Notice the divergence. Workday may have outperformed since its IPO, but over the past year it's down almost 15% despite growing revenue 68% and more than doubling cash flow from operations. All signs point to Workday earning more from its existing clients while still capturing new ones.
History also has me interested. Co-founder and Chairman Dave Duffield helped turn PeopleSoft into enough of a competitor to Oracle that CEO Larry Ellison paid $10.3 billion to acquire it.
Today, over a decade after starting Workday, Duffield still owns 35.08% of the company's shares outstanding, according to S&P Capital IQ . If common shareholders win, he does, too -- a historically powerful combination that I expect to pay off here, too.
Andrew Tonner (Apple): Although this pick should put me in the running for "least creative stock pick ever," the recent pullback in Apple's shares creates an attractive entry point for long-term investors.
Perhaps the seemingly constant refrain on investing in Apple occasionally grows tired, but the investment community's fixation on the world's largest publicly traded company remains merit-based. Apple currently trades at 13.0 times its LTM earnings, versus 18.9 times and 21.5 times for the S&P 500 and Nasdaq, respectively.
Despite this valuation gap, Apple's near-term and long-term growth outlooks appear more compelling than many of its peers. The average of 40 analysts' estimates call for Apple's EPS to increase 32.4% in the current quarter, a data point supported by Apple's again record 13 million iPhone 6s sales in its opening weekend. Apple should also benefit from the gradual ramping of Apple Watch sales, and the iPad Pro should help buoy its struggling tablet business.
Looking further into the future, our gradual understanding of long-tailed new product initiatives like Project Titan point to a market opportunity with the potential to double Apple's revenue base. So to summarize, Apple offers investors more growth at a lower valuation in the short term with ample big-picture catalysts to support sustainable long-term growth. Throw in likely gains from ongoing dividend increases and stock buybacks, and hopefully you see why Apple looks like a great buy today.
Cable Confusion by Eric, on Flickr .
Anders Bylund (Internap): I love to pounce on short-lived discounts. They are created when fundamentally solid companies make a fairly minor adjustment, only to send investors running for the exits in a wild panic.
That's what happened to Internap at the end of September. The Internet infrastructure operator lowered its full-year revenue guidance by 3.4%, slashed EBITDA profit guidance by 8.3%, and reduced its full-year earnings targets by 13.3%. The market responded with a full-scale rout, pulling Internap shares more than 18% lower the next day and down by 27% in September as a whole.
That's an overreaction any way you slice it. Internap's shares are priced for absolute disaster today. Now, I'll admit that it isn't the strongest business on the planet -- Internap investors are currently looking back at negative earnings and cash flows over the last four quarters and the company carries a crushing $373 million total debt load. But sales have trended strongly upward in recent years, and there's no doubt in my mind that core networking operators like Internap have a solid place in the modern business world for decades to come.
And the clincher, of course, is that Internap's sudden share price plunge was based on a decidedly short-term issue. The company is rolling out a new traffic routing platform at the moment, and it'll take a quarter or two longer than expected before that investment starts paying dividends.
Management expects to start reporting positive free cash flows very soon, and then the routing upgrades should start bringing new clients to Internap's data center doorsteps. That's all. A slight delay, no canceled orders or plunging market interest.
So the third and fourth quarters of 2015 will be slightly soft. But Internap's long-term business value looks solid, and investors just aren't paying attention right now.
There's your buy-in window -- right here, right now. The company is certainly worth a curious and greedy look before Mr. Market comes to his senses again.
Touchscreens are surprisingly complicated structures. Image source: Synaptics.
Tim Brugger (Synaptics):[Editor's note: Tim wrote this portion of this roundtable article before SYNA's jump on Sept. 30. He has added some post-pop perspective at the end of his write-up.] For long-term growth investors willing and able to ride out the inevitable ups-and-downs of a mid-cap stock, Synaptics offers one of the best values around. Since announcing fiscal 2015 annual and Q4 earnings on July 30, Synaptics shareholders have endured a more than 20% drop in share price from pre-earnings levels. Based solely on that, you'd think Synaptics' Q4 was a complete failure. Nothing could be further from the truth.
Last quarter's record-breaking $479 million in revenue was an impressive 52% jump year-over-year, and it gets better. On an annual basis, Synaptics had its best year ever: reporting an 80% jump in sales to $1.7 billion. Better still, according to Synaptics CFO Wajid Ali, investors can expect the stellar growth to continue heading into fiscal 2016. Ali forecast between $450 million and $490 million in revenue this quarter, equal to an improvement between 59% and 73%, respectively.
Earnings per share (EPS) also increased in both Q4 and annually, despite ratcheting up research and development (R&D) costs for new technologies like its recently unveiled "SideTouch" solution used by Xiaomi, one of China's fastest-growing smartphone manufacturers, for its new Mi4c device.
Despite incredibly strong financials, a product suite consisting of touchscreen, display, and fingerprint ID solutions -- all exploding markets in our mobile world -- and a stunningly low forward price-to-earnings ratio (P/E) of only 8.5, Synaptics is currently trading more than 40% below analysts' consensus price target of $94.82. No doubt about it, Synaptics warrants a spot on the list of five top tech stocks to buy in October.
Post-pop perspective: Some investors may assume that Synaptics no longer represents the same long-term growth opportunity after reports that it had received, and promptly rejected, an acquisition offer of $110 a share resulted in a $15-a-share price spike.
However, even at $79 a share as of this writing Friday morning, the offer from a group of China-based investors simply confirms what was apparent following the company's strong fiscal Q4: Synaptics' incredibly strong revenue growth, and expectations for more, warrant a good, long look. A price target of nearly $95 a share, industry insiders offering what was a 70% premium to acquire it, and still trading at a mere 10 times forward earnings all point to one thing: Synaptics remains a solid, long-term opportunity.
Image source: LinkedIn.
Andres Cardenal (LinkedIn): LinkedIn stock is down by more than 30% from its highs of the last year, and this looks like a buying opportunity for investors looking to invest in a disruptive growth business with massive long-term potential at a discounted entry price.
LinkedIn is the undisputed leader in online professional contacts and job opportunities, and the company has almost no relevant competition in its core business. The platform has nearly 380 million members and 37,425 companies using its services as of the end of the second quarter, and this huge scale provides a crucial source of competitive advantage in the business.
LinkedIn makes most of its revenue from talent solutions, meaning companies that pay LinkedIn to view and contact potential job candidates. This business produced 62% of total revenue during the second quarter, with sales growing by a strong 38% year over year.
Revenue from premium services grew 22%, accounting for 18% of total sales, while online advertising revenue grew 32% and represented 20% of sales.
LinkedIn's different segments are producing rapid revenue growth, and the company should be able to deliver increasing profitability over the years as the business matures and reinvestment needs decline in comparison to sales. Powerful sales growth in combination with rising profit margins bode well for investors in LinkedIn over the years to come.
The next billion-dollar iSecret
The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .
The article 5 Top Tech Stocks to Buy in October originally appeared on Fool.com.
Anders Bylund has no position in any stocks mentioned. Andrés Cardenal owns shares of Apple and LinkedIn. Andrew Tonner owns shares of Apple. Tim Beyers owns shares of Apple. Tim Brugger has no position in any stocks mentioned.The Motley Fool owns and recommends Apple and LinkedIn. The Motley Fool owns shares of Oracle. Try any of our Foolish newsletter services free for 30 days .We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
