Jim Cramer - Mad MoneyHubSpotHUBSDON'T BUYJul 22, 2024

Is up lately, because software stocks are recovering after taking the biggest losses ever in Q1 this year. HUBS is up 17% today though -35% this year. They're embracing AI and introducing it to their clients. They recently beat and raised revenues and earnings, but fell 20% because they announced they will change the pricing of their services to include AI. Insiders bought $2.5 million of stock. Now, the entire software sector is rallying. If you've got companies now that will replace humans with digital workers, then that software will be worth a lot more--that's the opportunity.

(Analysts’ price target is $274.00)

It is similar in its business model to Salesforce which caters to large companies and has moved away from small and mid cap companies. This has created an opportunity for Hubspot since its system is similar to Salesforce. There is an 18% expected growth rate in revenue and earnings this year. Trades at 21 times expected earnings, the same as Microsoft and the S&P 500. As to software companies in general, their clients prefer commercial versions, even at higher prices, as opposed to create your own software. Commercial versions stay up-to-date, innovate and keep things secure.        Buy 32  Hold 4  Sell 0

Is -42% this year. Earnings growth expected at 20% this year. Trades at only 20x PE. It reports next Wednesday. Wait for that. Buy on a sell-off.

A junior Salesforce that's turned a profit since 2017. Earnings growth was 38% in 2021 and 53% in 2022 and projected to be 74% in 2023. Revenue growth is actually decelerating to 20% this year. Shares are still soaring.

Fractional shares to buy instead of playing the short squeeze of GameStop, AMC, etc. It's growing fast. Cloud-based marketing software can target internet users to products you didn't realize you wanted to buy. He prefers Twilio, though.

Comparing this to Salesforce.Com (CRM-N). Both of these companies are attractive because their business (electronic customer relationship management) brings large, recurring revenue. However, he struggles with the valuation of both companies. They are too rich for his clients. In the context of concerns that tech’s valuation might be too far extended, he thinks it would be wise to step back from this one. At this time, if he was buying a tech stock, he would prefer one that showed more potential for structural growth. He gave IBM as an example of a tech company that is currently “on sale”.