We recently published a list of Jim Cramer’s Latest Calls: Top 10 Stocks. Since Bentley Systems Inc (NASDAQ:BSY) ranks 10th on the list, it deserves a deeper look.
Jim Cramer in a latest program said that if companies would “own up” to the changing circumstances, things would be “so much easier” for them as well as investors.
“There is so much information and misinformation flying around at this point in the earnings season that it’s very easy to be led astray,” Cramer said.
Cramer thinks companies are “leaving out” important information which can cause investors to make “faulty decisions.”
As an example, Cramer talked about how food and beverage companies are not talking about the impact of weight loss drugs on their financials
Cramer said that GLP-1 drugs are extremely “powerful” and they cause a decline in cravings for snacks and liquor. This, according to Cramer, directly affects beverage and snack companies. However, Cramer said these companies are intentionally not mentioning the impact of these drugs.
“I wonder how long they can maintain this fiction, it’ll be better if they just own that it’s a problem rather than just ignoring it.”
Cramer was also furious that consumer companies are not admitting that high prices are impacting their financials. He said hotels and entertainment companies raised prices in the past but now they are not willing to bring them down despite facing pricing headwinds.
Cramer also called the claims that huge AI investments are not bringing any solid results for companies “absurd.”
We watched several latest programs of Jim Cramer on CNBC and picked 10 important stocks he’s talking about. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Bentley Systems Inc (NASDAQ:BSY)
Number of Hedge Fund Investors: 17
Jim Cramer is staying away from BSY because of the broader headwinds in the enterprise software industry.
When asked about the company in a latest program, here is what he said:
“This is enterprise software and you know there is more money being lost in enterprise software in 2024 than in any other sector so I can’t play I’m sorry.”
Bentley Systems Inc (NASDAQ:BSY) makes software solutions for infrastructure projects, civil engineering, architecture, and construction. The company has strong strong secular growth catalysts. As companies look to cut costs, the demand for Bentley’s software systems is increasing. The global engineering software market was valued at $33 billion in 2022 and is projected to reach nearly $131 billion by 2030, reflecting a robust 18.8% CAGR.
Bentley Systems Inc (NASDAQ:BSY) second quarter was strong. It had $51.3 million in cash and equivalents and $1.34 billion in long-term debt. Over the past twelve months, free cash flow totaled $407 million, with capital expenditures at $20.4 million.
Despite this, the stock’s valuation has been a concern for investors. It’s trading at a forward P/E of about 45 compared with the industry median of 23. The stock has a forward EV/Sales multiple of approximately 12.1x, with an estimated next twelve months (NTM) revenue growth rate of 11.2%. This contrasts with the median implied annual recurring revenue (ARR) growth rate of about 18% from the Meritech SaaS Index. As of June 21, 2024, the median forward EV/Revenue multiple for publicly held SaaS application software companies, according to the Meritech Capital Index, was around 5.4x. This means the stock is currently overvalued based on its growth projections.
Artisan Small Cap Fund stated the following regarding Bentley Systems, Incorporated (NASDAQ:BSY) in its Q2 2024 investor letter:
“We ended our investment campaigns in Bentley Systems, Incorporated (NASDAQ:BSY) and Etsy during the quarter. Bentley Systems is the leading provider of engineering software used to design roads, bridges, tunnels, rail systems and other public works. Construction is one of the economy’s least digitized verticals, and our thesis was based on the view that there are significant opportunities for software to increase productivity within civil engineering projects. We also viewed the company as well positioned to support the infrastructure spending encouraged by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. After a successful multiyear investment campaign, we decided to exit the position due to the market cap outgrowing our small-cap mandate.”
Overall, Bentley Systems Inc (NASDAQ:BSY) ranks 10th on Insider Monkey’s list titled Jim Cramer’s Latest Calls: Top 10 Stocks. While we acknowledge the potential of Bentley Systems Inc (NASDAQ:BSY), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BSY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.