Many investors have gone far beyond the bargain hunt that was so popular just a few months ago and are now looking for other measures that could signal long-term success. A good starting point is to find companies that have a leading market position or strong tailwinds that can fuel continued growth.
If you have $ 3,000 (or less) in cash available that you don’t need for immediate spending or to boost your emergency fund, running it in these top three stocks could be a boon for the next decade.
Square: strengthening the economy
According to the U.S. Small Business Administration (SBA), small businesses are the engine of the U.S. economy, creating almost two-thirds of all new jobs and accounting for 44% of the nation’s economic activity. A company particularly well placed to benefit from this paradigm is Square (NYSE: SQ).
Square provides all the tools that entrepreneurs need to start a business. In addition to its homonymous mobile point-of-sale payment devices, the company offers e-commerce, social media integration, and billing and billing tools. Square also offers a variety of delivery, pickup and shipping options. The provision of options such as online retail and curbside delivery helped many businesses survive and even thrive during the pandemic, thereby contributing to the growth of Square.
While some investors feared the worst, Square reported 44% year-over-year revenue growth in the first quarter. The company continued to generate losses as it attempted to capture market share, but Square’s adjusted EBITDA improved by 85%. The company also handled a gross payment volume of almost $ 26 billion, which shows the staggering scope of its activities.
Its payment app also stimulates growth. During March and again in April, the peer-to-peer payment system added a record number of active customers, as orders for on-site shelters caused “significant changes in consumer behavior ” As a result, Gross App Cash Profits increased 115% year over year.
Carré is by no means cheap. After gaining more than 100% so far in 2020, investors have been willing to pay a premium for the fintech’s incredible growth opportunities, dropping its price / sales ratio to 12 – when a ratio between a and two is considered good. I’d say it’s a small price to pay, as analysts predict that Square’s revenues will more than double this year.
Roku: the leader in under-the-radar streaming
There is no doubt that streaming has entered the mainstream, as the number of video streaming subscribers has exceeded cable customers in recent years. At the same time, cord cutting is accelerating, with 4.9 million customers abandoning cable in 2019, the largest year-over-year decline in the history of the industry. However, as the number of paid subscriptions has increased, television enthusiasts are looking for an inexpensive way to fill the gaps in their viewing choices. It’s there that An (NASDAQ: ROKU) between.
The company launched set-top boxes and dongles that are now a staple in streaming video entertainment, but Roku also has a secret weapon in the streaming wars. It has developed a dedicated operating system (OS) for smart TVs that it licenses to TV manufacturers, thereby eliminating the need for additional equipment and improving the user experience. The Roku operating system has become the industry standard and has been integrated into one in three connected TVs sold in the United States last year, as well as 25% of TVs sold in Canada. Roku is now expanding its reach into more international markets.
What investors may not realize is that the lion’s share of Roku’s revenue – 73% in the first quarter – does not come from the sale of devices, but from its platform segment, which includes advertising, The Roku Channel and its operating licenses. This segment increased 73% year-over-year, accelerating from 71% growth in the fourth quarter. At the same time, active accounts increased by 37% and hours of streaming increased by 49%.
Fears of a potential slowdown in advertising spending as a result of the pandemic weighed on the stock of streaming technologies, giving long-term investors the opportunity to capitalize on this short-term thinking. The stock is still not cheap, with a forward selling price of 12. Yet analysts predict revenues will jump 32% this year and 35% in 2021 – and Roku frequently exceeds expectations, which explains more than the premium price.
Livongo Health: improving the quality of life for people with chronic diseases
One of the byproducts of the pandemic has been the accelerated adoption of telehealth as a means of keeping patients in touch with their health care professionals, especially in the era of social distancing.
Livongo Health (NASDAQ: LVGO), while not strictly a telehealth business, brings similar technology to the table. It helps patients with chronic health conditions to better manage their conditions using connected devices. Livongo collects and analyzes patient data and vital statistics using artificial intelligence. Once the algorithms have done their work, users receive personalized feedback, coaching and advice. By encouraging them to make gradual behavior changes, Livongo helps patients live longer and healthier lives.
While the company initially focused only on patients with diabetes, it has since expanded its offering to include conditions as diverse as weight management, diabetes prevention, hypertension, and behavioral health issues – including understood depression and anxiety.
Livongo announced preliminary results for its second quarter, which propelled the title again. For the second quarter, the company now anticipates revenue growth of approximately 111% year-on-year, after recording growth of 156% last year. Although we do not yet have a complete picture of the second quarter, the company has not been consistently profitable, although its recent losses have been small and manageable.
It is estimated that 60% of American adults suffer from at least one chronic health problem, while 42% suffer from more than one. Livongo management estimates that the diabetes and hypertension markets alone represent a market of nearly $ 47 billion. With sales of just $ 170 million last year, the company has barely scratched the surface of a huge opportunity.
It should be noted that Livongo has the highest value in the group, with a forward sale price of 30. In the context of triple-digit year-over-year revenue growth, however, it does not not seem to be almost the costly case.