1 Inexpensive High Growth Canadian Stock to Buy in an Expensive Market
Constellation Software (TSX: CSU) owns many software products which it sells, maintains, supports and improves. The company has at least one software product in each of Constellation Software’s verticals and often develops and supports multiple product lines in a particular vertical market.
In addition, and in addition to software products acquired and developed in-house by the Company, it licenses certain technologies used in Constellation Software’s software products to third parties, generally on a non-exclusive basis. The company’s products are generally designed to help Constellation Software customers automate as many aspects of business processes as possible.
Critical software solutions
While Constellation Software’s strategy is to provide mission-critical software solutions to all of the company’s customers, the specific software products it develops can vary widely across verticals. For example, in the mass transit market, one of the essential aspects of the business mission that it helps automate is the planning and routing of vehicles.
In the private club market, Constellation Software is focused on providing member accounting and point-of-sale solutions. The company’s goal is to continue to focus its efforts on specialized software products for specific vertical markets.
Robust distribution strategy
In addition, Constellation Software uses direct sales forces in most of the company’s major markets as its primary distribution channel. The company believes direct sales teams increase Constellation Software’s visibility and market penetration, encourage long-term customer contact, and make it easier to sell additional products.
The company’s sales and marketing teams work primarily in dedicated sales groups for each of the verticals it currently serves. Constellation Software’s sales and marketing strategy is to provide relevant business expertise directly to target customers using sales representatives with strong industry specific knowledge.
Continuous revenue growth
Part of the company’s continued revenue growth is achieved through the sale of complementary products and services to existing customers. Constellation Software also supports sales efforts with marketing that promotes the company’s products through appearances at major trade shows, advertisements in trade magazines, organizing user group meetings and informative website creation.
In addition, the company’s product development strategy combines innovation and the introduction of new technologies, with a commitment to the long-term support of customers’ current systems. Constellation Software’s research and development activities are focused on the design, development, testing and integration of new complementary products that enhance the features and functionality of the company’s existing software solutions.
Intellectual property license
In addition, Constellation Software also offers streamlined upgrade and migration tools for enterprise customers. The company primarily relies on the in-house capabilities of Constellation Software to develop software solutions using industry standard software development tools. However, when this is not strategic for the company’s operations and is more profitable, Constellation Software licenses certain technology components to third-party vendors.
In accordance with industry practice, Constellation Software relies on a combination of contractual provisions and patent, copyright, trademark and trade secret laws to protect the company’s property rights in Constellation Software products. These products could be very valuable when stored for the long term.
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The Motley Fool owns shares and recommends Constellation Software. Foolish contributor Nikhil Kumar has no position on any of the stocks mentioned.