The post 3 Top Stocks You Can Still Buy for Under $20 a Share appeared first on Investment Market.
]]>Buy low, sell high is supposed to be the mantra for successful investors. Thanks to this saying, many new investors target cheap-looking companies whose low share prices seem like an incredible value. Yet many stocks trading at these discounted prices haven’t shown enough promise to warrant a prolonged increase in share price — or worse yet, they’ve dropped to all-time lows.
Left behind by their outperforming peers, these low-priced companies are often not the innovators or leaders of their industries. But today, we’ll look at three recent IPOs trading below $20 a share that could not only become leaders in their industries but also revolutionize them entirely.
Well-known for its genetic testing and ancestry services, 23andMe Holding (NASDAQ:ME) somewhat quietly keeps its sights on upending the healthcare industry. With 11.6 million genotyped customers, the company has started to use its vast database of genetic information to develop a wide range of unique therapeutic possibilities — running genome-wide association studies to identify genetic commonalities across various diseases.
After finding these commonalities, the company can leverage its ongoing collaboration with GlaxoSmithKline (NYSE:GSK) to develop a therapeutics pipeline. So far, 23andMe already has 40 therapeutic programs, with CD96 in phase 1 and P006 set to be tested by a human for the first time soon. The CD96 and P006 pathways are being tested as possible cancer treatments.
But these therapeutic programs are not 23andMe’s only avenue of growth. In October 2020, the company soft-launched its personalized healthcare offering known as 23andMe+, which has quickly grown to 125,000 subscribers. Through personalized, genetically-based health reports, 80% of 23andMe+ members have been able to discover a meaningful genetic variant, ranging from overall heart health to a predisposition to diabetes. And thanks to these insights, 76% of members adopted a new health action to better take care of themselves. While the service is still in its infancy, it has the potential to move health-conscious customers into the 23andMe ecosystem, creating long-term flywheel effects for the company.
All in all, an investment in 23andMe will require at least a five-year outlook from investors. However, the company’s $3 billion market capitalization seems relatively cheap when considering the massive optionality potential from its therapeutic pipeline.
Posting 227% year-over-year revenue growth for its second-ever quarterly earnings, Latch (NASDAQ:LTCH) has exploded onto the public market, aiming to “revolutionize how people experience spaces.” If this sounds reasonably obscure, don’t worry.
Here’s what Latch does. Led by its aptly named door-access operating system, LatchOS, it aims to become a must-have for any modern building. With capabilities that include smart access as well as delivery and guest management, Latch’s app generates 4.6 interactions per user a day and has booked over 450,000 home units across the United States.
This engagement highlights just how incredibly sticky its sales are for the business as customers almost immediately become locked into the ecosystem and its benefits. In fact, since its launch in 2017, Latch has experienced minimal customer churn, effectively giving it a gross dollar retention rate of nearly 100%.
For the full-year 2021, management is guiding for roughly $40 million in revenue, which would amount to 120% growth over last year. While the company is unprofitable thus far, the 90% gross margins from its software show that once it creates a large enough installed base of customers, it should become a software-as-a-service juggernaut.
Intent on disrupting the traditional finance market, SoFi Technologies (NASDAQ:SOFI) says its mission is to “help our members achieve financial independence to realize their ambitions.” With its three segments — lending, payments processing, and financial services — SoFi seeks to offer its members a one-stop shop for all of their financial needs, emphasizing member input as a key source of product innovation and company focus.
The service is gaining traction, recording a 113% year-over-year jump in members — and it has produced eight consecutive quarters of accelerating year-over-year growth, a rare feat after going public. Similarly, growth in the number of products held by its members has also accelerated for eight consecutive quarters, highlighting its ability not only to bring in new members but also to cross-sell new products to existing members.
Further, the company’s $1.2 billion acquisition of payments processor Galileo in 2020 has already begun paying dividends. This new segment has grown its number of accounts by 100% or more, year over year, for each of the past four quarters and could bring long-term margin expansion to SoFi by helping it become more vertically integrated.
Touching on the purchase, CEO Anthony Soto said, “The acquisition of Galileo … provides us all the advantages of being able to innovate faster at lower costs and help the whole industry become more reliable, more stable and more trustworthy, which will accelerate the transition from traditional banks to new digital frontier banks.”
Overall, SoFi’s accelerating growth and vertical integration across all three operating segments have it positioned beautifully to thrive amid the ongoing fintech revolution.
This article originally appeared on The Motley Fool.
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]]>The post 5 Big-Name Stocks Expected to Increase Sales 356% to 1,605% by 2025 appeared first on Investment Market.
]]>Since the Great Recession ended more than 12 years ago, growth stocks have ruled the roost on Wall Street. A combination of historically low lending rates and ongoing quantitative easing measures from the Federal Reserve have rolled out the red carpet for fast-paced companies and given them access to abundant cheap capital.
Yet for some high-growth stocks, their parabolic sales increases are just beginning. Based on analysts’ consensus sales estimates, the following five big-name stocks are expected to increase their sales by 356% to as much as 1,605% by 2025.
The first well-known hypergrowth stock that could deliver a jaw-dropping sales increase over the next five years is cloud-based e-commerce platform Shopify (NYSE:SHOP). Following $2.93 billion in full-year sales in 2020, Wall Street is forecasting $16.54 billion in annual sales by mid-decade. That’s a 464% increase, for those of you keeping score at home.
The beauty of the Shopify operating model is that it finds itself in the right place at the right time. Prior to 2020, businesses were shifting their presence online at a steady pace. But in the wake of the pandemic, businesses of all sizes have come to realize how important it is to have their products available for sale on e-commerce marketplaces. Known best for helping small merchants reach large audiences, Shopify estimates its total addressable market for small businesses is currently $153 billion. Thus, with $2.9 billion in sales last year and the company constantly innovating and introducing new tools, it’s just scratching the tip of the iceberg in terms of its potential.
What’s more, Shopify is benefiting from its high-margin subscription-based services. Whereas entrepreneurs can take advantage of the company’s basic services for $29 a month, it offers its core service to small businesses for $79/mo. to $299/mo., or its Shopify Plus service for $2,000/mo. to larger businesses. This is a company that shouldn’t have any issue growing its operating margins over time.
Another big-name stock on track to produce eye-popping sales growth over the next half-decade is telemedicine kingpin Teladoc Health (NYSE:TDOC). Last year, Teladoc generated $1.09 billion in sales. But by 2025, Wall Street’s consensus has the company pegged for $4.98 billion in sales.
There’s little question that Teladoc Health benefited immensely from the COVID-19 pandemic. With physicians wanting to keep potentially sick and high-risk people out of their offices, demand for virtual visits soared.
But this isn’t a one-trick pony. What Teladoc is doing is fundamentally altering the personalized treatment landscape. While virtual services won’t replace all in-person visits, it’s far more convenient for patients, and it can help doctors keep better tabs on chronically ill patients. Ultimately, that’s a recipe for improved patient outcomes and less money out of the pockets of health insurers.
Teladoc also expects a serious long-term growth boost from the acquisition of leading applied health signals company Livongo Health. Livongo leans on artificial intelligence to send tips to its chronic care members to help them lead healthier lives. With a focus on diabetes, hypertension, and weight management, Livongo’s services could cater to a large swath of the U.S. adult population.
Singapore-based Sea Limited (NYSE:SE) is expected to deliver such robust sales growth that it doesn’t even need a full five years. With consensus estimates looking out to 2024, the company’s sales are projected to more than quintuple to $23.2 billion from $4.38 billion in 2020.
Sea’s success is the result of three very different but rapidly growing segments. The first, digital entertainment, is the only one generating positive earnings before interest, taxes, depreciation, and amortization (EBITDA). Sea had approximately 725 million quarterly active mobile game users in the June-ended quarter, 12.7% of which were paying customers. For some context, only about 2% of mobile gamers are being converted to paying customers industrywide.
Second, and arguably the more intriguing segment, is its e-commerce platform Shopee. Shopee has consistently been the most downloaded shopping app in Southeastern Asia, and it managed $15 billion in gross merchandise value (GMV) on its platform in the second quarter. This $60 billion annual run-rate is a 500% increase from what it did in all of 2018 ($10 billion in GMV). E-commerce sales in the emerging market countries Shopee serves are still in the early stages of ramping up.
Third, Sea’s digital financial services segment has almost 33 million paying digital wallet customers. Since many of the markets Sea serves are underbanked, mobile wallets could be a key growth driver for the company.
Television streaming platform Roku (NASDAQ:ROKU) is yet another big-name stock on pace to more than quintuple sales in just five years. After bringing in $1.78 billion in full-year sales in 2020, Wall Street’s consensus is calling for about $9.05 billion in revenue by 2025. That’s an increase of 408%.
Roku has two key catalysts in its sails. First, there’s ongoing cord-cutting from consumers. Over a four-year stretch, the number of U.S. households with traditional cable, satellite, or telcoTV services has fallen by more than 21 million to 75.6 million, according to a report from NScreenMedia.com. Meanwhile, the number of households without these traditional services now stands at more than 50 million. The opportunity to provide these households with streaming content of their choosing, be it free or paid content, is clearly helping Roku win over customers (55.1 million active accounts, as of June 2021).
But the more exciting opportunity for Roku is with programmatic digital ads. As consumers shift their viewing content from traditional cable and satellite to streaming providers, advertisers are responding by putting more of their budget to work with companies like Roku. More active accounts will give Roku increased ad pricing power, which in turn will it allow it grow its average revenue per user (ARPU) at a rapid clip. In the June-ended quarter, ARPU grew by 46%, even though active accounts increased by only 28% year over year.
However, the king of the mountain, at least on this list, is biotech stock Moderna (NASDAQ:MRNA). Sales for Moderna are expected to grow from a reported $803.4 million in 2020 to an estimated $13.7 billion by 2025. That’s an increase of more than 1,600%!
While it’s not uncommon to see rapid nominal sales growth when clinical-stage biotech stocks introduce their first drug for sale, Moderna’s launch from minimal revenue to multiple billions occurred quickly, thanks to its development of a COVID-19 vaccine, mRNA-1273. In clinical studies, mRNA-1273 led to a 94% vaccine efficacy and demonstrably helped inoculated patients stay out of the hospital with severe forms of the illness.
From a business standpoint, Moderna continues to benefit from the need to inoculate billions of people worldwide, as well as the mutability of the SARS-CoV-2 virus that causes COVID-19. The need for booster shots or annual vaccines could give Moderna a source of recurring revenue.
On the other hand, the vaccine space is growing more crowded, with a number of new entrants expected within the U.S. and globally. Considering that mRNA-1273 is the company’s only revenue-generating drug, Moderna’s $126 billion market cap can best be described as precarious.
This article originally appeared on The Motley Fool.
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]]>The post 3 COVID Stocks to Buy in a Bear Market appeared first on Investment Market.
]]>Our trio of Motley writers offer their best suggestions for stocks to own in a future COVID crash. Here’s why our writers like Moderna (NASDAQ:MRNA), Regeneron (NASDAQ:REGN), and FIGS (NYSE:FIGS).
George Budwell (Moderna): With a market cap of $173 billion at the time of writing, this therapeutic company and producer of the messenger RNA vaccine is easily one of the most valuable biopharmas in the world. The biotech’s stately valuation, however, has recently drawn significant criticism from various analysts and industry insiders.
The main reason is that Moderna has only one approved product on the market with its COVID-19 vaccine, and that product is widely expected to experience a sharp drop off in sales starting as soon as next year. In effect, the company’s present valuation appears to reflect a rather enthusiastic take among investors for the future of its mRNA vaccine and drug-development platform rather than its underlying fundamentals or even its near-term outlook.
To put this valuation issue into the proper context, Wall Street’s current consensus estimate has Moderna’s shares trading at an astronomical 22.1 times 2023 revenue. Most of the biotech’s closest peers, by contrast, trade at under 3 times 2023 estimated sales. This high-flying biotech stock, in turn, doesn’t exactly jump off the page as a bastion of safety. But that’s where conservative investors might be dead wrong.
The crux of the matter is that Moderna could very well be poised to utterly change the biopharma game with its mRNA platform. The company already has the main components of its next megablockbuster vaccine in the clinic: a customizable, pan-respiratory annual booster vaccine for COVID-19, influenza, and respiratory syncytial virus. And Moderna is rapidly branching out into several other high-value areas such as HIV, immunotherapy, and regenerative medicine.
Bear market or not, Moderna’s stock should continue to perform admirably for the foreseeable future thanks to its laser-like focus on innovation.
Taylor Carmichael (Regeneron): Regeneron has been a huge winner for Fools. In fact, it’s almost a 10-bagger stock now. Surprisingly, however, the stock has underperformed the market over the last year, which has made the stock incredibly cheap.
Regeneron stock has a price-to-earnings (P/E) ratio of 11, which is very low for a biotech company with 50% profit margins and 163% revenue growth rates. Growth investors might be shying away because the company is already very large, with a $69 billion market cap. And many value investors might not be interested because the stock doesn’t pay a dividend yet. So maybe Regeneron’s stock is falling through the cracks of the stock market, which makes the stock a steal for investors who are paying attention.
Regeneron has three blockbuster drugs on the market right now, each one pulling in over $1 billion in revenues in the most recent quarter. The company’s eye medication, EYLEA, brought in $2.3 billion in revenues in the quarter. And its respiratory drug, Dupixent, added another $1.5 billion to the company’s top line in three months. But it’s the company’s COVID medication, REGEN-COV, that is really rocking right now. It brought in $2.6 billion in the quarter. Without the COVID therapeutic, revenue growth would have been only 22%.
While vaccination is still the best bet for defeating the virus, it’s possible that large numbers of Americans will refuse to be vaccinated. And it might be politically risky to try to mandate vaccination. That’s perhaps why the Biden administration recently made a deal to acquire another 1.4 million doses of REGEN-COV, according to The Washington Post. The therapy has been a life-saver, and the federal government has decided to start stocking up on the drug for future needs.
Unlike the vaccines, the antibody cocktail is highly expensive, costing $2,100 a dose. So Regeneron was paid $2.9 billion. And yet the stock market yawned at the news. In fact, the stock price has dropped another 2% over the last week. But sooner or later, Mr. Market will notice how well this company is doing right now.
Patrick Bafuma (FIGS): Should COVID wreak even more havoc and potentially cause another round of lockdowns in the U.S., luxury medical outfit designer Figs may stand to benefit.
COVID-19 has taken a toll on the mental health of some stalwart humans working within the confines of a hospital. Face it, many of us believe in retail therapy, so in a way Figs is treating those who treat us. And there are certainly less healthy options than splurging on a pair of designer scrubs.
The stylish apparel maker may have raised some concerns with a deceleration of revenues in the second quarter, but revenue growth of 58% year over year is nothing to sneeze at for a clothing company. Its aspiration to become a $1 billion-plus net revenue global brand by 2025 only equates to about 35% annual growth. But that’s the kind of growth I’ll take through any bear market, especially for a company that has only penetrated 3% of a $12 billion U.S. healthcare apparel market and has enviable brand loyalty, with 50% of customers coming back and buying again within 12 months.
Figs is becoming an iconic brand with a loyal following akin to Apple (NASDAQ: AAPL), Tesla (NASDAQ: TSLA), Nike (NYSE:NKE), and Lululemon (NASDAQ:LULU) — not shabby company. The athleisurely Lululemon has seen its stock price grow more than 5 times since 2018 despite growing revenues less than 25% annually during the same time frame. Ditto the Just Do It brand, which has seen its share price grow north of 150% since 2018 with less than 20% revenue growth annually since 2018. Both handily beat the S&P‘s return of about 67% during the same period. So, despite what may look like average projected growth, Figs appears to be lined up to provide market-beating returns over the coming years.
For those who take care of others and wish to embody a look-good, feel-good mentality, Figs is the lifestyle brand of choice. And given the salaries for locum doctors and nurses who accept temporary placements, it seems like there may be quite a bit of disposable income to throw around. The world needs frontline COVID-19 fighters right now, and Figs is outfitting them.
This article originally appeared on The Motley Fool.
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]]>The post Down 50% From Its High, Is Zoom Stock a Smart Buy? appeared first on Investment Market.
]]>Last year, the pandemic sent Zoom stock soaring 765% as it reached an all-time high of about $589 per share in Oct. 2020. Since then, the stock has crashed back to earth, falling over 50% from that peak. And while I certainly can’t say Zoom is done falling, I still think it’s smart to buy a few shares at the current price.
Here’s why.
Since the beginning of the pandemic, many people have become familiar with Zoom Meetings, the cornerstone of Zoom’s communications platform. This videoconferencing application allows users to engage and collaborate remotely, and it has played a critical role in connecting socially-distanced friends, families, students, and colleagues.
However, because COVID-19 put Zoom in the spotlight, supercharging its financial performance and stock price, many investors have labeled Zoom as a “pandemic stock.” That description implies the company will be less relevant once the pandemic is behind us, but I disagree.
According to research company Gartner, 48% of employees will work remotely at least part of the time after COVID-19, while just 30% worked remotely prior to the pandemic. Likewise, just 25% of enterprise meetings will take place in person by 2024, down from 60% in the past. In both cases, this suggests a lasting change in the workplace which Zoom is well positioned to benefit from.
While Zoom Meetings remains its cornerstone product, the company now offers a robust portfolio of communications solutions. For instance, Zoom Rooms is a software-based conference room system designed to transform corporate offices into collaboration suites, creating a space where remote meetings can take place.
Likewise, Zoom Phone is a cloud phone system designed to eliminate costly onsite telecom hardware. This virtual system also allows clients to make and receive calls from a variety of devices (i.e. computers, smartphones, desk phones), meaning it’s more convenient and less expensive than traditional telecom options.
Collectively, these products make Zoom more than a videoconferencing company. Instead, Zoom offers a video-first unified communications platform as a service (UCaaS). And according to Nextiva, the UCaaS market will reach $141 billion by 2025. That puts Zoom in front of a massive market opportunity.
To bolster its offerings further, the company announced in July its intention to acquire cloud contact center specialist Five9 for $14.7 billion in an all-stock transaction. While this deal may fall apart as it has been met with criticism from certain analysts, I like Zoom’s initiative here. The deal would expand the scope of its UCaaS platform, adding $24 billion to its addressable market. Yet if this deal does fall through, I don’t think that would break Zoom’s investment thesis.
According to Okta‘s 2021 Business at Work report, Zoom is by far the most popular videoconferencing application on the market. The product surpassed Cisco‘s Webex in Feb. 2018 in terms of total customers, and it eclipsed Webex in March 2020 in terms of unique users.
In fact, as of June 2021, Zoom Meetings had captured 50% market share, according to TrustRadius, and it’s actually the fifth-most popular enterprise application of any kind. That scale gives Zoom a significant advantage and reinforces the network effects that drive its business. In other words, Zoom is the most logical remote work solution for many enterprises, because it has a broader user base than any other product on the market.
One of Zoom’s greatest strengths is its customer-centric culture. CEO Eric Yuan left his former employer — which happens to be Cisco — because customers weren’t happy with Webex, and the company didn’t give him the freedom to build a more modern product.
From day one, Yuan prioritized customer satisfaction, and it remains the first tenet of Zoom’s growth strategy. That approach has translated into incredible financial results over the past two years.
During the most recent quarter, Zoom’s top-line growth slowed significantly, rising just 54% over the prior-year period. This may have some investors worried, but I think the deceleration is a natural response to the hyper-growth the company achieved throughout the pandemic. Shareholders shouldn’t expect Zoom to post triple-digit growth quarter after quarter, but that shouldn’t be the reason you avoid the stock.
Currently, Zoom trades at 23 times sales. That means the stock is cheaper today than it has ever been (on a relative basis). And given Zoom’s strong competitive position, massive market opportunity, and founder-led management team, I think it makes sense to buy a few shares of this growth stock right now.
Just remember, no one knows the future, so it doesn’t make sense to buy your entire position at once. Instead, build a position over time through dollar-cost averaging.
This article originally appeared on The Motley Fool.
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]]>The post Crypto-linked stocks extend rally that produced 400% gains appeared first on Investment Market.
]]>Cryptocurrency-linked stocks rose Wednesday as Bitcoin headed for its biggest monthly gain since 2019, extending a rally that’s seen some companies’ shares more than quintuple since the end of October.
Marathon Patent Group Inc., which has soared 444% over the past two months, added another 4.4% Wednesday. Riot Blockchain Inc. rose as much as 7.1% Wednesday after gaining 383% since Oct. 30. And Bit Digital Inc., which surged 81% on Monday alone, jumped another 31%.
Canadian-listed Hive Blockchain Technologies gained as much as 6% early Wednesday, with shares nearly doubling since the start of December. Also, Mike Novogratz’s Galaxy Digital Holdings rose another 3.4%, pushing the shares more than 60% higher since the start of the month.
The price of Bitcoin briefly rose above $28,000 Wednesday to a record high, bringing its December gain to more than 40%. Other cryptocurrencies have also surged, with the Bloomberg Galaxy Crypto Index up 270% in 2020.
Some investors see Bitcoin as a gold-like hedge against inflation and U.S. dollar weakness, while others see it as too speculative to provide a safe haven.
This article originally appeared on Aljazeera.
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]]>The post Stocks making the biggest moves midday: Moderna, Lululemon, GameStop and more appeared first on Investment Market.
]]>Moderna — Shares of the drug maker rose more than 7% after announcing it’s developing a two-in-one vaccine booster shot that protects against both Covid-19 and the seasonal flu. The new vaccine, which the company is calling mRNA-1073, combines Moderna’s current Covid vaccine with a flu shot that’s also under development, according to a press release.
Lululemon — The athleisure brand jumped 12% and hit an all-time high after reporting strong second-quarter earnings and said it’s on track to hit a 2023 revenue target ahead of schedule. The company has outperformed other retailers during the pandemic and is poised to continue to even as people return to offices.
GameStop — Shares of the video game retailer fell 2.7% even after the company posted a narrower loss in the second quarter compared with a year prior and rising sales. The retailer was light on providing an outlook for the upcoming quarters and details on its e-commerce transformation, which disappointed Wall Street analysts. The meme stock favored by Reddit traders is still up over 900% this year.
Boston Beer — Shares of the alcoholic beverage lost over 4% after it pulled its earnings guidance late Wednesday amid a slowdown in sales of its hard seltzer brand Truly. That development came just a few weeks after the company blamed weaker-than-expected second-quarter earnings on poor Truly sales, leading it to cut its full-year forecast.
RH — Shares of the furniture retailer popped nearly 8% after beating on the top and bottom lines of its quarterly results. RH earned $8.48 per share, topping estimates of $6.48 per share, according to Refinitiv. Revenue came in at $988.8 million, above expectations of $975.4 million.
Caesars Entertainment — Caesars shares gained 3% after the company announced it will sell the non-U.S. assets of its William Hill sports betting unit to British gambling firm 888 Holdings. The deal is worth about 2.2 billion pounds, or roughly $3 billion.
NetEase — Chinese regulators summoned NetEase and other gaming companies to remind them of restrictions on game time for children. Shares of NetEase retreated 2.7%.
Analog Devices — Analog Devices shares added 2.8% after the company announced its acquisition of rival chip maker Maxim Integrated Products is expected add to adjusted earnings in 12 months after closing, six months sooner than previously expected. Analog Devices said it expects the acquisition to be neutral to adjusted earnings in fiscal 2022.
Macy’s — Shares of the retailer gained 1.5% after Cowen upgraded the stock to an outperform rating, saying the stock can jump almost 30%. The firm pointed to the retailer’s digital push, as well as product innovation and pricing management as factors that will drive upside. Shares of Macy’s have nearly doubled this year.
Ford — Shares of Ford dipped 1.4% after the automaker said it would end vehicle production in India, costing about $2 billion. The company is shutting down two large plants in the country and about 4,000 people are expected to lose their jobs.
Blade Air Mobility — Shares of Blade surged over 15% after JPMorgan said the aerial ride-sharing company could be the Uber of the skies. The firm predicts an 80% rally ahead for Blade and believes the aerial ride-sharing market could be worth tens of billions of dollars within a decade.
Leslie’s — Shares of Leslie’s rose 2.6% after Stifel initiated coverage of the pool stock with a buy rating. The firm said the stock is currently undervalued as Leslie’s is poised to “build upon its leading market share” in the pool and spa market.
This article originally appeared on CNBC.
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]]>The post Bitcoin vs. Ethereum vs. Cardano: Which Cryptocurrency Is a Buy? appeared first on Investment Market.
]]>Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), and Cardano (CRYPTO:ADA) are three of the biggest names in the crypto space, and they’ve all experienced explosive growth. The price of Bitcoin is up by more than 300% over the past 12 months, Ethereum has soared by roughly 700%, and Cardano has increased by a whopping 2,350% in that time period.
Each of these cryptocurrencies has unique advantages and disadvantages, and it’s wise to do your research before you buy. Here’s what you need to know when deciding which of these options is right for you.
Pros: One of the biggest advantages of Bitcoin is that it’s one of the oldest cryptocurrencies and has the most name recognition. That first-mover advantage has also helped make it the most popular and the most widely accepted cryptocurrency.
For any cryptocurrency to survive over the long term, it will need to be widely adopted. Because Bitcoin is already the best-known cryptocurrency with the longest track record, it has a head-start in this department.
Bitcoin’s limited supply is another advantage. There will only ever be 21 million tokens in existence, and that scarcity could potentially drive up its value. Bitcoin supporters consider the cryptocurrency “digital gold,” and its increasing value could help hedge against inflation.
Cons: Like any cryptocurrency, Bitcoin is a risky investment. Nobody knows for sure whether crypto will ever become mainstream, and that uncertainty carries risk.
The Bitcoin mining process is also incredibly energy-intensive. In fact, Bitcoin uses more electricity than the entire country of the Philippines, according to data from the University of Cambridge.
This energy consumption is a problem that has many investors and regulators concerned about its future. Unless it finds a way to become more sustainable, Bitcoin may have a tough time staying competitive.
Pros: Ethereum is more versatile than Bitcoin, which is one of its most significant advantages. Not only does it have a native token, Ether, but the Ethereum blockchain also serves as a platform for smart contracts and decentralized applications.
Some of the best-known applications are decentralized finance (DeFi) and non-fungible tokens (NFTs), but because Ethereum is an open-source technology, anyone can create new applications, and the opportunities are endless.
Ethereum also processes transactions faster than Bitcoin, and it’s less energy-intensive. While Bitcoin uses a proof-of-work (PoW) mining protocol, Ethereum is moving to a proof-of-stake (PoS) network.
With a PoW network, crypto miners must use high-powered computers that solve complex puzzles to verify transactions — which is why the process is so energy-intensive. Also, because Bitcoin has a limited supply, the more tokens that are mined, the harder these puzzles become — and the more energy they require.
With PoS networks, on the other hand, miners validate transactions by putting their own crypto holdings at stake for a chance at earning rewards. Not only does this process use significantly less energy, but it also processes transactions much more quickly.
Cons: While Ethereum does have a lot of potential, it’s not as popular as Bitcoin. Ether isn’t as widely accepted among merchants as Bitcoin, which gives it a disadvantage.
In addition, the Ethereum blockchain is undergoing a lot of changes as it grows. Developers are working on releasing Ethereum 2.0, which will move it from a PoW network to a PoS network. These growing pains could result in greater volatility.
Finally, the PoS protocol also has its downsides. Miners with the most cryptocurrency tokens have the most power when it comes to verifying transactions, so it’s possible that a small number of wealthy individuals could have majority control over the blockchain.
Pros: Cardano was created by one of the co-founders of Ethereum, so it shares many similarities to its crypto competitor. It also serves as a platform for smart contracts, which is one of the biggest advantages of Ethereum.
Also, while Ethereum is currently transitioning from a PoW network to a PoS network, Cardano already uses a PoS system. That makes it more environmentally friendly and faster than its competitors.
Like Bitcoin, Cardano also has a limit on how many tokens can be produced, which creates a sense of scarcity and can help drive up its value over time.
Cons: Widespread adoption is the biggest hurdle Cardano is facing. It’s the newest of the three cryptocurrencies, and its market cap is significantly lower than both Bitcoin and Ethereum. Its native cryptocurrency, ADA, also isn’t as widely accepted as Bitcoin or Ether.
That doesn’t necessarily mean Cardano won’t be able to catch up to the competition. But at the moment, it’s more speculative than Bitcoin and Ethereum, making it a riskier investment.
As you’re weighing your options, consider how much risk you’re willing to take. All cryptocurrencies are risky investments, but by doing your research and thinking about how much speculation you’re comfortable with, it will be easier to decide which option is best for you.
This article originally appeared on The Motley Fool.
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]]>Roku (NASDAQ:ROKU) and Upstart (NASDAQ:UPST) are growing quickly, and if you’re willing to invest for the long term, both of these growth stocks could supercharge your portfolio. Here’s what you should know about them.
Roku is the most popular streaming platform worldwide, capturing 30% of total viewing time in the first quarter of 2021. Its platform connects viewers with streaming content publishers like Netflix, allowing users to access all of their content from one location. This includes ad-supported content like The Roku Channel, the company’s own streaming service.
From there, Roku can monetize its business by selling digital ad space. Specifically, its OneView platform allows marketers to deliver targeted ad campaigns to viewers across mobile devices, desktops, and connected TVs (CTVs). It also provides tools to measure performance and optimize ad spend, something that’s not possible with traditional linear TV.
More importantly, Roku’s position as the leading streaming platform demonstrates a highly engaged user base. And in the marketing world, user engagement is a valuable asset. As a result, Roku captured 46% of all programmatic CTV ad spend in Q4 2020, crushing second-place Samsung and third-place Apple, which took 11% and 9% market share, respectively.
That dominance has translated into strong financial results on both the top and bottom lines.
To reinforce this strong growth, Roku is investing aggressively in The Roku Channel. For instance, it recently added new linear TV channels to its ad-supported streaming service, bringing the total to over 200 options. And in May, the company debuted 30 Roku Originals, making its first move into original content of its own.
I like this strategy. It helps Roku further differentiate itself, and these original series are already boosting engagement. In fact, the company reported record streaming activity during the two weeks following the launch of Roku Originals in May. If that momentum continues, brands should be banging down Roku’s door to get a piece of its platform.
Looking ahead, CTV ad spend is expected to hit $100 billion in the U.S. by 2030, according to BMO Capital Markets. That puts Roku in front of a massive market opportunity, and with its strong competitive position, this company appears to have a bright and profitable future. That’s why this growth stock looks like a rewarding long-term investment.
Upstart is disrupting the consumer credit industry. Its platform uses artificial intelligence, rather than the outdated FICO score, to help lenders quantify risk and determine creditworthiness. At the same time, this business model benefits borrowers, creating a powerful network effect.
Specifically, banks benefit from greater approval rates, lower loss rates, and a highly automated lending process, and consumers benefit from greater access to credit and lower interest rates. How is this possible? Upstart’s AI models are powered by over 1,600 data points per consumer, trained against 10.5 million repayment events and counting. By comparison, a typical FICO score is based on just 20 data points. That gives Upstart a data-driven edge.
More importantly, that advantage should become evident over time. As Upstart adds new borrowers and measures more repayment events (e.g. on-time payments, late payments), its AI models should become increasingly good at predicting credit risk. That means lenders should see fewer defaults over time, furthering their ability to offer low interest rates to consumers.
This virtuous cycle has already been a significant growth driver for Upstart, as evidenced by the company’s strong financial performance over the past two-and-a-half years.
Looking ahead, Upstart is well-positioned to grow its business. Last year, the company expanded beyond the $84 billion personal loan market, entering the $635 billion auto loan industry. But management sees an opportunity to disrupt other verticals as well, including credit cards, mortgages, and student loans.
Here’s the bottom line: Upstart has a massive market opportunity, and its AI-powered business model appears to be more effective than traditional lending solutions. That’s why this growth stock looks like a smart long-term investment.
This article originally appeared on The Motley Fool.
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]]>Here’s why YouTube will overtake Netflix’s revenue figures in 2021 and what it means for investors.
After everyone and their mother signed up for Netflix in 2020 amid the coronavirus pandemic, Netflix is suffering a bit of a hangover in 2021. To be fair, management warned that would be the case, as it pulled forward subscribers into 2020 that it expected would eventually sign up, but perhaps in 2021 or beyond.
As such, subscriber growth has been lean so far this year. CFO Spencer Neumann does, however, expect the fourth quarter to produce more typical subscriber growth as it laps the impact of COVID-19 and releases a strong content slate. His third-quarter outlook calls for just 3.5 million net additions and revenue of $7.5 billion.
YouTube, meanwhile, has seen continued strength in its execution and it’s benefiting from a couple secular trends. More people are watching YouTube and specifically watching it on their main screen — a television. Management said 120 million Americans watched YouTube on their TV last quarter during the Q2 earnings call. That’s up from 100 million in the second quarter last year.
Moreover, YouTube is riding the acceleration in digital advertising spend. And it’s in connected TV, one of the faster-growing segments of digital advertising. YouTube has the scale and technology to win an outsize portion of connected TV advertising without sacrificing ad inventory to the distribution platforms. That makes it one of the few streaming services that can fully capitalize on the connected TV trend.
On top of that, digital ad spending is typically skewed toward the back half of the year. As such, investors should expect YouTube revenue to keep climbing through the fourth quarter, significantly outpacing the growth at Netflix.
Through the first six months of the year, YouTube’s ad revenue totaled $13 billion. It also had about 3 million YouTube TV subscribers generating around $1 billion in revenue. Netflix subscribers paid it $14.5 billion through the first half of 2021. Given the trends, investors should expect YouTube’s full-year revenue to surpass Netflix’s.
Alphabet doesn’t share its operating profits from YouTube specifically, but they may be comparable to Netflix’s. The company pays out 55% of its revenue to creators — about $3.85 billion in the second quarter. Netflix’s content amortization expense totaled $2.8 billion in the second quarter, but that number should climb in the second half of the year as it works through the production bottleneck caused by COVID-19.
On top of that, Netflix also has significant marketing expenses, which totaled $600 million last quarter. It also likely incurs higher content delivery expenses because it uses a third-party cloud provider while YouTube benefits from its sister company’s cloud.
All told, operating profits for the two companies probably don’t look too dissimilar, and the edge may go to YouTube. Netflix’s operating margin in the second quarter was 25%, but management expects full-year margin to come in closer to 20%.
YouTube is generating more revenue than Netflix and growing faster, and it may even be more profitable. As such, it should trade at a premium to Netflix if it were a stand-alone company.
But it’s not likely Netflix is grossly overvalued at today’s stock price. Just two of 41 Wall Street analysts rate the stock as underperform or sell and the average price target is $611.
More likely, YouTube is currently undervalued. Netflix’s enterprise value is around $250 billion. Alphabet’s is around $1.73 trillion, but it also has a massive advertising business outside of YouTube generating six times the revenue and higher profit margins. On top of that, it houses a mobile services business (Android and Google Play), a burgeoning cloud computing segment, a hardware business, and its “other bets.”
There’s a case to be made that Alphabet is still undervalued while trading near its all-time high stock price, and the market’s underestimation of YouTube may be one reason why.
This article originally appeared on The Motley Fool.
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]]>Luxury and high fashion have produced the world’s richest person: Bernard Arnault, founder and chair of LVMH Moët Hennessy-Louis Vuitton. But can investing in Farfetch’s digital-forward take on luxury goods get you a cut of the spoils? If you have the patience for a volatile growth stock, it certainly might.
Farfetch had a solid second quarter, the first full-quarter period lapping the initial effects of the pandemic in spring 2020. The company reported a 40% year-over-year increase in gross merchandise value (the value of all goods sold through its system) to just over $1 billion. That GMV figure was over double what it was in the same quarter of 2019. Resulting revenue was up 43% to $523 million.
The bottom line also swung positive too. Net income was $87.9 million, compared to a loss of $435.9 million in the same period last year. Don’t get used to the profitability just yet, though. The positive net income was due to a $246 million non-cash re-measurement of items held on the company’s balance sheet. Adjusted EBITDA, which backs out the effects of non-cash items on the bottom line, was negative $20.6 million, compared to negative $25.2 million last year.
Not every investor will be comfortable enduring these kinds of losses, but Farfetch is spending heavily to promote maximum expansion now, while profitability will be a bigger concern later on. Nevertheless, for those wondering if the company can endure such bleeding, Farfetch had $1.15 billion in cash and short-term investments offset by debt of $612.9 million as of the end of June. With the company making steady progress toward break-even, it can afford to keep strutting to its own fast-and-steady beat for now.
E-commerce has slowly but steadily moved its way up the retail pecking order and disrupted every aspect of the shopping experience. The revolution Amazon helped start with low-value items like books moved on to household basics, and groceries, consumer electronics, everyday clothing, and other higher value merchandise have rapidly moved to digital outlets over the last decade as well.
But high fashion has long been a holdout. It’s not that luxury brands haven’t dabbled with online stores and direct-to-consumer order fulfillment in the past, but a physical presence has always been a priority. After all, high-end purchases are about the experience as much as the objects of consumers’ desire.
Farfetch knows this, and that’s why this is a hybrid digital commerce technologist. It’s a software firm, sure. But it also has a foot planted in physical retail to help the brands it works with bridge the gap between a highly sought-after in-person shopping experience and a top-notch virtual experience — and a direct-to-consumer order fulfillment platform to boot.
And even as the company starts to lap the boom in activity it got last year when consumers of all types (even those in the market for high fashion) were in lockdown, it isn’t expecting too bad a slowdown. Management is calling for respective 30% and 45% year-over-year increases in its digital platform GMV and brand platform GMV in the current quarter. For reference, digital platform GMV was up 60% in the third quarter last year, and brand platform GMV was up 79%. Talk about compounding growth! Farfetch is quickly becoming a titan in the fashion industry.
So is its stock a buy? For the right type of investor, I think so. Though the stock has fallen this year, Farfetch’s business is still expanding at a rapid pace as high-end fashion brands look for the best way to interact with their patrons in a digital format. The company is on a path to reaching consistent profitability, but growth is the name of the game here, so a volatile stock price is par for the course. If you’re comfortable with wild swings in valuation and can purchase small batches of the stock over time (assuming the thesis for growth doesn’t change), put Farfetch on your radar.
Currently trading at about 8.7 times trailing 12-month sales, Farfetch stock looks like a long-term value considering the long runway this firm still has ahead of it.
This article originally appeared on The Motley Fool.
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