Salesforce, Inc. (NYSE: CRM) is the acknowledged leader in customer relationship management software (CRM). But if you’ve ever implemented or used the Salesforce software, you know it is not for every business. Small and medium-sized businesses have become the target of more user-friendly CRM companies.
Mindbody (NASDAQ: MB) is a niche CRM company operating in the health and wellness space. By focusing on a specific industry with specific needs, MB has grown rapidly. The stock is up almost 50% in the past year, and is expected to grow earnings 150% next year.
The recent acquisition of Booker, with software specific to salon and spa needs, is going well and adding to revenue. Growing both organically and through acquisition, Mindbody is attempting to lock-up various components of the health and wellness market. With a growing consumer focus on health and wellness MB should continue to ride the coattails of a very strong market segment.
Staying in the healthcare area, but with a focus on medical and dental practices, is Quality Systems, Inc. (NASDAQ: QSII). The company’s NextGen Healthcare solutions integrate the vital record and tracking systems used by healthcare professionals, providing a clear picture of patient needs.
Quality Systems’ stock has been a telling indicator of how the company is executing. QSII has risen over 60% this year as the company is expanding. While profit margins have been pinched by the rapid expansion, gross margins at the healthcare IT company are a juicy 54%. By specifically targeting small healthcare providers, and providing an all inclusive solution to managing complicated EHR (electronic healthcare records), QSII is carving out a very profitable niche in the CRM market.
Finally, let’s take a look at an Israeli based company that provides CRM and technology solutions, Formula Systems, Ltd. (NASDAQ: FORTY). The company has been performing at a very high level. As CEO Guy Bernstein, stated after recent Q2 earnings, the company had “…significant growth in all major financial indices across our entire portfolio.”
The stock has pulled back this year, but at current levels appears to be a value play. Trading at just over $38, the company has a book value of $24.40, with over $17 of cash per share.
The company is well positioned to fund additional expansion, and management, owning over 68% of the company, is highly incentivized. Volume in the ADRs is low, so limit orders should be employed by investors adding FORTY to their portfolio.
If you’re looking for a small-cap CRM play to bolster your portfolio consider Mindbody, Quality Systems, or Formula Systems. These three stocks are taking market share and can add value not only to their customers, but to your portfolio as well.
Disclaimer: The author and Spotlight Growth has no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Steven Adams