Real estate software company AppFolio is Monday's IBD 50 Growth Stocks To Watch pick as it recently announced new artificial intelligence technology for its property management software platform. Now the AI stock is near a buy point out of a flat base.
AppFolio's platform integrates accounting, staffing, marketing and building maintenance management functions. It is used to manage single-family, multifamily, commercial and student housing properties.
On June 18, AppFolio announced its new artificial intelligence software capabilities, named Realm-X. Its Realm-X Assistant can generate reports and initiate and automate tasks for managing vendors, residents and owners. And its new Realm-X Messages is used to communicate with residents.
AppFolio ranks No. 1 out of 37 stocks in the computer software-specialty enterprise group. That sector holds the No. 79 spot out of IBD's 197 industry groups.
Stock Nears A Buy Point
Shares pulled back for a second straight day on Monday. The AI software stock is in a second-stage flat base with a 256.73 buy point, according to MarketSurge pattern recognition. The buy point coincides with its all-time high.
An early entry can also be seen at 243.04. AppFolio reclaimed its 50-day moving average as it gained 5.5% last week. The stock has climbed 40% so far this year, and that follows a 64% gain for 2023.
AI Stock: Triple-Digit Profit Growth Expected
AppFolio topped first-quarter earnings and sales estimates on April 25. Earnings-per-share grew to $1.05 from a one-cent loss in the first quarter of 2023. Quarterly sales growth has averaged 36% over the last three quarters.
The company raised its full-year 2024 revenue outlook above analyst projections to $766 million to $774 million in the earnings release. Meanwhile, free cash flow improved significantly to a $41 million surplus at the end of the first quarter compared with a $0.4 million deficit in the prior year's same quarter.
Second-quarter profit estimates call for a sharp gain of 281%, which then tapers to 67% and 13% in the following two periods. Second-quarter sales growth is forecast to slow to 30% then 19% and 15% in the following two quarters. FactSet full-year per-share earnings projections show a 133% rise for 2024, then a 30% increase in 2025.
Mutual funds have been adding shares of the AI stock, with 549 funds owning it in March, up from 511 in December and 432 in September.
The IBD Composite Rating for AppFolio stock is 98 out of a possible 99. Its Earnings Per Share Rating of 80 includes a 2022 loss and a dismal year in 2021.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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