The global economy isn’t quite as “digital” as you might think yet. Lurking just beneath the surface are mountains – shocking amounts – of paper, copper phone wire, media like compact discs, and even magnetic media like tape and floppy discs.

Call it the “Ana-lag,” but every day these relics of the recent past cost businesses untold sums in storage fees, and it’s virtually impossible to quantify the price paid for the inefficiencies incurred.

As a “recovering” gigging and recording musician, I’m dealing with the “analog hangover,” too. Hundreds of hours of songs I originally recorded on analog media from the late 1980s to the early 2000s are basically stuck on dozens of reel-to-reel tapes.

To really go fully digital and, say, monetize that work, I’d have to hire a(n expensive) specialist sound engineer to digitize that content.

And there are thousands of firms across the planet facing similar, expensive hassles. They need to accelerate their own digital transformations…

… and they desperately need help doing so. So much so, in fact, that International Data Corp. expects they’ll spend $6.8 trillion on this “niche” IT services segment between 2020 and 2023. The spending is growing by 15% annually.

That’s an investment trend no one can afford to miss out on, and I’ve researched the very best play for us here…

Human Nature Is Driving a Digital Dilemma… and a Multitrillion-Dollar Opportunity

Most of us will admit to doing this once in a while: putting off a difficult task for as long as possible.

And as a difficult task, digitization ranks right up there with the toughest. And so these businesses, from mom-and-pop operations to Fortune 500 giants, still have paper records, aging databases, outdated operating systems, and so on.

The sheer volume of work is overwhelming, enough to make the savviest, most hard-charging tech executive blanch.

That’s why more and more of those execs are turning to Perficient Inc. (NASDAQ: PRFT). This firm is a digital consultancy that more properly sees itself as a digital change agent.

Perficient is device- and operating system-agnostic and integrates a wide range of tech platforms depending on the client’s needs. The idea is elegant…

  • Simplify operations
  • Provide bulletproof platforms
  • Improve profit margins

So, it provides customers with automated ordering systems, mobile-centric user outreach, e-commerce backends, digital marketing programs, and a lot more.

And Perficient does this for a huge array of businesses across the economy – automotive, finance, manufacturing, and retail, to name some.

Perficient is particularly well-known and highly regarded for its work in the life sciences industry. As of 2020, it’s the sixth-largest IT consulting firm in healthcare, according to Modern Healthcare. Perficient supports nine of the 10 largest healthcare providers in the United States, and the five largest health insurance plans.

It also boasts an impressive roster of strategic partners, a sign the firm is great at what it does. Partners include Adobe Inc. (NASDAQ: ADBE), Amazon.com Inc.’s (NASDAQ: AMZN) Amazon Web Services division, the venerable Oracle Corp. (NYSE: ORCL), and International Business Machines Inc. (NYSE: IBM).

And yet, if you asked a roomful of tech investors if they own PRFT stock or have even heard of Perficient, I’d bet you wouldn’t see many hands go up.

But the fact is, when it comes to performance, PRFT shares have trounced those of Alphabet Inc. (NASDAQ: GOOGL), Amazon, and even Apple Inc. (NASDAQ: AAPL)… combined.

Had you bought Perficient at the beginning of this year, you would have crushed the S&P 500 by a stunning 768%.

And remember, this company operates in a fast-growing $6.8 trillion market. The serious share price gains are yet to come. And just think what’ll happen once Wall Street wakes up to the great story here.

We’re Seeing Some of the Most Aggressive Growth in Tech

Perficient’s got growth squarely in its sights. During the pandemic, firms up and down the economy have stepped up their “digital transformations.” Now that “hybrid” work schedules are becoming the norm, the pace is only going to continue.

As I said earlier, the market for IT consultancies is big – and getting bigger, as IDC projects annual growth of 15% there.

That means the leaders, like Perficient, will pocket the lion’s share of $13.6 trillion by 2028. Let’s say, conservatively, that Perficient merely keeps pace with the sector’s growth. Its sales will double over the same period.

But it’s well worth mentioning that the firm is growing earnings faster than sales. With this stock, we’ve got a firm throwing off unbelievable profits.

Over the last three years, Perficient has boasted high-profit growth that sets up an interesting comparison to mega-cap Microsoft Corp. (NASDAQ: MSFT) – a strategic partner, it just so happens. Both firms have grown their per-share profits over the last three years by 27%.

But at around $125, PRFT shares trade at less than 40% of the price of MSFT. In my experience, that bodes extremely well for the Perficient stock’s price appreciation.

For the September quarter, per-share profits grew about 10% more than their three-year average of 27%. With that in mind, always wanting to be conservative, I’m going to forecast future profits at the lower rate.

Now we use what I call my “Doubling Calculator,” though if you’re a mathematician, you know it as the “Rule of 72.”

At that lower rate, we can project – again, conservatively – that it should take just more than 2.5 years for earnings – and share prices, most likely – to double.

My recommendation, then: Make sure Perficient shares are in the “Foundational” long-term allocation of your tech portfolio.

— Michael A. Robinson

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Source: Money Morning