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Technology Small-Caps: Safe growth through cutting costs

Posted November 15, 2007

“Its that kind of market penetration domination that creates safe winners in the technology sector like Concur. Right now, Concur is still cranking away at growing its customer base and has plenty of years of solid growth ahead of it.” — Andrew Mickey

by Andrew Mickey, TodaysFinancialNews.com

Friday, November 16, 2007

Baltimore — (TFN): I initially recommended Concur Technologies (CNQR) to BreakAway Investor members a little over a year ago, when the stock was trading at about $14 per share. Now it’s at $30 and poised for even more growth.

Concur is a software development company that makes programs for the credit card processing industry. As we’ve already seen with Mastercard, credit cards can be an extremely lucrative business. But Concur isn’t out there making loans to overextended consumers. It merely provides the system to process the payments between, buyers, sellers, and banks.

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That’s where Concur has carved out a nice little niche for itself. Concur’s software allows accounting departments to automatically process payments and expenses. Concur’s software links the credit card, to the company’s bank acct, and automatically tracks everything.

Concur technology has cut the cost of completing an expense filing from $29 to $19. And with worse economic times ahead, Concur’s cash-saving technology is going to be in demand.

That’s why we’ve seen Concur’s sales more than double in the past two years. More importantly, business has been so strong; Concur’s operating margins are up 133% in the same time period. That means Concur is getting more than twice as much profit for every dollar of revenue.

And with revenue growth averaging 40% per year, it’s no surprise shares of Concur are up more than 100% since I first recommended it a year ago and has held up extremely well during the recent market downturn.

But here’s the best part about Concur. It’s clearly such a lucrative business, that we’d expect the big boys to step in and just design its own business expense software, right? Not here, Concur is so far ahead, they just went ahead and partnered with Concur.

In fact, Visa, Mastercard, and American Express, all the big players responsible for processing more than $6.6 trillion in annual credit card transactions, have all partnered with Concur. Even payment process behemoth Automatic Data Processing, has partnered up with Concur. Clearly, Concur has got something good going on here. Concur counts 6 of the top 10 Global 100 companies and 30 Fortune 100 businesses as customers. Dell, Texas Instruments, Eaton and JC Penney are already users of Concur’s software.

Its that kind of market penetration domination that creates safe winners in the technology sector like Concur. Right now, Concur is still cranking away at growing its customer base and has plenty of years of solid growth ahead of it.

More importantly, it has some of the most attractive fundamentals in the market and it will hold up just fine during any future market downturn.

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Posted by Andrew Mickey · Filed Under Hot Stock Pick of the Week 

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