things first, my graphics card wouldn’t work after
installation. I tried tech support on their website, twice over the
phone, and finally at the store.
Each time I spoke to someone different. And each time I had to explain
the situation from the beginning. Heck, the guys I talked to on the
phone couldn’t even pull up a record of the sale.
It was a horrible customer experience. There was no coordination between
tech support, customer service, and sales.
Eventually my problem was resolved. But the lack of coordination between
the different parts of the company is inexcusable. There’s no reason why
I should have to explain the problem in detail each time I spoke to
someone new.
There are a number of Customer Relationship Management (CRM) software
packages available. And they’re designed to improve customer experience
so they don’t have “one of those days”.
It got me thinking about a company I had recommended call options on in
Elite Option Trader about a year ago. Subscribers pocketed a 365% gain
as their stock price soared from $23 to over $35.
And thanks to a recent pullback in their stock price, I think it’s a
screaming buy again…
The company I’m talking about is Pegasystems (PEGA). They’re a leader in
the CRM and business automation software industry.
PEGA’s software is designed to improve customer experience, increase
sales, and lower costs. And they’ve developed a reputation for being
able to deliver on those promises. It’s allowed them to develop a client
list of major companies in financial services, healthcare, telecom,
manufacturing, and retail service industry.
The beauty of PEGA’s business is they’re able to grow in any business
environment. In fact, they’ve grown revenue seven quarters in a row
(including the recession after the financial meltdown in 2008).
Right now PEGA is gearing up for a major growth spurt. Their goal is to
be a $1 billion per year player in the CRM and business automation
industry.
Last quarter, PEGA’s earnings fell short of analyst estimates. And
investors who didn’t dig into their quarterly earnings report sold the
stock. It’s currently about 20% off the all-time high of $39.66 it set
in April.
According to PEGA’s quarterly earnings report, they missed analysts’
earnings estimates for a few reasons.
The first reason is because sales and marketing expenses are up $6.5
million.
Expenses are increasing because they’re increasing the size of their
sales force. I think this is a long term positive for the company. They
already have a best in class product… a bigger sales force will drive
more sales and earnings in the future.
The second reason is because of the different options they give
customers to pay. Revenues will be accounted for differently depending
upon the type of contract they have. It creates some lumpy quarterly
revenue and earnings.
It’s why PEGA doesn’t provide quarterly guidance. They only provide
yearly guidance. And they’re still on pace to meet or beat their yearly
revenue goal of $360 million.
PEGA also completed the acquisition of Chordiant last quarter as well. Due to the merger, the company didn’t give yearly earnings guidance. Not
giving earnings guidance is a sure fire way to spook some investors.
Management said the merger should increase earnings this year. And
they’ll give updated yearly earnings guidance when they report second
quarter earnings. That report is due out in early August. And I’m
expecting their guidance to send PEGA soaring.
The bottom line is PEGA’s a great growth stock…
Their goal is to increase revenue from $264 million last year to $360
million this year. And eventually to $1 billion a year and beyond. They
already have a best in class product. And their commitment to increasing
revenue through acquisitions and a larger sales force has the company on
the right track.
Take advantage of the recent pullback. Consider adding PEGA to your
portfolio. It’s currently at a discount to what I think it will be
trading for after they report earnings next month.
•
Wright Medical (WMGI) was
upgraded by RBC Capital Markets this week. They now have an outperform
rating on the stock. The orthopaedic medical device maker will feature
new product innovations at the American Orthopaedic Foot & Ankle Society
meeting.
• Best Buy (BBY) was downgraded to hold by
Jefferies this week. The analyst said weak sales trends for the retailer
are likely to erode further.
• Stern Agee started coverage on NetLogic (NETL)
this week with a buy rating. Last week the semiconductor company
announced a game changing new technology for networking systems.
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