AI stocks have been hot for a year because the technology has the ability to revolutionize the economy and enhance productivity. Investors may be overlooking great prospects outside AI. Bill Holdings (NYSE: BILL) produces payment software for small and mid-size enterprises, tapping into a huge market. Investors have dumped DocuSign (NASDAQ: DOCU), a pandemic darling, but it's trading at a great price.
1. Bill Holdings Bill Holdings' stock rose 15-fold to $334 in two years after going public in 2019. The company's triple-digit revenue growth went investors crazy, but it has subsequently stalled and the stock has fallen 80% from its record high.
Bill's program simplifies accounts payable, accounts receivable, and budgeting for small and mid-sized enterprises. Bill.com, its flagship application, lets businesses receive and upload invoices and pay them with a click. It helps manage cash flow and reduce paper.
Last month, Bill.com added strong predicted cash-flow capabilities to its products. They can predict future events using historical accounting data, reducing uncertainty and helping organizations plan. Bill Holdings had 473,500 clients in the fiscal 2024 second quarter (ending Dec. 31). The company has connections with over 7,000 accounting firms, which promote its software to their business clients since organized financial data make accountants' duties easier.
Bill Holdings is on target to earn a record $1.2 billion in fiscal 2024. That would be a 17% year-over-year growth rate, a dramatic drop from their fiscal 2023 sales increase of 65%. The company invested extensively in growth and made large losses since becoming public, but it's now focused on cost management to achieve profitability.
The plan seems to be working. The net loss was $68.2 million in the first two quarters of fiscal 2024, down 61% from the year before. Bill Holdings is seeking to grab a global market of nearly 70 million enterprises, but its moderate growth may continue as it approaches profitability. At its substantially discounted price, this stock may be a good investment for investors who can hold on for a few years.
2. DocuSign After the pandemic, investors ignored DocuSign stock, which is now 80% below its high. The corporation has struggled with revenue growth, but it has also improved profitability.
DocuSign is the leader in e-signature technology, but its Agreement Cloud, with over a dozen applications, helps businesses at all stages of the contract life cycle. Businesses can draft, negotiate, and close contracts online without meeting.
Insight from DocuSign may detect problematic contract conditions and new possibilities using AI. Through AI Labs, the company allows select clients to test new applications and provide feedback to enhance its AI product offering. It will use that data to choose which AI technologies to distribute.
The company's 2024 fiscal year concluded Jan. 31 with record $2.8 billion in revenue. However, revenue growth slowed to 9.8% from 19.4% in fiscal 2023. To maximize profitability, DocuSign has cut growth-focused spending like marketing. The corporation earned $73.9 million in fiscal 2024, its first annual profit.
Even better, DocuSign's adjusted net income rose 48.7% to $622.9 million, excluding one-time and noncash items like stock-based compensation. The stock's P/E is 20.1, based on $2.98 in adjusted earnings per share. DocuSign is 33% cheaper than the Nasdaq-100 index, making it cheaper than the tech sector.
Knowing the corporation is pursuing a $50 billion technological market makes shares more appealing. It's unlikely that DocuSign stock will reach $310, but it has room to grow from here.
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