In the software world the big news is that SAP (SAP) is buying SuccessFactors (SFSF) for $40.00 a share which computes to a 52% premium. SuccessFactors is being purchased at Price/Sales (P/S) of about 8.
Oracle (ORCL) and SAP are the two big software behemoths. For a long time Oracle’s strategy has been to grow through acquisitions. On the other hand, SAP has touted a strategy of organic growth.
Now it appears that SAP is on the hunt for more software acquisitions. Here are five cloud software application stocks that are ripe for a takeover.
Salesforce.com is the leader in customer relationship management software as a service (SaaS). Users can access the application from anywhere as the application runs on the cloud.
Salesforce.com was founded in 1999 by Marc Benioff, Frank Dominiguz, Dave Moellenhoff and Parker Harris.
The stock of the company is trading at P/S of 7.78.
Taleo Corp. (TLEO)
Taleo provides talent management solutions via SaaS.
The company traces its origins to a Canadian company Viasite founded by Martin Ouellet in 1996.
The stock of the company is trading at P/S at 4.59.
Concur Technologies, Inc (CNQR)
Concur Technologies provides software to automate management of employee spending.
Concur is run by Steve Singh and Rajeev Singh.
The stock of the company is trading at P/S at 7.26.
Ariba Inc (ARBA)
Ariba was one of the first business to business eCommerce companies. The company has now transformed itself as a provider of solutions for procurement processes.
The company was founded in 1996 by Bobby Lent, Boris Putanec, Ed Kinsey and others.
The stock of the company is trading at P/S at 6.27.
NetSuite Inc. (N)
NetSuite provides cloud based Enterprise Resource Planning (ERP) software to mid markets.
NetSuite was originally founded as NetLedger by Evan Goldberg and Larry Ellison, the CEO of Oracle.
The stock of the company is trading at P/S at 13.04.
With the exception of P/S the rest of the traditional fundamental data such as P/E and book value is meaningless for this category of companies. Typically these companies are acquired for strategic reasons and not for financial engineering reasons.
I am not recommending buying these stocks right away, but suggesting that they be followed and bought when the criteria of a proven system for making money from technology stocks such as the ZYX Change Method is met.
Disclosure: I am long ORCL.
Additional disclosure: I am long ORCL and have recently taken profits on SAP. Subscribers to ZYX Buy Change Alert may also be long on ORCL and may have recently taken profits on SAP. The buy signal may be given on any of the stocks mentioned in the very near future.