My Favorite Data Stock

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By Chloe Lutts

Editor of Dick Davis Digests

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If you own a business, you'll immediately understand what I'm going to talk about today. You'll also be a step ahead if you've worked in marketing in the last couple decades, or in certain tech fields.

What do all those readers have in common? Those are some of the professions that have been most changed-in the last decade or so-by data.

You've heard about Big Data, I'm sure. It's a popular buzzword and has propelled a few investing success stories.

What sets Big Data apart from regular, lower-case data is size, primarily. Typically, data is considered Big when it takes up multiple terabytes or petabytes of information. And from a technical standpoint, Big Data is different because it requires new and purpose-built tools to capture, store, search, analyze and visualize. You can't use Microsoft Excel to wrangle your Big Data.

To get an idea of how big Big Data is, look at the example of the Sloan Digital Sky Survey, an astronomical survey begun in the year 2000. Scanning the practically infinite universe, the Sloan Survey collects about 200 GB of data per night. In its first few weeks of operation, the survey collected more data than had previously been collected in the entire history of astronomy.

When you have that much information, you can't just put it in a table or list and then look at it when you want to analyze it. That's why Big Data requires purpose-built tools: something that can store all that data on the night sky and display it in a useful way that humans can understand.

But Big Data isn't the only kind of data that's changing the way we live and do business. In fact, most of us have much more interaction with lower-case-d data. It just doesn't have a catchy buzzword name that journalists can write trend pieces about.

But data is changing the way thousands of companies operate-which is why I expect some of you, especially from the areas I mentioned above, are already experts on this "trend."

For example, at Cabot, where I work, we're constantly using data to try and make our products better and more successful. We track how people find us, what they read or click on before they subscribe, and what our subscribers call and email us about most frequently. Having this information-and being able to change our marketing, emails, website, products and customer support offerings in response to it-has changed our business more than anything since the advent of online stock quotes, I think.

This isn't Big Data-we collect and store it ourselves, and use more-or-less off-the-shelf software to analyze it. It doesn't take up petabytes of storage space. But it has still made a huge difference in the way we do business.

And thousands of other businesses are doing the same thing. If you've owned a business, you've probably faced a problem that could be solved with data. Maybe you wanted the answer to a question like "what percentage of our customers are repeat customers?" or "how are people finding out about our product?" Without knowing the answers to those questions, it can be hard to make decisions about how to improve your business. Do you need to advertise more, or are most of your customers acquired through word of mouth? Twenty years ago, you might have made your decision based on your gut feeling-it seems like a lot of our customers know each other, so we should focus on getting referrals. But now, by collecting and analyzing data on your customers and transactions, you can find out the real answers. And I know from experience, sometimes they're surprising!

Likewise, marketers have been on the forefront of collecting and using data to improve their businesses.

If you've worked in marketing in the past decade, I'm sure you can think of your own examples of using data to fine-tune your message or better target potential customers.

In fact, if you have a good story about how you used data to improve your business, let me know by replying to this email. I'd be interested to hear your real-life examples and might use some in a future post.

If you worked in marketing at Target, or Wal-Mart, these efforts might be classified as Big Data. Wal-Mart supposedly has over 2.5 petabytes of data on its customer transactions, and adds one million more transactions every hour.

But if you worked for a small- or medium-sized business like Cabot, your data was just regular data.

But that doesn't mean it's any less useful. And small- and medium-sized businesses still need the right tools to analyze this data for it to make the most positive impact.

That's where I got my investment idea today.

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The company is Tableau Software , and it has the fitting ticker symbol DATA.

Tableau makes software to analyze, visualize and share data. They offer four different "levels" of their Tableau product for everyone from big businesses to individuals. Tableau Desktop, Server and Online serve the needs of businesses, and Tableau Public is a free version of the software that lets people like journalists and bloggers create their own interactive data visualizations online. (The company shares some nice examples here.)

I first heard about Tableau from a friend who works in data analysis. Her company- a for-profit education company with over a million students a year-had just started using Tableau to analyze their data on classes, teachers, students and sales, and she loved it. "It's super fun to use, mostly because you get immediate, gorgeous payoff," she told me.

Then, a couple weeks later, the company popped up again. This time, as a mid-year Top Pick from one of our Investment Digest contributors. Here's what David Bannister, analyst at Active Trading Partners, wrote about Tableau when he chose the stock as his favorite investment for the second half of 2013:

"My mid-year pick is Tableau Software ( DATA ) . Tableau software has been growing at a 90% compounded rate for years using their revolutionary Business Intelligence analysis platforms. Their software allows users across small- to large-size entities to analyze the thousands and thousands of pieces of business data that corporations and organizations receive.

"They have developed a graphical user interface akin to what Apple did for the personal computer and later Microsoft with Windows. As the graphical interface changed for personal computers, we saw torrid growth from 1983 through 1999 in personal computers.

"Tableau, we believe, is doing the same thing for business intelligence gathering and analysis, allowing even the entry level employee to analyze data with ease and even have some fun doing so. We expect the stock to return upwards of 60% over the coming six-to-nine months as investors catch on to the story." - David A. Banister, Active Trading Partners, 7/16/13 As Bannister points out and my friend confirms, what really sets Tableau apart from the crowd are its clear, useful and beautiful visualizations. You can see lots of examples on the company's website.

Tableau also offers Big Data-caliber data analysis to companies of all sizes, and even individuals. The one downside to the stock right here is a lack of history-the company just came public in May. What history is does have is pretty good-the IPO went well (Wall Street Journal story), and the company has remained above its IPO price since. But this is still primarily a story stock here, until it gets some more technical action under its belt.

Still, I like it as a speculation, and think it's a great play on the growing use of lower-case-d data by businesses of all sizes.

Wishing you success in your investing and beyond,

Chloe Lutts Jensen
Editor of Dick Davis Investment Digest
and Dick Davis Dividend Digest



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: DATA

Cabot Heritage Corporation

Cabot Heritage Corporation

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