Topic: How To Invest

Q: Pat, hi. Is Smartsheet Inc. a stock worth having? Thanks.

Article Excerpt

A: Smartsheet Inc., $44.60, symbol SMAR on New York (Shares outstanding: 87.4 million; Market cap: $5.0 billion; www.smartsheet.com), provides cloud-based software for teams and organizations to plan, capture, manage, automate, and report on their work. Smartsheet first sold shares to the public in April 2018 at $15 a share. The company operates in a competitive market and continues to lose money; it will likely report a loss of $0.55 a share in 2020. Still, Smartsheet spends a very high 35% of its sales on research. That’s a major hidden asset for the company. Firms have to treat this spending as a day-to-day expense, much like maintenance or tax payments. So, research spending comes out of the current year’s sales, and it lowers the current year’s earnings. But when you do it right, research and development spending pays dramatic long-term dividends. Employers increasingly place demands on their workers to manage a widening array of IT resources, process data and complete more projects. As a result,…

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