Shares of monday.com (NASDAQ: MNDY)
are consolidating above key moving averages below a September 2 high of $425.84.
It’s one of several enterprise-focused software applications showing technical strength right now.
Rivals including Atlassian NASDAQ: TEAM and Asana NYSE: ASAN also boast solid price appreciation recently.
Project management software that facilitates collaboration and workflows for business teams is a fast-growing category. Certainly, remote work during the pandemic hasn’t hurt growth, although even before the work-from-home trend began, these services were gaining steam.
According to MarketBeat’s company profile, monday.com “develops and markets a team management platform for organizations and businesses. The company provides an online project management tool for topic-based internal company communication and information sharing. It serves academic institutions, manufacturing companies, and the hospitality industry.”
The company dubs its service offering “Work OS.”
This is a case of a newly public company making advances on robust revenue growth, despite being pre-earnings, a not-uncommon situation. Revenue grew at double- or triple-digit rates in the past six quarters, with increases ranging from 85% to 114%.
The stock went public in June at $155, is up 68.03% in the past three months.
It’s also up 13.99% in the past month, as the stock etches the right side of a base, after successfully testing its 50-day line on October 4, then trending higher along that line since that date.
The company is set to announce third-quarter results on November 10 before the market open. Analysts expect a loss of $1.02 per share on revenue of $74.69 million. That would be a steeper per-share loss than a year ago, but a 75% improvement on the top line.
At this juncture, it’s prudent to wait until after the earnings report to make a purchase.
Atlassian, an Australia-based holding company active in several aspects of team management and collaboration, was trading lower Monday. The stock was digesting gains following a 9.78% gap higher Friday on much better-than-expected fiscal first-quarter 2022 results.
Revenue rose 34% over the year-earlier quarter, to $614 million. Earnings were up 53% to $0.46 per diluted share.
Analysts’ consensus estimates called for earnings of $0.40 per share on revenue of $582 million.
The company’s product portfolio includes the Jira suite of software, Confluence, Trello, Bitbucket, Sourcetree, Bamboo, Opsgenie and Statuspage.
Atlassian rose significantly after the past two earnings reports. Those price jumps offer a tutorial in technical set-ups that often lead to big gains.
In June and July, the stock traded in a tight sideways pattern for five weeks ahead of the fourth-quarter earnings report. This type of tight trade is often a precursor for further price advances. It signals that institutional investors are holding shares and not selling, perhaps in anticipation of a better-than-anticipated earnings report.
More recently, the stock found support along its 10-week moving average prior to Friday’s report. Moving-average support is also a sign that big investors are hanging on to shares and even scooping up a few more.
It’s OK to purchase a stock after a big gap-up, particularly if it pulls back slightly. However, be careful not to keep chasing a stock that is continuing to rise, without pausing to offer a fresh buy opportunity.
Meanwhile, Asana has been getting support above the short-term 10-day moving average, below the stock’s October 25 high of $139.98. Shares were trading just above $135 mid-session Monday.
Asana provides a work management platform as software-as-service that allows individuals and teams to get work done faster while enhancing employee engagement. Employees have transparency into how their work connects to the mission of an organization.
Like monday.com, this is a company with strong revenue growth, but no earnings as yet. It went public at $21 on October 2, 2020.
The company reports its third quarter on December 1, with analysts expecting a loss of $0.38 per share. That would be a wider loss than a year ago.
This stock is currently in a buy range; however, investors should be cautious as the earnings report approaches. It’s not wrong to take some profits, or even sell the entire position, if you have gains and want to be prudent.
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