The economy is a little stronger than most investors expected while inflation (or at least the headline year-over-year Consumer Price Index) is slowing faster, cutting the foundation of the stagflation bears. PagerDuty (PD) is attractive here as a Software-As-A-Service (SAAS) play, advises Michael Murphy, editor of New World Investor.
First-time jobless claims just unexpectedly dropped to 239,000 from 264,000 the week before. Meanwhile, the Commerce Department’s third estimate of March-quarter GDP rose to 2%, higher than the expected 1.4% estimate. GDP still decelerated from the September quarter’s 3.2% growth and the December quarter’s 2.6%. And I still think we are headed to a short, shallow recession.
But the S&P 500 was recently up 14.5% year-to-date. The Nasdaq Composite was up around 30% for the first half of the year. And the small-cap Russell 2000 was up 6.8%.
The fractal dimension also eased back into an uptrend. I still expect it to last into June quarter earnings reports, but then we’ll probably take a breather.
As for PD, Forrester Research named PagerDuty a leader in its “The Forrester Wave: Process-Centric AI For IT Operations (AIOps), Q2 2023” report. PagerDuty AIOps receives and normalizes events from any source, and extracts signal from the noise to provide powerful context and noise reduction at scale. It is just one part of the PagerDuty Operations Cloud, an AI-powered platform to help enterprise companies operate.
PagerDuty received the highest score possible on many criteria. Forrester said: “PagerDuty goes beyond alerting to automate processes and workflows that accelerate resolutions…Normalizing event data and enriching it with remediation-specific data powers automation workflows throughout the PagerDuty platform.
PagerDuty mobilizes teams during an incident by automatically adding chat-driven operations (ChatOps) channels, setting up conference bridges, and sending status updates…Reference customers praised PagerDuty’s event noise reduction with one calling its Event Intelligence ‘very powerful.’ PagerDuty is a good fit for enterprises with diverse technologies that will remain in place or must integrate into a common platform that can drive automation and eliminate low-value work.”
I believe PD is a “Buy” up to $30 for a 2- to 5-year hold as their digital operations management Software-As-A-Service gains market share.
Recommended Action: Buy PD.