Got $50,000? This Unbelievable SaaS Compounder Is Hiding in Plain Sight.

Software stocks have gotten obliterated in recent weeks due to fears over artificial intelligence (AI) disruption. Some stocks have now fallen 50% in just a few short months. This is creating buying opportunities for high-quality businesses that are being thrown out with the bathwater.

One such stock with a lock on a profitable niche in the United States is Doximity (NYSE: DOCS). The social feed and software provider for doctors has seen its stock fall by 66% in the past year and now trades close to an all-time low. However, if you look at the underlying business, it is doing just fine.

Here's why the software provider may be a great healthcare compounder investors can buy today.

A newsfeed for doctors

Doximity began its journey as a social network tailored for doctors and other medical professionals. On its platform, these professionals can receive healthcare news updates and collaborate with other medical professionals nationwide in a HIPAA-compliant manner.

To make money on this social network, Doximity uses sponsorships from pharmaceutical companies to educate doctors about new drugs and medical devices. These are highly valuable sponsorships, which is why Doximity now has 126 customers spending more than $500,000 a year on the platform. Roughly 85% all physicians in the U.S. use Doximity, with little competition.

Now, the company is expanding into new software tools, including its DoxGPT AI assistant. These tools are generally complementary right now and are simply used to increase time spent on Doximity's platform. Over the long term, investors should expect Doximity to begin selling more of these interactive software tools directly to medical providers, further boosting revenue.

Image source: Getty Images.

Is the stock a buy?

Revenue growth has been phenomenal for Doximity in recent years, up 448% since March 2020. Revenue growth has now begun to slow, with 10% year-over-year growth last quarter, but the company still has a long way to go within its existing medical marketing tools, as drugmakers spend more on the platform each year. On top of this, investors should expect more progress in monetizing its new software tools, such as DoxGPT.

The company has fantastic profit margins. Earnings before interest and taxes (EBIT) margin was 38.5% over the last 12 months, which is best-in-class for a software provider and typically requires much more scale than Doximity's $638 million in trailing revenue. At a price-to-earnings ratio (P/E) of just 21, Doximity could be a nice growth stock to buy on this AI-fear software dip.

Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Doximity. The Motley Fool has a disclosure policy.