Technology Sector Ideas

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>>> ServiceNow (NOW) -



http://money.msn.com/top-stocks/8-tech-stocks-worth-a-look



Headquarters: Santa Clara, Calif.
Price: $55.97
Market capitalization: $8.0 billion
52-week range: $35.90 - $71.80
Annual sales: $477.8 million
Estimated earnings growth: Not meaningful (company is losing money)

What Workday (WDAY) does for human-resources management, ServiceNow (NOW) does for the information-technology department. Baird & Co. analyst Ashley thinks the company's software is game-changing. It's able to consolidate fragmented and redundant systems and allow for better tracking of performance and prioritization of work. Better yet, it can do all that at a lower cost than traditional IT software.

As with Workday, ServiceNow is delivering astounding revenue gains -- analysts estimate 54 percent growth this year -- and the company is expected to deliver its first quarterly profit in the July-September period. Profits have not yet materialized, but analysts believe ServiceNow will break into the black next year. After that, profits are expected to grow rapidly. But the stock sells at a pricey 107 times estimated 2016 earnings, so if you buy the stock, be prepared for a wild ride.

As with Workday's stock, ServiceNow shares took a hit in March, when investors got skittish about high valuations for growth stocks. But Ashley thinks ServiceNow will recover to $65 within a year.

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