Motley Fool’s 5 High Growth Stock Picks

4. Tyler Technologies, Inc. (NYSE:TYL)

3-year Revenue Growth: 65.6%

Tyler Technologies, Inc. (NYSE:TYL) is a Texas-based provider of integrated information management solutions and services for the public sector. Motley Fool Asset Management held 24,800 shares of Tyler Technologies, Inc. (NYSE:TYL) in the fourth quarter of 2022, worth approximately $8 million. It is one of the high growth stock picks of Motley Fool. On March 1, Tyler Technologies, Inc. (NYSE:TYL) announced that it has acquired Safeground Analytics, a company specializing in real estate appraisals and assessments for states, counties, and municipalities.

On February 17, Tyler Technologies, Inc. (NYSE:TYL) had its price target reduced by Credit Suisse from $375 to $370 and the firm’s rating on the shares remains Neutral. The company’s financial results were lower than expected, primarily due to the increased adoption of Software as a Service, leading to a significant decrease in revenue from software licenses, and the continued growth of subscriptions, as per Credit Suisse. 

According to Insider Monkey’s data, 40 hedge funds were bullish on Tyler Technologies, Inc. (NYSE:TYL) at the end of December 2022, compared to 41 funds in the prior quarter. Greg Poole’s Echo Street Capital Management is the largest stakeholder of the company, with 543,880 shares worth $175.3 million. 

Andvari Associates made the following comment about Tyler Technologies, Inc. (NYSE:TYL) in its Q4 2022 investor letter:

“Tyler Technologies, Inc. (NYSE:TYL) is the only public company focused on software for state and local governments in North America. Since 1998, Tyler has acquired over 40 software companies. Annual revenues have grown from $50 million in 1998 to now over $1.8 billion while cash flows and profits have grown at a faster rate.

Tyler has few competitors that can match its offerings and service levels. Large, potential competitors stay away from Tyler’s market because the sales cycle is measured in years and products require too much customization. Once Tyler wins a client, they usually stick around for decades. Client retention for Tyler is nearly 100%, which gives them highly predictable revenues. Also, Tyler management has a record of effective capital allocation. Finally, Tyler has the wind at its back as local governments continually upgrade decades-old systems. Tyler will steadily increase its market from the low-teens into the 20s and 30s over the next decade.”