BMC Software, Inc. (BMC)

Ford Strong Buy, S&P (4 or 3 stars), Member of S&P 500

to much competetion in this field you have to have the brightest and best and pay what the market will bear and there are others out there who have deeper pockets

BMC's portfolio is the best of the big 4 (BMC, HP, IBM and CA); it is continuing to generate good sales; and they are taking cost cutting measures to ensure that operating margins are at the best possible levels.

BMC Software trades at only 8 times True Free Cash Flow (TFCF) at prices in the upper $20s, so it's very inexpensive. TFCF grew more than 50% annualized the last few years; it will likely flatten this year, but it will not likely go down, so the price remains attractive. Fears in Sept. 2008 that IT spending will slow have hit BMC hard (along with higher costs as it integrates acquisitions -- a temporary issue), although in the last quarter, BMC said customers save enough money on their software, and soon enough after buying it, that they're still implementing it. A slowdown? Sure, it's possible in a weaker economy. But even so, BMC is inexpensive on its free cash flow, so the rebound, when it comes, should be strong.

part of the mattchenzo 50, my own index of the 50 fundamentally best stocks in the s&p 500, almost sure to beat it over about a year or so...

This stock is moving up and moving fast shouldnt be to long

deal

The Bladelogic acquisition completes BMC's product portfolio to win the data center automation market.

http://stockmarketbeat.com/blog1/2008/03/26/bmc-street-overreacting-to-bmcs-bladelogic-purchase/

Although the BladeLogic deal is expected to reduce BMC’s 2009 per share earnings by 10 or 11 cents, BMC’s estimates for 2009 had already risen by a similar amount. Effectively, the dilution from BladeLogic offsets BMC’s organic improvements for a year.

Meanwhile, BMC has generated more than $540 million in free cash flow over the last 12 months. Some of that is unsustainable, as it comes from collecting on financed receivables. However, I think the sustainable free cash flow is more than $400 million. That still amounts to a 6.5% free cash flow yield at a time when five-year Treasuries return a paltry 2.2%.

This company will most likely be taken over within a year.
IBM and Oracle are focussing on taking over more and more software specialty companies

VALUE LINES - TIMELY STOCKS IN TIMELY INDUSTRIES

Acuity Brands Inc. (AYI, $51.13, -$0.55, -1.06%) said its board approved the completion of the previously announced spinoff of its specialty products business. The new company will be called Zep Inc., and it is expected to be listed on the New York Stock Exchange under the ticker symbol "ZEP." Acuity Brands will distribute pro rata to its stockholders all of the shares of Zep common stock by means of a stock dividend on Oct. 31. The stock dividend of one share of Zep common stock for every two shares of Acuity Brands common stock will be paid pro rata to holders of Acuity Brands common stock who hold their shares at the close of business on Oct. 17, which is the record date for the distribution.

cool

BSM is ripe for the picking and BMC's platform is way ahead of the competition

Although the Mainframe

VL

Product receives good reviews. Company really upbeat about prospects - recently added to Zacks #1 rank and IBD top 100

Steady rise form a low and a lot of room to get back to its high.

BSM (Business Service Management) is gaining traction, primarily because the solution is complete, the value is easily illustrated and the ROI is fast. Competitors compete only on price and do not deliver the value. Look for aggressive market expansion in the coming quarters.