I read an article in the New York Times this morning that had a passing mention of Autodesk (NASDAQ:ADSK). It was an interesting piece and after researching the company, Autodesk also looks compelling on a valuation basis.
Autodesk – “Autodesk, Inc. provides design software and service solutions to customers in architecture, engineering, and construction; manufacturing; and digital media and entertainment industries. It operates in four segments: Platform Solutions and Emerging Business (PSEB); Architecture, Engineering, and Construction (AEC); Manufacturing (MFG); and Media and Entertainment ((M&E))”. (Business description from Yahoo Finance).
8 reasons Autodesk is a strong buy at under $30 a share:
- It has fallen over 22% this year and could move higher once tax loss selling abates.
- It has a robust balance sheet with almost $6 a share in net cash on the books.
- ADSK is selling in the bottom third of its five-year valuation range based on P/S, P/CF and P/B.
- Autodesk could benefit greatly by the buzz generated by the acceleration of 3D printing in 2012 due to it being the premier design software company in the world.
- Even with the slow domestic economic growth, Autodesk is expected to grow revenue in double digits for both FY2011 and FY2012.
- The company has beat earnings estimates 11 of the last 12 quarters. Earnings estimates for FY2011 and FY2012 have risen in the last 60 days.
- Autodesk is selling some 30% under consensus analysts’ price targets of $39. S&P has a $40 price target on ADSK.
- Earnings are on an upward path. ADSK earned $1.32 a share in FY2010, is expected to make $1.72 for FY2011 and projected to produce $2.04 per share in earnings in FY2012.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ADSK over the next 72 hours.