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Tip Ranks
3 Monster Growth titles that still have room to run
Investors are in the market to make a profit, and that means finding stocks with proven growth potential. Yes, it’s a cliché to remind everyone that past performance doesn’t guarantee future results, but when a stock consistently shows strong stock appreciation, over an extended period, it’s a positive sign for investors. More than ten months late, stocks that are now showing a combination of strong earnings and high short- and medium-term potential will attract investor interest. With that in mind, we set out to find titles flagged as exciting growth games by Wall Street. Using the TipRanks database, we focused on three analyst-backed names that have already made impressive gains and boast strong long-term narrative growth. Bandwidth, Inc. (BAND) We begin in the communications software industry, where Bandwidth is a leading provider of VoIP systems, using its Application Programming Interfaces (API) to offer customers both text and voice capabilities. The company’s products include applications for voice calling, text messaging, local Internet telephone numbers and access to the 911 emergency telephone system. Bandwidth developed and built its own Internet voice network, helping to ensure connectivity. Like many online tech companies, BAND benefited from the 2020 shift to remote working. The move to virtual office space has put a premium on internet communications, and BAND shares have reflected that: stock has risen an impressive 135% year to date. The company’s third quarter earnings were also strong and at 14 cents per share was far above the EPS net loss of 12 cents. Third quarter revenue was $ 84.8 million, up 40% year-over-year. In addition to positive revenues and earnings, Bandwidth also showed solid liquidity. The company had over $ 300 million in cash and cash equivalents available at the end of September, while liabilities amounted to just $ 57.8 million. Finally, earlier this month, Bandwidth completed the acquisition of the European cloud communications company Voxbone. The deal was valued at 446 million euros, or more than $ 520 million in US currency. The transaction included € 354.6 million in cash and the remainder in shares. Growth in bandwidth and healthy future prospects attracted the attention of 5-star analyst Michael Walkley. Writing from Canaccord, this leading analyst said: “With Covid-19 impacting the way we work, learn and interact for the foreseeable future, we believe that bandwidth is a long-term beneficiary of the strong growth trends expected at due to increased use by customers of their platform. We believe revenue growth should remain strong given our expectations for some permanent long-term changes with an increased remote work environment that favors both increased usage from part of existing customers is the stratification of potential for greater growth of new customers “. BAND stock rating and its $ 225 price target suggests room for a nearly 50% upside over the next 12 months. (To see Walkley’s track record, click here) Overall, BAND achieves an analyst consensus-moderated buy rating, based on 5 reviews, including 4 purchases and 1 sale. The shares are priced at $ 150.50 and the median price target of $ 192.20 implies a one-year upside of ~ 28%. (See BAND Stock Analysis on TipRanks) Wayfair, Inc. (W) From cloud communications to e-commerce, where Wayfair is a leader in the home and furniture industry. Ecommerce made strong gains during the COVID pandemic as customers moved larger portions of their purchases online. The stock shows that, having grown 180% year to date, the gains also reflected strong sales during the pandemic period. EPS turned positive in the second quarter, coming in at $ 2.54 against a forecast of 55 cents. In the third quarter, earnings per share were $ 1.80, beating the estimate of 300%. Revenue is also high, with $ 3.8 billion in the third quarter representing a 66% year-over-year increase. And like Bandwidth above, Wayfair has a solid balance sheet, with $ 2.6 billion in cash and liquid assets reported at the end of the third quarter. These tax gains are based on solid sales performance. Wayfair recorded 11.3 million repeat customer orders in the third quarter, or nearly 72% of total orders for the quarter. Active customers in the company’s Direct Retail business segment increased by 50% year-on-year to 28.8 million. Peter Keith, 5-star analyst at Piper Sandler, writes of Wayfair, “Looking ahead, KPI’s repeat customers (% of orders) and Average Customer Revenue (LTM) both have hit all-time highs and suggest Wayfair will grow nicely. Revenue on a broader customer base … We maintain our bullish thesis as above-trend sales growth is likely to persist at least into 2021 and margins are expanding far above expectations – with the long-term drivers who focus. ”It shouldn’t come as a surprise, then, that Keith stays with the bulls. In addition to an overweight (i.e. Buy) rating, it left a $ 370 price target on the stock. Investors could pocket a 47% gain if this target is met in the twelve months ahead. (To see Keith’s track record, click here) Overall, Wayfair has 20 reviews recorded, including 10 buys, 7 holds and 3 sells, making analyst consensus consider a Moderate B uy. Stock W is on sale at $ 251.70 and has an average price target of $ 312.63, with a potential upside of 24% for the next few months. (See Wayfair’s Stock Analysis on TipRanks) Schrodinger (SDGR) Last but not least is Schrodinger, a software company that develops applications for the life sciences and materials sciences sectors. In short, the company builds the software platforms that allow customers to evaluate experimental compounds. Schrodinger describes his software as a physics-based platform, integrating solutions for collaboration, data analysis and predictive modeling in chemistry. The platform is widely used in the pharmaceutical industry, but also in the aerospace, energy and semiconductor industries. Schrodinger went public in February this year, just as the crown crisis was intensifying, and quickly saw strong share gains. At the IPO, the stock sold for $ 26 per share, well above its initial price of $ 17. The company sold well over 11.8 million shares, making it one of the most successful openings of the year. . Since then, SDGR shares have more than doubled, gaining nearly 140% in the first nine months of public trading. Revenues have remained steady throughout the year, with the first three quarters of 2020 showing the top line between $ 23. and $ 26 million. The third quarter number, at $ 25 million, is right in the middle of that range. The third quarter top line beat the forecast by 10%. Covering this stock for BMO, 5-star analyst Do Kim writes, “We believe the 42% y / y growth in software revenue reflects accelerating adoption of the growing customer base. We expect growth of software continues into 2021, as we believe the pandemic trend of remote working is persistent, with increasing platform validation from collaborations. ” In keeping with this optimistic outlook, Kim estimates that SDGR shares an Outperform (i.e. Buy) along with a $ 94 price target. This figure indicates confidence in a 37% upside potential over one year. (To see Kim’s resume, click here) All in all, Schrodinger’s Strong Buy consensus rating is based on 3 purchases and 1 suspension. The stock has an average price target of $ 83, up 21% from the current trading price of $ 68.52. (See SDGR Stock Analysis on TipRanks) To find good ideas for trading growth stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buys, a newly launched tool that combines all of TipRanks’ equity insights. Disclaimer: The views expressed in this article are only those of the analysts in attendance. The content is to be used for informational purposes only. It is very important to do your own analysis before making any investments.
