The Rise of The Recurring Revenue Portfolio

On the heels of my recent post "What Are Kerchunker Companies? 5 Reasons Why You Should Like Them," please watch this recent CNBC interview of Mike Smerklo, Chairman and CEO of ServiceSource. Many high tech companies are realizing what IBM did 20 years ago. The information technology industry can rapidly become commoditized so IBM determined that the company needed to shift its portfolio to a more balanced mix of high-value offerings. That meant a transition away from products (hardware) and growing its services and software businesses. Today, the cloud is enabling companies to offer Software as a Service (SaaS) which often boasts better customer retention and more recurring revenue.

If Companies Like It, Your Portfolio Should Too

While many investors continue to speculate about the next game changing product or in commodities like precious metals or oil, we prefer the stable earnings growth of service sector companies. The beauty is that the positive characteristics of recurring revenue models cuts across sectors and industries - video rental memberships, gym memberships, cloud services, outsourced laundry service.

Many companies are motivated to make the shift to recurring revenue models, and Runnymede believes that investors can benefit by making a similar shift in their investment portfolios.

Click to see why Service stocks should be a significant part of your portfolio

Share This Story, Choose Your Platform!

About the Author: Andrew Wang

Andrew Wang

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede Capital Management, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede Capital Management, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Runnymede Capital Management, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.