The New Era of Observability Will Push this Stock Higher

Whenever the world shifts into a new “era,” an enormous opportunity emerges wherein investors can turn this shift into big money.

Over the past few years, we’ve shifted into a new era of electric transportation — and amid this shift, Tesla (NASDAQ:TSLA) stock has soared several hundred percent.

We’ve also shifted into a new era of cloud computing and a new era of digital advertising. Amid those shifts, Salesforce.com stock has soared several hundred percent. So have Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOGL), Snapchat (NYSE:SNAP), and Pinterest (NYSE:PINS) stocks.

The pattern is crystal clear.

Whenever the world shifts into a new era, the companies pioneering this shift score early investors huge returns.

Right now, the software world is making one of these enormous shifts.

It’s a shift into a new era of what software insiders call “observability” — wherein developers are increasingly using advanced analytics and AI to dynamically “observe,” measure, and improve the performance of their company’s full software stack.

Observability is essentially just using data and AI to make software work better. No bugs in apps. No lags when checking emails. No errors when refreshing a web page. Just seamless connection to always usable software.

Hardly anyone is talking about this shift today. For many of you, I’m sure it’s the first time you’ve heard the term “software observability.”

But… make no mistake… this shift is going to be enormous.

Technology is taking over the world. Nearly every company is going to become a software company at some point. And, therefore, nearly every company is going to pivot into this new era of software observability — meaning this pivot will encompass millions of companies across the globe, and impact how hundreds of billions of dollars in IT budgets are spent.

The fact that no one is talking about this enormous pivot today is your million-dollar opportunity.

Today, we will show you how to play this “sleeper” megatrend, by buying the emerging Tesla, Salesforce or Facebook of the software observability space.

A Hyperscalable Market Leader That is Enabling a New Era of Better, Faster Software Apps

When it comes to the software observability market, a small, $3.4 billion enterprise software company by the name of New Relic (NYSE:NEWR) is the champion of the space — and a winning investment over the next 5 to 10 years.

New Relic sells an all-in-one, centralized observability platform dubbed New Relic One to any company that runs software apps.

This platform’s job is to tie together all the operational data produced by every app and server in a company’s full software stack (so things like app usage and error-reporting data), dynamically monitor and track all that data in one place, and leverage AI to identify, predict, and fix oddities or “bugs” in that data.

In essence, New Relic One is a one-stop-shop for all your observability needs. Throw New Relic One into your IT stack, and bamyour company’s software apps will work far better.

Fewer bugs. Fewer crashes. Faster connections.

Sounds pretty dreamy, right?

That’s why New Relic has turned into one of the fastest growing enterprise software companies in the market.

As observability has become increasingly ubiquitous across business development operations over the past few years, New Relic has grown revenues at a 40% annualized pace since 2015.

More importantly, this hypergrowth trajectory is sustainable — for two big reasons.

One, New Relic only has 16,300 paid customer accounts today, in a world of millions of software businesses. The runway for further customer growth here is obviously enormous.

That runway also has tremendous visibility because observability platforms generate competitive advantages through better-performing software — meaning that if your competitor adopts an observability platform like New Relic One, you’re probably not too far behind from doing the same.

Two, New Relic is the best in business when it comes to the “tough stuff” in observability… namely, AI-powered prediction.

Verified reviews across the internet rave about New Relic One’s advanced analytical and AI capabilities, with many current customers concluding that New Relic is unrivaled in terms of analytical prowess in observability. That’s why New Relic has been named a leader in Gartner’s Magic Quadrant in observability for eight straight years.

Thus, as best-in-breed player in an emerging observability market with a long growth runway ahead, New Relic is optimally positioned to sustain enormous revenue growth over the next decade.

More than that, New Relic operates on a 100% SaaS business model — meaning the company’s business is hyperscalable. Gross margins run north of 80%, and management believes operating margins can run to 25% at scale, versus 4% today.

That’s enormous profit margin expansion potential… and it’ll come on top of huge revenue growth… a winning combination which implies a doubly enormous profit growth ramp over the next few years.

As go profits, so go stocks…

With that in mind, I say go ahead and put New Relic stock on your buy radar today.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

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Article printed from InvestorPlace Media, https://investorplace.com/2020/11/the-new-era-of-observability-will-push-this-stock-higher/.

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