The Dow and Nasdaq climbed slightly Wednesday amid strong quarterly earnings results from Apple AAPL and other giants. This marks two days of gains following the coronavirus-based selloff, which might help ease some Wall Street nerves.
Aside from the uncertainty surrounding the potential spread of the coronavirus in China and beyond, markets appear to be in a good place in 2020. Corporate earnings growth, low interest rates, low U.S. unemployment, and more, all set up a situation where stocks could continue to climb.
With this in mind, investors should always think about adding a few growth stocks to their portfolios. And tech has clearly been the home of growth stocks for years. So let’s take a look at three growth-focused tech stocks that we found with our Zacks Stock Screener that investors might want to buy right now…
Coupa Software COUP
Coupa Software’s cloud-based spend management platform aims to deliver “value as a service” to its customers. The firm’s cloud offerings help connect hundreds of organizations with over five million suppliers around the world to provide stronger “visibility into and control over how companies spend money.” Coupa’s business model is straightforward and highly attractive, as nearly every firm, big and small, aims to save money where they can.
The San Mateo-California based firm topped our Q3 earnings and revenue estimates in early December and its shares are up 11% since then. Plus, COUP shares have soared 106% in the last year and 342% in the last 24 months. COUP is the only stock on our list today with a Zack Rank #3 (Hold) at the moment, but its story and growth prospects seem to warrant its inclusion.
Coupa, which earns a “B” grade for Growth in our Style Scores system, is projected to see its full-year fiscal 2020 revenue soar over 46% to $381.3 million, based on our Zacks estimates. This growth is expected to help lift its adjusted FY20 earnings by 80% to $0.36 a share. Coupa’s fiscal 2021 sales are then projected to jump another 27% higher, with its EPS figure set to climb 30% above our current-year estimate. Plus, COUP announced in early January that it acquired corporate travel savings startup Yapta in an effort to further expand its offerings.
Zendesk, Inc. ZEN
Zendesk is a CRM firm that offers sales, support, and customer engagement software, and boasts over 150,000 customers, ranging from startups to enterprises. ZEN announced earlier this month the launch of its The Sell Marketplace. The service helps clients access apps from other firms, such as Dropbox DBX. “Customers increasingly expect companies to collaborate internally and with partners on delivering a great experience,” Zendesk’s Adrian McDermott said in a statement.
ZEN shares are up 265% in the last three years and have soared 29% since it reported its Q3 results in late October. Despite this surge, the stock still rests about 8.5% below its 52-week highs, which could give the stock room to run heading into its Q4 report on February 6. Zendesk is also trading below its two-year highs of 11.1X forward 12-month Zacks sales estimates at 8.9X right now. Zendesk’s positive earnings revision activity helps it earn a Zacks Rank #2 (Buy). ZEN also boats an “A” grade for Growth in our Style Scores system.
The San Francisco-based firm’s adjusted Q4 earnings are projected to pop 10% on the back of 32.3% higher sales. ZEN’s fiscal 2019 EPS figure is expected to soar 45.5% to $0.32 a share, with sales set to jump over 36% to $814.3 million. Then, ZEN’s fiscal 2020 sales are projected to climb another 30% higher, with adjusted earnings set to skyrocket another 84%. In the end, Zendesk looks poised to grow as part of the continued digitalization of businesses big and small.
CrowdStrike Holdings Inc. CRWD
CrowdStrike is a cybersecurity firm focused on cloud computing. The firm should be able to grow alongside the industry that is quickly becoming ubiquitous. CrowdStrike’s multi-tenant, cloud native, artificial intelligence-based security solutions for endpoints and more have attracted thousands of customers to its multiple SaaS subscription-based cybersecurity offerings. CrowdStrike was founded in 2011 and went public in June 2019. CRWD stock found early success, hitting nearly $100 per share last August.
Shares of CRWD have fallen since then, but have regained some momentum, up 20% in January to hover around $60 per share. The stock is trading at 18.3X forward 12-month sales estimates. This is high, but it comes in far below its August peak and helps make its valuation more reasonable even though it is purely a growth play. CrowdStrike’s strong upward earnings estimate revisions help it earn a Zacks Rank #2 (Buy).
CrowdStrike’s management raised its sales guidance in December on the back of solid Q3 subscription sales growth and customer additions—up 112% to 4,561 customers. The Sunnyvale, California-based firm’s fiscal 2020 sales are projected to reach $467 million, based on our Zacks estimates. The company’s 2021 revenue is then projected to surge 42% higher to $664.4 million. On top of that, CRWD is expected to cut its projected adjusted FY20 loss of -$0.52 down to -$0.21 in 2021. CRWD has also easily surpassed our bottom-line estimates in the trailing two periods.
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