Today, the stock market struggled with S&P 500 and NASDAQ both decreased by almost 1%, closing at 3,819 and 11,265, respectively. U.S. oil prices continues to decline to less than $96 amidst concerns on downward shift in demand.
David Sharek, the Founder of The School of Hard Stocks, thinks that the economic recession negatively impacted Software stocks. He said,
So this recession is now bringing down Software stocks. But most of these stocks, like ServiceNow (NOW) and Salesforce (CRM), are already down. Still, they can go lower. NOW’s P/E is 58 after today’s drop, CRM’s is 35.”
Tweet of the Day
ServiceNow sinks after CEO warns global tech firms won't be able to outrun strong dollar: "So, the mood is not great," McDermott said in an interview that aired on "Mad Money" after the closing bell on Monday. https://t.co/Pv04GfUTax
— Trabigohosting.com (@TrabigoHosting) July 12, 2022
Chart of the Day
Our chart of the day is NOW’s ten-year chart from May 14 when the stock was $453.
NOW builds applications that help automate processes and create efficient workflows, to enable work to flow naturally across different departments of a business. It’s product portfolio is on a single cloud platform called the Now Platform that integrates easily with other enterprise systems including Microsoft Teams and Azure, Amazon Web Services, Splunk, SAP, Oracle, YouTube, Google Cloud, and Crowdstrike (CRWD) among others.
NOW keeps it solid momentum as new enterprise jump significantly. Last qtr, it closed 52 deals with more than $1 million in annual contract value, representing 41% year-over-year growth. That brings the company total to 1,401 customers with more than $1 million in annual contract value, up 24% in a year. Although there’s challenges across the globe — especially in Eastern Europe — the company hasn’t seen this impact its target market.
NOW is one of the best companies in the world. Forbes recognized NOW on its World’s Most Admired Companies list in 2020, and Fortune ranked NOW #1 on the Fortune 50 list of companies with the best long-term growth potential. The stock has an Estimated Long-Term Growth Rate of 27% per year and I feel this is a 30% to 35% grower. Years ago, CRM was a 35% grower and it was earning P/Es in the 70s and 80s. My Fair Value P/E on NOW is 75, and with the P/E currently at 62, the stock seems slightly undervalued. But a a 75 P/E is awfully rich during a Bear Market, so my expectations for the stock might be too high. NOW is a core holding in the Growth Portfolio.
