Today, PEGA is one of the few publicly-held software companies in the Boston area worth more than $1 billion, thanks in part to its patented Pega 7 software development platform. The software creates the infrastructure that allows PEGA's clients to create customized, game-changing software that performs Customer Relationship Management (CRM) functions.
A study by technology consulting firm CapGemini found that Pega 7 is superior to its rival application development program Java, which is owned by Oracle (ORCL). The results showed that Pega 7 is 6.4 times faster than the Java Enterprise edition (JAVA EE) in developing robust business applications.
PEGA also gives clients the ability to develop their applications in cloud computing through its Pega Cloud platform.
This company has enjoyed steady top-line growth as customers continue to support PEGA's solutions. Sales nearly doubled from 2009 through 2013, rising from $269 million to $509 million. The company's strong results and guidance helps set the stage for continued growth in 2015. With further upside ahead, this is a stock that you don't want to miss profiting from!
Stock Superstar #2: A Revolution in the Auto Industry
O'Reilly Automotive (ORLY) is a dominant supplier of auto parts, operating over 4,400 stores in the United States. The company reported a strong first quarter on April 23 with same-store sales up 7.2% and EPS jumping 28% to $2.06. At 22.2X 2015 EPS, ORLY is a great example of a solid, reasonably priced company with an excellent long-term track record. The stock has sold off from its $230 high, giving you a good entry point to get in now before its next move up.Stock Superstar #3: Don't Call it A Comeback
Merge Healthcare (MRGE) develops software solutions that facilitate the sharing of images to create an electronic healthcare experience for patients and physicians worldwide. The company has been on a roll over the last year as a restructuring lowered costs and the company won new customers.The company has made significant progress, replacing sales declines and losses with growth and profitability. A recent acquisition has also given it 200 new customers to whom it can cross-sell its own products. This is an attractive opening in a stock that's primed for a recovery bounce.
Stock Superstar #4: An Ironclad Profit Opportunity in Animal Care
My next pick is the country's largest provider of veterinary and related laboratory services. Not only does the company stand to hold up well in a high interest rate environment, but it has several growth drivers in place to move it higher over time–making this stock an even more attractive buying opportunity right now.The company operates 643 animal hospitals in 41 states and four Canadian Provinces. These hospitals have over two million (human) clients, caring for 2.7 million pets and handling over 8.7 million pet visits each year.
A significant growth driver for this company has been acquisitions. The hospital division has made a number of deals over the years that brought in over $600 million in annual revenues since 2009.
I'm really impressed with this company's solid growth record, thanks to all those acquisitions. From 2008 to 2014, revenues increased from $1.28 billion to $1.92 billion. Given its recent solid execution and discipline in smart acquisitions, in addition to the steady growth in the overall industry, the company still has plenty of room for expansion.
Stock Superstar #5:
This Sports Retailer is Kicking
Into High Gear
Hibbett Sports (HIBB) is a sporting goods retailer
that it is very attractively valued at the moment. HIBB operates about
950 stores across 31 states in the Southeastern U.S., each focused on
small- to mid-sized markets of 25,000-75,000 people. This is an
interesting strategy, as it allows the company to limit its competition
and become the dominant sporting goods retailer in the area.While the company's merchandising strategy is often local in nature, featuring apparel from local professional and college sport teams, the company's stores also sell brand-name athletic wear including Nike, Jordan and Under Armour. In the 2014 fiscal year that ended February 1, HIBB derived 45% of total revenues from footwear, 32% from apparel and 23% from sports equipment.
A recent pullback brought these shares down to an attractive price, and the company's latest third-quarter results (which boosted shares nearly 4%) indicate that a rebound is ahead. While HIBB may not be able to achieve its past levels of growth in the near term, I certainly believe it has the potential to convert its 2.5% comparable store sales increase into 7%-10% earnings growth as margins remain stable. And in the longer term, management plans to grow its store base as high as 1,500, which will also add to growth.
The college football season is also cooperating this year. Two universities from states with a strong Hibbett presence —the University of Alabama again and Mississippi State — are likely to be part of this year's new four-team college football playoffs. A disappointing season in Alabama impacted sales last year, but the story looks to have a happier ending this year.
Another aspect I like about the company is its discipline and high returns, as Hibbett's goal is to reach 40% return on investment on its stores — a very attractive return only made possible by the relatively low cost ($225,000) to open or upgrade a store. I believe the stock's decline is now behind us and the shares are now discounting realistic growth going forward. This is a very attractive value play, but you have to jump on it soon!
Stock Superstar #6: Monster Profits Fueled by this Energy Breakthrough
The alternative fuel field is a crowded place, with biodiesel just one of the many options available on the market. But since government standards have mandated increased purchases of biofuels through 2022, this has become an attractive area to find lower-priced companies with fantastic growth potential.FutureFuel (FF) is one such opportunity that packs a one-two punch of income and growth. This undervalued dividend stock has a strong sales trend that is looking to expand further into the biofuel market.
FF manufactures and sells specialty chemicals and bio-based products primarily in the United States. The company's biofuel segment consists mostly of biodiesel, an alternative fuel that emits fewer carbon emissions and is manufactured at its Arkansas plant. FF has a current production capacity of 59 million gallons of biodiesel, which is made from vegetable oil, fat or grease feedstocks, and is usually mixed with petro-diesel. The company caters to the same customers who purchase petro-diesel for on-road use.
Mirroring the company's name, biofuel is FutureFuel's future. The segment is certainly growing thanks to those government mandates, which helped revenues more than triple last year, and its potential is a major catalyst going forward. However, FF currently generates most of its operating income from a highly profitable specialty chemicals unit.
In 2011, FutureFuel derived more than 90% of its chemical revenues from custom manufacturing of specialty chemicals, generally under long-term contracts. The unit also produces a bleach activator for Procter & Gamble, which had sales of $70.8 million in 2012, and represented 23% of total sales and 54% of the unit's sales last year.
In addition to specialty chemicals, FutureFuel makes a proprietary herbicide and intermediates for Arysta LifeScience. The herbicide's sales of $38.93 million in 2011 made up 13% of FF's total sales and 24% of segment sales.
The company continues to exceed expectations by maintaining profitability each year and realizing earnings of at least $0.58 a share since 2008. Furthermore, FF is in the biofuel segment that has more than tripled its revenue to $141.6 million from $40.9 million in 2011 on the government's increased usage mandates that were developed in 2005.
Stock Superstar #7: Niche Technology Pioneer
Fleetmatics (FLTX) provides software to track data on everything from fuel usage to driver behavior, while also helping companies meet the challenges that come with managing local fleets and improving the productivity of their mobile workforces. Thousands of businesses rely on FLTX, including well-known companies like Comcast (CMCSA) and Time Warner Cable (TWC).FLTX's services are divided into two categories: Fleet Management Solutions and Fleet Service Management. The Fleet Management Solutions segment, which has over 500,000 vehicles subscribed, helps businesses manage their local fleets by extracting actionable business intelligence from vehicle and driver behavior data. By using FLTX's products, customers can monitor driving performance and routes, as well as email notifications when unwarranted behavior occurs.
Fleet Service Management also helps businesses improve their time management, providing organized back-end functions (such as customer information, invoices and service history) and storing them in the cloud.
I like that management has been able to grow their customer base from next to nothing in 2005 to 552,000 fleet vehicles today in a very cost efficient manner.
FLTX's annual revenues rose significantly from 2010 through 2014, increasing from $65 million to $232 million, driven primarily by an increase in vehicles under subscription. Profitability also improved steadily during this period, as the company benefited from the larger scale.
I especially like that FLTX is almost exclusively a domestic company, so foreign currency impact will be minimal. Now is the time to get in before it's too late.
Stock Superstar #8: The Ultimate "Money Mover"
Total Systems Services (TSS) is a global payment solution provider that connects financial and nonfinancial institutions with its customers through more streamlined transactions.The company is driven by four main services that support more than 49 million payment transactions a day!
- Issuing Services makes it possible for money to move between buyers and sellers.
- Acquiring Services processes billions of transactions annually between buyers and sellers.
- Prepaid Services are provided through the company's NetSpend division, one of the country's leading providers of reloadable prepaid cards for individuals and corporations.
- Merchant Services allows for businesses to gain information about their customers and competitors, including reviews and ratings, as well as financial information such as revenue growth.
The stock currently trades around 18X 2015 EPS, just slightly more than the market, which is unusually attractive for a company with such quality and growth potential. But one of the key criteria that attracts me to this pick is the company's ability to stay in-step with game-changing technology.
Last September, the company announced that it will support transaction for ApplePay, and it is also involved in the Big Analytics phenomenon.
With financial institutions, businesses and governments already in more than 80 countries, I expect growth to continue as management offers additional services and more financial services are conducted electronically.
Given its consistent earnings and attractive valuation, this is a double-digit play that you must jump on now!
Stock Superstar #9: Banking on Value
Flushing Financial Corporation (FFIC) is an old-line New York state bank that offers a full complement of deposit, loan and cash management services through 17 branches in Queens, Brooklyn, Manhattan and Nassau County. The company derives the vast majority of its income from its $3.64 billion loan portfolio. The largest part of this portfolio consists of $3 billion in mortgage loans, mostly multi-family residential and commercial real estate loans secured by the value of the property.Flushing Financial has enjoyed steady operating performance, remaining profitable through the financial crisis by earning $1.03 and $0.91 a share in 2008 and 2009, respectively. The bank's current credit position is quite favorable, which should help FFIC continue its stable performance in the future. Only $41.4 million (or less than 1.4%) of the company's loan portfolio is non-performing (not making money for the company), and the amount of these loans are only for 50% of the underlying property value on average.
Stock Superstar #10: Saving Millions of Students Time and Money
Chegg (CHGG) is a provider of services for college students, ranging from choosing the right school to selling and renting used textbooks. Over 7.4 million students use the company's services each year, helping it to achieve solid growth. In its most recent quarter, CHGG saw revenues pop 34% on a pro-forma basis.This growth has led to a solid performance so far this year, and after gapping higher on both first and second-quarter earnings reports, shares took a natural correction from their price peak. The stock has now formed a nice base that indicates it is ready to resume its upward trend in August.
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