Sunday, February 12, 2017

Aspen Technology Weathering The Storm, But New Opportunities Should Be Pursued

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.

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Aspen Technology Weathering The Storm, But New Opportunities Should Be Pursued

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