Morgan Stanley analyst Keith Weiss listed 4 Software-as-a-Service (SaaS) stocks that screen best in the environment of rising interest rates and high macro uncertainty.
Investors are increasingly more focused on margins, says Weiss, as the high-growth sector of the stock market continues to suffer in the rising rates environment.
Based on the margins, valuable recurring bases, and generally positive fundamentals, Weiss sees Salesforce (NYSE:CRM), Instructure (NYSE:INST), Workday (NASDAQ:WDAY), and Zoom Video Communications (NASDAQ:ZM) as “best positioned” as each of the four stocks ranked in a top 10 positions based on these criteria.
“The analysis reinforces our conviction in companies like INST, ZM, CRM, and WDAY where ~65, ~52%, ~44%, and ~40%, of their total enterprise value, respectively, can be explained by their installed base, meaningfully underpricing the growth potential of each company moving forward,” Weiss said in a client note.
By Senad Karaahmetovic