When George Soros is the largest shareholder of any company, investors pay attention. Yet not even Soros is immune to market pullbacks, especially when an entire sector is weak.

#-ad_banner-#For Soros, it’s like owning the best house in a depressed market. When the market bounces back, he’ll make the most money.

That’s the case with Soros’ investment in ClickSoftware Technologies (Nasdaq: CKSW). At the end of this year’s first quarter, Soros owned nearly 10% of the outstanding shares, his largest stake percentagewise in any software company.

ClickSoftware makes computer programs to manage workforces across a wide variety of industries. Part of its weakness has been due to its transition to selling software as a service (SaaS) and offering its services in the cloud for a monthly fee. 

ClickSoftware’s business model was previously based solely on selling software with an upfront contract and then installing the software on the client’s computers. In contrast, the risk of the cloud computing model is that clients can cancel their contracts at any time. 

The transition to the cloud resulted in ClickSoftware posting a loss last year, its first in more than eight years. Although the company posted a 16% year-over-year increase in revenue, it reported a loss of $0.03 a share. 

The entire application software sector has been hit this year as investors sold cloud computing companies, many of which are well off their 52-week highs. Among the notable underperformers are Rackspace Hosting (NYSE: RAX), which is off 40%, and industry leader Salesforce.com (NYSE: CRM), down almost 20%. ClickSoftware is 27% off its April highs.

ClickSoftware is expecting the rest of this year to be better for the company: Revenue is expected to come in at between $126 million and $132 million for the year, up from $107 million in sales last year, with $26 million to $30 million of that coming from its cloud operations. 

The earnings forecast calls for the company to earn between $0.04 and $0.12 a share, a reversal from last year’s loss of $0.19 per share.

ClickSoftware should benefit from its recent acquisition of Xora, a maker of mobile workforce management software. Xora expands the company’s offerings in the small and medium businesses (SMB) market and opens the door with wireless carriers AT&T (NYSE: T), Sprint (NYSE: S) and Verizon (NYSE: VZ). ClickSoftware already has a client base of more than 50 global telecommunications providers.

ClickSoftware’s acquisition of Xora and its new clients give the company a leading position in the cloud industry. The company’s founder and CEO, Moshe BenBassat, said that “with the new cloud wins we have been reporting over past quarters and the installed base of Xora, we believe we are now the #1 cloud company in our space.”

Shares of CKSW are attractively priced in comparison to other SaaS providers, trading at only 2.4 times sales, well below the industry average of 4.8. ClickSoftware also has a solid balance sheet, with $47 million in cash and only $682,000 in debt. This equates to about $1.47 per share in net cash, which covers 18% of its market cap. 

Soros isn’t alone in liking the company. The three analysts following the company all have “buy” ratings on the stock. These analysts have an average price target on the stock of $13, representing upside of better than 60%.

Risks to Consider: The biggest risk in buying CKSW is continued weakness of cloud computing stocks. If the market were to pull back, shares could go lower with the rest of the tech sector.

Action to Take –> My price target on CKSW is $11, for upside of almost 25%. At this price, the stock would be trading at 3.3 times sales, which is below the industry average.

Cloud computing has proved to be a game-changing technology — exactly the kind of investing opportunity my colleague Andy Obermueller is constantly on the hunt for. In his latest report, Andy’s identified five game-changing trends that have the potential to revolutionize the way we live our lives — and make early investors a killing. To learn more about these emerging technologies — and the companies behind them — follow this link.