For a business that is enormously dependent upon the energy, chemical, and engineering and construction (or E&C) sectors, Aspen Technology (NASDAQ:AZPN) is holding up quite well. Credit that, I think, to the company's management team and the strong suite of value-adding software products that help process industry managers optimize their processes and enhance productivity.
Valuation is still a serious issue for me with this stock. I fully acknowledge that high-quality companies, can, do, and should
trade at premium valuations, but that still leaves little room for
mistake. That said, I believe Aspen would be an attractive asset to a
number of companies in the process automation space, and I believe that
should keep a floor in for the stock. In terms of what would change my
opinion, I would very much like to see Aspen build upon its established
expertise in hydrocarbon-based process industries and expand into other
process industries like food/beverage, metal/mining, pulp/paper, water,
and so forth. Management has indicated some interest in doing so, and I
believe this could be a meaningful future driver for the company.
Aspen Technology Weathering The Storm, But New Opportunities Should Be Pursued