Cash Machine Trading Cheap – Atlassian Stock Set to Run?
We think Atlassian (TEAM) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
The stock is available at a significant discount to its 3-month, 1-year, and 2-year highs.
TEAM Has Strong Fundamentals
- Cash Yield: Atlassian offers an impressive cash flow yield of 8.1%.
- Growing: Revenue growth of 20.1% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: TEAM stock is currently trading at 57% below its 3-month high, 74% below its 1-year high, and 82% below its 2-year high.
Below is a quick comparison of TEAM fundamentals with S&P medians.
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| TEAM | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Technology Hardware, Storage & Peripherals | – |
| Free Cash Flow Yield | 8.1% | 4.3% |
| Revenue Growth LTM | 20.1% | 6.8% |
| Operating Margin LTM | -3.2% | 18.6% |
| PS Ratio | 2.7 | 3.3 |
| PE Ratio | -83.3 | 24.3 |
| Discount vs 3-Month High | -56.9% | -9.1% |
| Discount vs 1-Year High | -74.0% | -11.4% |
| Discount vs 2-Year High | -81.5% | -13.8% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While TEAM stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Team’s stock took a hit across every major selloff. It dropped about 30% in the 2018 correction, roughly 22% during the Covid crash, and a sharp 75% plunge in the inflation shock. Even solid companies can face steep declines when the market turns. Good fundamentals don’t always shield you from big selloffs. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read TEAM Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell TEAM Stock.
Other Stocks Like TEAM
Not ready to act on TEAM? You could consider these alternatives:
These stocks have positive revenue growth, high free cash flow yield, and are trading at a meaningful discount to 3M, 1Y, and 2Y highs.
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 25.7% and 57.9%, respectively, with a win rate (percentage of picks returning positive) of above 70%.
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