One of the most significant results of the recent recession is the heightened focus on how we spend our money, especially with the recovery continuing to be so sluggish. If you’re like most consumers, you’re more aware of how much money you’re spending and what you’re spending it on. Businesses are no different.
Consider this: U.S. productivity growth doubled from 2008 to 2009 and then doubled again in 2010. Stocks that help businesses cut costs and operate more efficiently are in a sweet spot right now, and SolarWinds (NYSE:SWI) is one of my favorite.
Don’t be fooled by the name. This is not a solar or even alternative energy company. (The two brothers who founded SWI were big fans of outer space lore.) It’s actually an enterprise software company. Enterprise is a bit of a fancy word for an organization — a huge corporation, a small business, a nonprofit, a government agency and so on. SWI sells its products to 93,000 organizations of all shapes and sizes all over the world, including 425 of the Fortune 500 companies.
SolarWinds is a real recession and post-recession success story. It continued to grow through the worst of times, and it was just the second tech company to go public after the recession — successfully completing its IPO in the second quarter of 2009.
I look for SWI to continue growing solidly. It has very good products but charges lower prices than many of its competitors, so the company provides strong value in this value-oriented world. It has a big, loyal and growing customer base. The company itself keeps costs low thanks to its marketing approach, and management has an excellent track record of smart acquisitions that fuel growth. In fact, some of its more recent products put SolarWinds in good position to benefit from the powerful trend toward cloud computing.
Through the years, SolarWinds has built a suite of powerful software that allows IT professionals to manage key elements of their infrastructure — networks, applications, storage and physical and virtual servers. The company touts its products as the easiest of their kind to use, and in many cases customers simply download the software off the Internet just like you and I would add a program to our PC.
SolarWinds has new products that I think position it very well for continued growth. Among the most important are Virtualization Manager and a related product called Storage Manager. Virtualization is a game-changing trend in IT. It is the path to the cloud because it allows for shared resources, which increases efficiency and saves money.