Cloud Companies to Buy: NetSuite (N)
NetSuite (N) is one of the pioneers among cloud companies (it was founded in the late 1990s). Then again, the company has needed lots of time to build mission-critical software for ERP (enterprise resource planning) requirements. While there is competition — such as Workday (WDAY) — it is still fairly limited. And this will likely remain the case because of complexities of the market.
No doubt, N stock has benefited from the company’s ability to post solid growth on a consistent basis. For example, the company has generated 30% revenue growth on a year-over-year basis for the past seven consecutive quarters. It certainly helps that the company has a full-blown suite of applications and also allows for lots of customization, which is critical for enterprises.
And the valuation of N stock is reasonable right now. NetSuite is currently trading at 12 times sales while WDAY’s multiple is still at a nose-bleed 26.