Part 7/8:
Despite the potential for growth in the software sector, Hazen advises caution. She underscores the importance of avoiding overpaying for growth, noting that many profitable software reputations come with high price multiples. Investors should scrutinize both free cash flow conversion and earnings revisions to avoid stocks that could plummet in value when market sentiment shifts. Paying particular attention to whether a stock has maintained its multiple over time or whether it has vastly inflated can safeguard investments against impending downturns.