The raging bull market has vaulted the P/E ratio of the S&P 500 to above 25. That's quite expensive when compared to historic norms, which is making it hard for die-hard stock pickers like me to find compelling opportunities.

However, even in today's pricey market, I think I've found a wonderful stock to buy: AppFolio (NASDAQ:APPF). This software-as-a-service provider is growing fast, is well managed, and still has plenty of room to run. Here's why it's a stock that I'd be happy to pull the trigger on right now.

usinessman looking at data using magnifying glass

Image source: Getty Images.

What it does

AppFolio is a software-as-a-service business that focuses on the needs of small and medium-sized businesses. The company got its start by catering to the unique needs of property managers. To this day more than 90% of total revenue is still earned from its property management business. 

Why would a property manager choose to do business with AppFolio? The answer lies in the company's all-in-one, cloud-based solution. Once a customer gets setup they can manage all facets of their business with AppFolio's platform. This includes scores of mission-critical tasks like contracting, billing, collections, reporting, background check, tenant screening, and more. These features make it easy for property managers to keep their assets performing at the highest level possible.

Ipad featuring AppFolio software

Image source: AppFolio.

How does AppFolio monetize its growing user base? In three primary ways:

  • Users pay subscription fees to remain on the platform. This accounts for about 39% of AppFolio's total revenue.
  • Customers pay a fee whenever they use one of the company's optional services, which the company refers to as "Value+ services." This is a catch-all category that includes add-on tasks like payment processing, lead management, website hosting, and more. In total, Value+ services account for about 57% of revenue.
  • New customers pay a small onboarding fee. This category accounts for about 4% of revenue.

While the company's property management software accounts for the lion's share of revenue, AppFolio also has a growing business that caters to the needs of small law firms. Called MyCase, this solution helps lawyers with tasks like secured file sharing, time tracking, billing, and more.

Are AppFolio's services catching on? Here's a look at the company's customer count over the last few years:

Customer Count 2014 2015 2016 2017
Property manager customers 5,885 8,218 10,038 11,250*
Property manager units 1.68 million 2.15 million 2.68 million 3.1 million*
Law firm customers 3,663 6,145 8,135 9,200*

*As of September 30, 2017. Data source: AppFolio.

The growing customer count has allowed AppFolio's revenue to soar from $47 million in 2014 to an estimated $140 million to $141 million in 2017. That's a lightning-fast pace.

And yet, as great as these numbers have been, there's still reason to believe that AppFolio's growth engine is just getting started. Management estimates that its market opportunity within the property management business exceeds $5.0 billion annually in the U.S. alone. You can tack on another $2 billion when adding in the opportunity ahead of MyCase.   

Sparkling financials

Many high-growth software companies are happy to sacrifice near-term profits for explosive user growth. While this growth-at-any-cost strategy can work out well for investors in some cases -- just take a look at a long-term chart of Shopify, Workday, or Splunk for proof -- running at a loss on purpose also greatly increases a company's risk profile.

Thankfully, this isn't a trade AppFolio's management team has to contemplate anymore. AppFolio has been profitable for four quarters in a row, which suggests that the company has reached enough scale that it can invest for growth and still generate profits at the same time. That's an attractive combination that I believe helps to reduce the company's risk profile substantially.

What's more, AppFolio also boasts a rock-solid balance sheet that has $64 million in cash and no debt. That's a war chest that gives this company plenty of financial firepowers to keep the growth pedal to the metal. 

Moving forward, AppFolio's profits should expand at a faster rate than revenue thanks to favorable operating leverage. Investors should applaud that fact.

A strong culture

Another factor that makes AppFlolio a compelling long-term investment is its vibrant and engaged workforce. The company earns a strong 4.6 out of 5 stars on, and CEO Jason Randall boasts a 100% approval rating. Given these numbers, perhaps it isn't surprising to see that AppFolio has won numerous awards, including best places to work and highest-rated CEO.

I also like that AppFolio's founders -- Dr. Klaus Schauser and Jonathan Walker -- are still heavily involved with the business. They currently occupy the roles of chief strategist and chief technology officer, respectively.

Team of workers with smiles on their faces

Image source: Getty Images.

I'm a big believer that cultivating an energized workforce can do wonders for talent and customer retention rates in the long term. That bodes well for this company's continued success.

AppFolio is a buy

Between its rock-solid business model, strong leadership team, wonderful financial statements, and huge growth opportunity ahead, AppFolio is a company I greatly admire. In fact, the biggest knock I have against AppFolio is that Wall Street has caught on to this company's growth story. Shares are currently trading at more than 10 times sales and more than 77 times next year's earnings estimates, both of which are pricy figures. If the company fails to deliver eye-popping growth numbers, then its shareholders could be in for a world of hurt.

Despite the high price tag, I'd still think AppFolio is an attractive enough business to warrant a purchase today. In case you think those are empty words, you should know that I plan on adding to my personal position as soon as the Fool's trading rules allow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.