Summary: ON SALE
Score: 14/20
MOS: 97%
Share Price: $60
Sticker Price: $2,125
Is SSNC a good buy?
SSNC is a FinTech (Financial Tech) company headquartered in Windsor, CT that creates SaaS (Software as a Service) products for the financial services industry. The company has over 22,000 employees and has offices in the Americas, Europe, Asia, Africa and Australia.
SSNC owns companies including Advent Software, Varden Technologies, Eze Software, and Primatics Financial. SS&C specializes in specific fintech markets, such as fund administration, wealth management accounting, and insurance, and pension funds.
This is a winner. Let’s break out the checklist…
- SaaS – Check
- Enterprise – Check
- FinTech – Check
- Boring Business – Check
- Acquire other businesses for growth – Check
We’re checking all the right boxes on this business. Let’s break each down.
1. SaaS is a recurring revenue model. It’s considered to be the most attractive business model because of revenue and growth predictability.
2. Enterprise. I’ve explained this in the past but enterprise means they serve BIG BUSINESS. Typically big businesses sign contracts that last 3 – 10 years and the annual revenue from just one enterprise customer can be hundreds of thousands of dollars on up to millions of dollars per year.
3. FinTech. A recent article from Toptal says the FinTech industry was worth $127B in 2018 with an annual growth rate of 25%. This shows how in demand this industry is. In other words, if you’re going to start a business, start a FinTech business.
4. Boring Business. I love this check. This gives a nod to the entrepreneurs of the 1850’s. Don’t be a gold miner, be a business that sells tools (pickaxe’s, shovels, and jeans) to gold miners. Yes, it’s boring but boring businesses make money.
5. Acquire other businesses for growth. If a competitive business is growing quickly, no need to worry. We’ll just buy that business. Holding companies can be great investments, especially if the businesses they own are growing.
Now let’s dive into the financials…
The score is 14/20 which means the financials are strong. This is a safe investment. It also has a share price of $60 and a sticker price of $2,125, which means there is a lot of upside potential.
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