It should come as no surprise that one of our longest-tenured holdings, Paycom Software (PAYC), has accumulated the biggest gain of our Special Situations portfolio stocks. Since we first recommended it in August of 2014 it has racked up a total return of 166%, or about 15 times greater than the 10.7% return on the S&P 500 Index over the same span.

However, after peaking above $52 last month, its share price has fallen back below $44 after the company released its most recent quarterly results at the start of this month that beat on earnings but came up short on total revenue. Despite posting a net profit of 15 cents per share compared to an estimate of only 11 cents, analysts are concerned that its revenue stream is beginning to flatten at a quicker pace than projected.

The tricky aspect to owning a growth stock like Paycom is knowing when to get out. Currently  priced at 42 times forward earnings and 19 times book value (even after the 20% drop in its share price over the past three weeks), there is no conventional metric that clearly defines a fair value for the company. However, we can tell when momentum in the stock has come to an end, so we are taking our gain in Paycom to reinvest in the new growth opportunities we will be presenting the December issue of Breakthrough Tech Profits.

Sell Paycom.

Getting the Zen Out

We had equally high expectations for specialty software developer Zendesk (ZEN) when we added it to our recommended list in June of 2015, and for a while it looked like it was also going to pay off big for us. As recently as two months ago it was trading above $31 per share, about 30% above our entry price, but it tumbled badly in October after releasing a disappointing quarterly earnings report. It looks like ZEN has lost its mojo, so we’re moving on greener pastures.

Sell Zen.