Stock Trade of the Week: Upland Software (UPLD)

Upland Software (Nasdaq: UPLD) – is an application software company that provides cloud-based work management software to customers. The products include software packages that can help companies with information technology, process excellence, finance, and marketing. Upland is based in Austin, Texas and was founded in 2010.

Upland’s fundamental indicators are incredible. The company has averaged earnings growth of 199% per year over the last three years while sales have increased by 40% per year over the same time period.

In the most recent quarter earnings increased by 111% while sales were up 47%.

Analysts expect earnings to grow by 45% for 2019 as a whole while sales are expected to increase by 43%.

The management efficiency measurements for Upland are just as strong as the earnings and sales growth.

The return on equity is at 39.7% and the profit margin is at 24.5%. Both of these indicators are well above average.

The sentiment toward Upland is mixed with analysts being optimistic and short sellers being pessimistic.

There are only eight analysts covering the stock at this time and all eight rate the stock as a “buy”. I would be more concerned if there were more analysts following the stock and it had a 100% buy percentage. On the other hand, the short interest ratio is currently at 9.9 and that is considerably higher than the average stock.

Looking at the weekly chart we see that the stock has been trending higher within a trend channel. The upper rail connects the highs from the last few years and the lower rail just got tested for a second time. In both instances where the stock tested the lower rail, it was also in close proximity to the 104-week moving average.

Upland is scheduled to report earnings in mid-November, but the company website doesn’t list the exact date just yet. Investors will want to be aware of the impending earnings.

Suggested strategy: Buy UPLD with a maximum entry price of $42.00. I would set a target of at least $56.00 over the next 9 to 12 months. I would suggest a stop loss at the $33.00 level.

— Rick Pendergraft

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