Sailboats, Software, and A $78 Billion Opportunity

Michael Robinson

Tuesday, June 06, 2023

With sailing season upon us, I can't help but think how my passion for the sport dovetails nicely with my love for crushing the stock market.

You see, I moved to the Bay Area in June 1984 for two main reasons:

Firstly, after years of analyzing the tech industry, I wanted to become more involved in the Silicon Valley scene.

And secondly, I wanted to race sailboats on San Francisco Bay, one of most exciting places in the world to set sail.

As a small-boat skipper, I’d occasionally get the chance to slipstream a larger yacht, a term that refers to getting behind a bigger boat and letting its draft pull you along. Sometimes referred to as drafting, this maneuver enables you to increase speed without exuding much more effort.

The thing is, I’m currently seeing a similar situation with a company that's slipstreaming behind Microsoft (MSFT). And it's here that we find today's profit opportunity...

A $78 Billion Market

Long known for selling software for personal and business computers, Microsoft recently pivoted its focus to workflow automation.

Workflow automation is the practice of automating a collection of manual processes and tasks.

To do so, Microsoft's cloud-based software works on a set of pre-defined criteria or conditions. The idea is to tap workflow automation so that organizations save time and money by reducing human input, as well as the risk of employee errors.

For investors, workflow automation is a field worth targeting. According to Acumen Research, the sector will grow 23% a year through the end of the decade. At that point, it'll be valued at nearly $78 billion.

A Failure to Communicate

That level of growth is certainly exciting. But this sector's attractiveness also stems from the fact that it enables us to tap into the modern hybrid-work world. That's because automation software can reduce employee turnover.

One of the most common reasons employees leave a company is a lack of communication with management. And with millions of workers still logging hours remotely, it's easy enough for team members to get signals crossed.

For its part, Microsoft had a compelling reason to join forces with the company I have my eye on – a company that focuses on workflow automation.

Microsoft's global helpdesk team supports more than 170,000 employees and partners in more than 150 countries. The unit works on a massive scale, answering more than 3,000 user requests every day. And seeing to these requests manually would be a huge waste of resources.

Flying Under the Radar

Notably, the company I'm recommending today doesn't make a lot of noise. In other words, it doesn't receive much press attention, partly because it's not working on anything sexy like neural implants, flying cars, or Artificial Intelligence ("AI").

Instead, it offers the automation software I mentioned earlier, along with information technology ("IT") services, to enterprise clients.

IT is a vital field. Thousands of companies are moving much of their data and applications out of internal networks and into the cloud.

That shift is certainly in Microsoft's wheelhouse. The tech giant's move to cloud hosting and related services nearly 10 years ago has been a huge boon to the company and its shareholders.

Sales of Microsoft's Azure product, a cloud-computing platform, have been growing consistently at double digits. It's a major reason why Microsoft now ranks as one of the most valuable companies in the world and boasts a market cap north of $2 trillion.

Meanwhile, Microsoft's partner offers clients an IT environment that unifies everything from operations and asset management to security and risk compliance. Its software also integrates with Teams, Microsoft's popular messaging app.

A Connected Company

This company is certainly connected, as it works with more than 7,700 global-enterprise customers, including around 85% of Fortune 500 firms.

This is a company on the move, too. Over the past four years or so, it's grown its customer base by more than 42%.

Now, as impressive as that sounds, some of you may be thinking that if the economy softens later this year, as many economists expect, IT budgets could get hammered.

But I wouldn't focus on that. As companies reduce their head count, they'll need digital tools to improve productivity so they can get the same amount of work done with fewer people.

The stats are encouraging about this theory. A recent Citibank survey of IT managers found they expect spending in IT services to grow over the next 12 months.

Simply put, companies still expect to spend heavily on this field, no matter what happens with the economy.

630% Growth on the Way?

The company I'm excited about is running circles around Microsoft these days.

Analysts forecast that Microsoft will show profit growth of 1% in its current fiscal year – not bad. By contrast, its IT partner is projected to post earnings growth of a whopping 630%. That's a difference of more than 3,000%!

Bottom line: I believe this IT company is an exciting opportunity for investors like us. The thing is, I'm only revealing the name of this company to my "Pro" readers, so make sure you're one of them.



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Cheers and Good Investing,

Chief Investment Officer
Trend Trader Daily

Tags: it microsoft