Fountainheadinvesting

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Enterprise Software

Long-Term Investment Opportunity: Solid Cash Flow, Strong Margins, and Growth Potential in Cloud Storage

Solid company with big improvements in cash flow and gross margins in the past few years. Revenue growth has slowed to 15-16%, and shouldn’t grow much faster in the next three years. Renewals have been good and they have a decent pipeline with two possible upsides from customers either moving from VMware after Broadcom acquired it, and a strategic tie up with Cisco, that should help business growth.

There are ample opportunities in cloud storage though it is competitive, it’s a growing market with all the datacenter spend right now.

The stock has already moved up 149% in the past year, so that could restrict upside gains. Valuation is OK with 7x sales and 16% growth, a bit on the higher side, Buy on declines or Dollar Cost Average, this is a good long term investment.