We came across a bullish thesis on Autodesk, Inc. (ADSK) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on ADSK. Autodesk, Inc. (ADSK)'s share was trading at $248.40 as of March 10^th. ADSK’s trailing and forward P/E were 48.52 and 25.97 respectively according to Yahoo Finance.

A software engineer using AutoCAD Civil 3D to create a 3D design in a modern office setting.

Investing in equities requires a strong foundation, and one of the best ways to sleep well at night is by owning quality businesses. But how do we define quality? One powerful lens is Annual Recurring Revenue (ARR), a key performance indicator that highlights stability and predictability. A company with 95% recurring revenue suggests that even if it ceased operations, it could still generate 95% of its revenue next year—an incredibly resilient characteristic. In the current market pullback, this metric is more crucial than ever, as it provides insight into businesses with sustainable revenue streams.

Among the companies worth watching is Autodesk (ADSK), a leader in design and engineering software, including AutoCAD, widely used in architecture and construction. With a $54.2 billion market cap, Autodesk exhibits exceptional financial robustness. It boasts a 93% ARR percentage, a three-year revenue CAGR of 11.8%, and a stellar 92% gross margin. Additionally, its free cash flow margin of 25.6% and an average return on invested capital of 9.9% highlight its operational efficiency. Despite a manageable net debt of $400 million, its stock beta of 1.51 suggests some volatility. Coupled with other key financial metrics, these factors make Autodesk a compelling watchlist candidate for investors seeking resilient, high-quality stocks.

Autodesk, Inc. (ADSK) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held ADSK at the end of the third quarter which was 70 in the previous quarter. While we acknowledge the risk and potential of ADSK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ADSK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.