Marketing Automation Is New High-Tech Buzz: 4 Software Stocks to Buy

By Lee Jackson Published May 21, 10:10AM EDT

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Nothing stays new forever. There is always a new buzzword and technology that accompanies it. Among the newest is marketing automation, which refers to software platforms and technologies designed for marketing departments and organizations to more effectively market on multiple channels online (such as email, social media, websites, and so on) and automate repetitive tasks.

UBS recently met with a marketing automation expert who ranked the companies that excel at this new platform. While the companies with the top grades maybe are not a huge surprise, it is good to buy stock in the leaders in any new and emerging technologies. Given the growth of the Internet and social media, this is going to remain big for a long time.

HubSpot

This company comes in with the highest grade, which is an A. HubSpot Inc. (NYSE: HUBS), not only ranks the highest, it is considered one of just two pure-play vendors left, which could ultimately make it a buyout candidate. HubSpot is a leading inbound marketing and sales platform. More than 14,700 customers in over 90 countries use HubSpot’s award-winning software, services and support to create an inbound experience that is designed to attract, engage and literally delight customers.

The stock had a hot initial public offering last fall that stumbled a touch out of the gate, but it has been on fire pretty much since. The stock also has had a gigantic move lately, as technology investors climb aboard in a big way. So investors may want to wait for a pullback, or just buy partial positions here.

The Thomson/First Call consensus price target for the stock is $47.88. The stock closed above that level Wednesday at $52.18, so again caution in starting positions at this level.

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Adobe Systems

This is a high-profile old-school software company that earns an A grade. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content.

The Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management and cross-channel campaign management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers and chief revenue officers.

The Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development and high-end printing, as well as publishing needs of technical and business and original equipment manufacturers (OEMs) printing businesses.

Adobe is a safer route for investors looking to own a company with a marketing automation product. The consensus price target is set at $86.17. Shares closed on Wednesday at $79.61.

Salesforce

This company posted big numbers this week and traded up nicely afterward. Salesforce.com Inc. (NYSE: CRM) earns a grade of B and has been the target of very loud takeover chatter recently. Everybody from Microsoft to IBM has been mentioned as a potential suitor for the company. While no deal has been announced, many on Wall Street feel that the mergers and acquisition rumors will not go away anytime soon.

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UBS mentioned Salesforce.com as a company that could possibly capitalize on more focus in business-to-business segments, given its installed base falls primarily under that category.

The consensus price target is $76.90. Shares closed Wednesday at $70.16, but they were much higher in early trading Thursday.

Oracle

This is another mega-cap software company for investors to consider, and it comes in with a grade of B-. Oracle Corp. (NYSE: ORCL) stock trades at 15.4 times estimated 2015 earnings, and sports a 7.03 free cash flow yield. Combined sales in Oracle’s cloud software, infrastructure and platform-as-a-service businesses were $527 million in the latest quarter, up about 29% from a year earlier. The company will report fiscal year-end numbers in mid to late June.

Co-Chief Executive Officer Mark Hurd said recently that Oracle plans to make almost all of its services available via the Internet by mid-October, as the database-software company changes its business model to fit a new competitive landscape. Around 65% of Oracle’s products are available on the cloud today, and that will climb to 95% by the time the company holds its annual Oracle OpenWorld conference in October

Oracle investors are paid a 1.4% dividend. The consensus price target is $46.34, and shares closed Wednesday at $44.29.

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While innovation could always make marketing automation insignificant, for the time being it is in its infancy. More conservative growth accounts can always stay with the big-cap tech leaders and still have some chips on the table for the new platform.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.