|Bid||103.15 x 800|
|Ask||103.21 x 1100|
|Day's Range||101.64 - 105.21|
|52 Week Range||41.88 - 141.85|
|Beta (3Y Monthly)||1.04|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||143.74|
In early September, we have seen a violent, significant and largely unprecedented shift in the investment landscape from momentum stocks to value stocks. Month-to-date, the iShares Momentum Factor ETF (BATS:MTUM) is down more than 1%, while the iShares Value Factor ETF (BATS:VLUE) is up more than 7%.What's happening under the hood? Long story short, investors were hyper-concerned about a recession in August. In response to rising recession fears, investors ditched economically sensitive value stocks that require a good economy to head higher, and piled into momentum growth stocks that don't require a good economy to head higher (because they have such strong secular tailwinds).In September, though, recession fears have backed off. The Federal Reserve has sounded as dovish as they've ever sounded. China and the U.S. have resumed trade talks. Long bond yields have moved higher. The curve has mostly un-inverted. In response to these easing recession fears, investors are unwinding their momentum trade. That is, they are booking profits on their momentum stocks, and buying the dip in value stocks, since these stocks should now move higher that the economic outlook is improving.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the September momentum-to-value shift is actually a vote of confidence in the economy from the equity markets.The last time a momentum-to-value shift like this happened? Mid-2016, when the global economy was in the process of shaking off slowing growth headwinds.What happens next? All stocks go higher -- momentum stocks and value stocks. Broadly, the global economy isn't going into a recession. On the contrary, conditions are improving. As conditions do improve, both value and momentum stocks will move higher over the next few quarters. * 10 Recession-Resistant Services Stocks to Buy The implication right now? Selectively buy the dip in high quality momentum stocks. Which ones are on my shopping list? Let's take a look. Momentum Stocks to Buy on the Dip: Shopify (SHOP)Source: Beyond The Scene / Shutterstock.com YTD Gain Before Selloff: Almost 200%% Off High: 15%First up, we have e-commerce solutions provider Shopify (NYSE:SHOP), which -- thanks to a near 200% gain from January to August 2019 -- has been one of the most unstoppable stocks this year. But, as we all know, there is no such thing as an unstoppable stock. Indeed, SHOP stock has been stopped recently. Over the past few weeks, the stock has shed 15% as investors have booked profits on what has been an 800% rally over the past three years.The "buy the dip" thesis on SHOP stock revolves around three things.First, the fundamentals underlying Shopify stock remain rock solid -- the company just reported (yet another) 50%-plus volume growth quarter with robust margin expansion, and the underlying decentralization and direct retail trends supporting the growth narrative remain vigorous. The only thing that has changed is the stock is now cheaper.Second, this momentum trade unwind won't last forever. It's tough to see investors selling Shopify stock and buying Rite Aid (NYSE:RAD) stock for the foreseeable future. They won't. This momentum-to-value shift is short lived, and is simply a reversion to the norm (momentum's out-performance relative to value got over-extended in the summer). Once we do get back to the norm, investors will pile back into SHOP stock because this stock is supported by one of the most robust growth narratives in the market.Third, excluding the late 2018 selloff, corrections in SHOP stock usually bottom out once they hit a 20% peak-to-trough decline. We are almost there today, so it looks like the worst of this sell-off is over. Okta (OKTA)Source: Sundry Photography / Shutterstock.com YTD Gain Before Selloff: About 120%% Off High: 24%Next up, we have cloud security and access management company Okta (NASDAQ:OKTA). Through late July, OKTA stock was up a whopping 120% year-to-date. Ever since, though, the stock has come crashing down, and now trades in bear market territory, or more than 20% off recent highs.Much like the selloff in SHOP stock, the August/September selloff in OKTA stock is a buying opportunity. The rationale? The fundamentals remain great and the optics are improving.Big picture, Okta is a hyper-growth cloud player in the secular growth identity access management market, which is essentially an identity-centric approach to data security and management. This market is very big (around $10 billion in 2018), is growing very quickly thanks to widespread cloud adoption and the mainstream emergence of IoT devices (13% compounded annual growth rate projected into 2025), and Okta is rapidly gaining share in that market (roughly 1% share in 2015, to 4% share in 2018). Assuming Okta can continue to expand share in this market thanks to its exclusive focus on cloud IAM (comps in this space have many different verticals, of which IAM is just one), then Okta projects as a big revenue grower for a lot longer.At the same time, gross margins are really high, and approaching 80%, while the opex rate is rapidly falling with revenue scale. This dynamic will persist for the foreseeable future, meaning Okta projects as big time profit grower for a lot longer, and that reality provides a favorable fundamental backdrop for OKTA stock. * 10 Big IPO Stocks From 2019 to Watch Meanwhile, as mentioned earlier, the optics surrounding big growth momentum stocks should improve over the next few months. As those optics improve, they will converge on favorable fundamentals, and ultimately spark a nice rebound rally in OKTA stock. The Trade Desk (TTD)Source: Shutterstock YTD Gain Before Selloff: Over 120%% Off High: 23%Third on this list of momentum stocks to buy on the dip is programmatic advertising leader The Trade Desk (NASDAQ:TTD). Once up over 120% year-to-date, TTD stock has come crashing down over the past few years, and presently trades in bear market territory.The next move in this stock will likely be higher for three big reasons. First, the fundamentals remain supportive of sustained long-term growth. Second, the optics surrounding TTD stock will improve going forward. Third, the stock is closing in on major technical support.On the first point, The Trade Desk is the leader in the secular growth programmatic advertising market, which entails automating and optimizing the ad transaction process by using data and algorithms. As the global economy becomes increasingly automated and data-driven, so will the global advertising world, meaning that at scale, The Trade Desk's programmatic ad platform will be a very important and relevant piece in the global ad machine.Right now, less than a percent of global digital ad spend flows through The Trade Desk's ecosystem. Thus, the runway for growth here is quite robust in the big picture.On the second point, as mentioned earlier, the momentum-to-value shift won't last forever. Once it ends -- and it should end soon -- momentum stocks will come back into favor, providing an upward lift for TTD stock.On the third point, TTD stock is rapidly closing in on its 200-day moving average, which has -- historically speaking -- provided a significant level of support for the stock during selloffs. If TTD successfully tests and holds this support level, the next move here will almost assuredly be higher. Pinterest (PINS)Source: Nopparat Khokthong / Shutterstock.com YTD Gain Before Selloff: Over 90% (from its IPO price)% Off High: 20%Another momentum stock that looks compelling on recent weakness is social media and digital ad platform Pinterest (NYSE:PINS). Pinterest went public in April 2019 at a price of $19 per share. By mid-August 2019, PINS stock had nearly doubled from its IPO price. Since, the stock has tumbled alongside other momentum names and presently trades 20% off those August highs.The bull thesis on PINS stock goes something like this. Pinterest has always been a great company. They operate a unique and differentiated social media platform that is used for visual discovery and inspiration, and which importantly: 1) has very little use-case overlap with other social media platforms, and 2) is a perfect place for ads, since consumers are going to Pinterest looking for something. Consequently, as this company just starts to ramp up its ad business, the next few years should comprise very big growth since advertisers will love the unique attention they get through the Pinterest platform.Despite all this greatness, PINS stock simply became too richly valued in August. It's now sold off -- to much more reasonably valued levels. As such, the fundamentals check out here, and imply that this selloff is a buying opportunity. * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk So do the optics, which -- as mentioned before -- should improve surrounding all momentum stocks over the next few months as this momentum-to-value shift stops. Net net, then, favorable fundamentals and optics should drive PINS stock higher from today's lows. Splunk (SPLK)Source: Michael Vi / Shutterstock.com YTD Gain Before Selloff: Over 30%% Off High: 18%Another cloud momentum stock that looks good on this dip is big data company Splunk (NASDAQ:SPLK). SPLK stock has been less hot this year than its momentum peers -- at its peak, it was up just 30% year-to-date. But, this relative under-performance in 2019 has not shielded the stock from recent momentum stock weakness. At current levels, SPLK stock trades nearly 20% off recent highs.Time to buy? I think so. Splunk is at the heart of arguably the biggest growth narrative in the market today -- data-driven decision making. Broadly, everyone and their best friend are starting to understand that data is the future of everything, since it allows individuals and companies to make better, smarter and faster decisions. Consequently, enterprises everywhere are doing all they can to get their hands on data. But, what good is data if you can't understand it, and glean actionable insights from it?Insert Splunk. This is exactly what Splunk does. They help enterprises of all shapes and sizes turn their raw machine data into actionable insights. Consequently, as companies continue to pivot into data-driven decision making processes over the next several years, they will adopt and more heavily lean into Splunk's services.The long-term implication? Splunk's revenue and profit growth trajectory will remain robust for a lot longer. As it does remain robust, SPLK stock will continue to move higher, meaning that recent weakness in the stock is nothing more than a long-term buying opportunity. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com YTD Gain Before Selloff: About 60%% Off High: 26%One momentum stock that has been hit particularly hard over the past few weeks is digital education company Chegg (NASDAQ:CHGG). At one point, CHGG stock was up an impressive 60% year-to-date. That was back in late July and early August. Ever since, CHGG stock has come crashing down and presently trades more than 25% off those recent highs.This big selloff is a compelling opportunity for three simple reasons.First, nothing company-specific prompted this selloff. The last news we heard from Chegg was a double beat-and-raise Q2 print which shot the stock to all-time highs in late July. Ever since, we haven't heard anything big -- good or bad -- from the company. Thus, CHGG stock has shed more than 25% on no news.Second, the core fundamentals underlying CHGG stock remain very healthy. The company has created a connected learning platform that is rapidly becoming a necessary learning tool for high school and college students across America. Current growth rates are huge, with 25%-plus revenue growth last quarter and 30% subscriber growth. Margins are powering higher -- gross margins were up nearly 500 basis points last quarter thanks to the software pivot. The opportunity remains large -- only 3 million subs for Chegg, in a 36 million U.S. high school and college student market. Thus, broad strokes, the fundamentals underlying Chegg stock remain very good.Third, the valuation is now attractive. In late July, this stock had a near 60-times forward earnings multiple. Today, that multiple stands narrowly above 30, which is below the application software sector average forward earnings multiple. * 7 Dow Titans Breaking Higher Net net, CHGG stock looks ready to bounce back. This selloff was largely unwarranted, the fundamentals remain good, and the valuation leaves room for multiple expansion powered upside. Adobe (ADBE)Source: r.classen / Shutterstock.com YTD Gain Before Selloff: Over 35%% Off High: 11%Last, but not least, on this list of momentum stocks to buy on the dip is cloud giant Adobe (NASDAQ:ADBE). Adobe stock, which at one point was up more than 35% year-to-date, presently trades about 11% off recent highs. That matches the biggest drop ADBE stock has posted in 2019, and the second-biggest drop over the past three years.In other words, with ADBE stock, you have a winning company in the midst of its second-biggest selloff in three years. That's a compelling set-up to buy the dip.Adobe is a very good company. This company dominates the visual cloud segment, with very little competition. That's a great segment to dominate today. All content is becoming visual -- think streaming TV services, or visual-first social media apps. We live in a world where consumers love to consume visual content, meaning we live in a world where enterprises, advertisers and creative professionals have to create visual content. When those entities create visual content, they do so with Adobe -- and they've been creating more and more visual content than ever before, meaning adoption of Adobe's services is growing rapidly.Just look at Adobe's numbers for proof of this. Revenue growth has been in the double-digit range for a long time, and will remain there for a lot longer, because secular visual consumption trends are far from being over. At the same time, Adobe can get away with price hikes and huge gross margins, because there's hardly any competition in the space. Thus, this is a big margin, big growth company that will ultimately stay on a big profit growth trajectory for a lot longer.What will that result in? A winning trajectory for ADBE stock in the long run. Thus, near-term weakness in ADBE stock is nothing more than a long-term buying opportunity.As of this writing, Luke Lango was long SHOP, OKTA, TTD, PINS, SPLK, CHGG and ADBE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post 7 Momentum Stocks to Buy On the Dip appeared first on InvestorPlace.
Okta (NASDAQ:OKTA) isn't exactly a household name. Enough people knew about it though (and liked it well enough) to Okta stock from its early-2017 IPO price of $17 to its July high of $141.85.Source: Sundry Photography / Shutterstock.com Then, everything changed. The stock has peeled back from that high to its current price near $103 and is seemingly testing even lower lows. The 27% meltdown Okta stock has suffered in fewer than two months is the biggest selloff it has seen since became publicly traded.The likely reasons include that Okta pushed the average maturation date on some of its debt down the road. On top of that uninspiring decision, several cloud-computing names like Twilio (NYSE:TWLO) and Slack Technologies (NYSE:WORK) have also stumbled into selloffs over the course of the past few days. Industry influence can be potent at times.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThere's a more likely underlying reason OKTA has been hammered after being such an incredible performer though. That is, it's wildly, ridiculously overvalued, with little hope of ever justifying what was at one point in July a more than $16 billion market cap. A Closer Look at Okta StockOkta offers computer login-security services, remotely preventing unauthorized access to protected information. If you log into an app at work or even via your smartphone, it's possible you've passed through an Okta-managed digital gate. * 7 Tech Stocks You Should Avoid Now It's an important business given the countless number of data breaches and computer hacks we've seen of late, but it's not a business with a particularly high barrier to entry.The crowded field is evidence of that. Twilio is in the same arena, as is Nexmo. And Bandwidth. And Hearsay, Plivo and Voxbone just to name a few, along with dozens of other players.It's not just the small startups in the business though. Big rivals offer comparable services. Though Forrester gave Okta the highest praise in the second quarter of the year by calling it the leader of the IDaaS (identification as a service) industry, that industry's players also included Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG).No company wants to have to stand up to Google or Microsoft.It's not a message fans and followers of Okta want to hear about, and it's certainly not the new and modern way of thinking about evaluating equities. A good story is good enough. The idea is all the matters. The trajectory rather than the current situation is the key.Except, those premises are only true for a short while. Eventually, a company has to make some real money that at least comes close to making sense given its price.Even with its 27% selloff, Okta stock still isn't even close. The Real Problem for Okta StockThe sheer quantity and quality of its competition is only half the concern suddenly weighing Okta down, however. The other half is a valuation that makes little sense even if Okta can outpace its rivals.Forget the lack of earnings for the moment; lots of companies bleed cash in their infancy. Even just focusing on revenue, Okta is valued at a stunning 25.7 times its trailing sales of $486.8 million.The S&P 500's price/sales ratio right now is an above-average 2.2. By that measure, Okta is overvalued by a factor of more than ten.Okta would need to grow its top line all the way from $486 million now to $5.6 billion to fairly justify its current market cap of $12.3 billion. Even allowing a little more wiggle room that tech stocks often command, a top line of $5 billion would still be a necessity. That's more than a 1000% improvement in sales in a market that Microsoft and Google are also in.Earnings growth would have to be even more dramatic to justify the stock's current value, working its way out of the red. The Reality for Okta StockThe digital future will undoubtedly require even more secure login architecture. Okta provides it.Unfortunately, so do dozens of other companies. Investors went nuts in particular over this one, however, without ever really asking questions like, "How much revenue can this one company produce?" and "How much of that revenue can be turned into a viable, sustainable profit when the service is essentially a commodity?"Increasingly, investors are realizing that the company's insiders and early investors had more to gain by going public and touting the stock than they did by building the company's revenue base. The same goes for rivals. It's also arguable these insiders and major stakeholders of all these companies were ultimately gunning for an acquisition that's looking less and less likely.The timing of these realizations remains one of life's great trading mysteries.And that's not to say Okta stock won't bounce back from its recent setback. It probably will. Anything dropped from enough height will bounce. The question is, can any bounce be sustained?The scope and speed of the selloff, however, suggests the cloud-identification market's investors just had their aha moment. Okta's honeymoon period is officially over, and that ain't good for existing shareholders.As of this writing, James Brumley held a long position in Alphabet. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Okta Stock May Be Preparing to Take a Real, More Permanent Plunge appeared first on InvestorPlace.
Anaplan, Inc., CrowdStrike Holdings, Inc., Okta, Inc. - some of the most resilient technology stocks have recently slipped to a key level and are poised for a possible bounce. That's according to All Star Charts, which pointed out software is approaching oversold territory. "Most Technology subsectors like Cloud Computing, Cybersecurity, and Internet, have been […]
Undoubtedly, cloud services companies like Okta (NASDAQ:OKTA) offer the most relevant products and platforms. With more organizations taking advantage of the connectivity and cost efficiencies that cloud functions provide, OKTA stock has witnessed a surge in buying interest.Source: Sundry Photography / Shutterstock.com That said, the industry is still relatively in its infancy. While early leaders like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) have emerged to take the lead, there's no guarantee that they'll keep it. Technology is always in flux, and demand -- or lack thereof -- can change on a dime.Previously, this circumstance has benefited Okta stock. But recently, Wall Street has apparently take a dim view on the cloud and various tech names. On Monday, OKTA stock dropped nearly 10%. That made it one of the worst performers of the day.InvestorPlace - Stock Market News, Stock Advice & Trading Tips What Happened to OKTA Stock?Naturally, whenever we see a massive hemorrhaging in the markets, we want (or demand) an explanation. In most cases, the answer is apparent: A company flubbed an earnings report or the industry faces a decimation in revenue-making opportunities. * 7 Stocks to Buy In a Flat Market But with Okta stock, none of these things apply. For one thing, shares have absolutely skyrocketed this year. Even with Monday's market erosion, OKTA is up almost 73%. That, my friends, is what we call resiliency.It also points to the fact that, up until at least recently, investors believed in the narrative for OKTA stock. A quick rundown of their client list reads like a "who's who" of major industry players. For example, we're talking about names like JetBlue Airways (NASDAQ:JBLU), Adobe (NASDAQ:ADBE), and Western Union (NYSE:WU).Fundamentally Okta stock is on the up and up. About two weeks ago, OKTA released its earnings report for the second quarter of fiscal 2020. As a bull, the company provided exactly what you could hope to expect. On the profitability front, the company narrowed an expected loss of 10 cents per share to a loss of 5 cents. On the top line, OKTA rang up $140.5 million, easily surpassing the consensus estimate of $131 million.Yet OKTA stock dropped on the financial disclosure, puzzling many onlookers. Curiously, shares never really recovered. For those hoping that Monday would provide a fresh spark, they were obviously badly disappointed.Worst of all, no one knows why. However, peer-to-peer comparisons offer some clues. For example, several rivals, including Twilio (NYSE:TWLO) incurred double-digit losses on Monday. Although it's speculation, investors may be rotating out of tech plays and into what are perceived as safer opportunities. Portfolio Shifting May Have Hurt OKTA StockIn the absence of a better explanation, investors probably shifted their exposure to safer bets. This in turn created, and then later amplified, volatility in OKTA stock.First, while the cloud services company's bulls have lauded its growth trajectory, I must bring up the counterargument: The robustness of that growth has declined significantly in magnitude.For example, back in Q1 of calendar 2017, OKTA generated $49.3 million, which was good for an 82% lift from the year-ago quarter. In the most recent earnings report, the year-over-year lift was comparatively small at 48.5%. With the exception of a few quarters, the sales growth rate has consistently declined between Q1 2017 to Q2 2019.Ordinarily, that shouldn't cause panic. Because of the law of small numbers, it is increasingly difficult to sustain outrageously high growth rates as the nominal revenues get bigger. However, OKTA's quarterly revenue is now $140 million, which isn't that big compared to its market capitalization of $13 billion. Thus, investors might be freaked out about the rich premium on Okta stock.A second point to consider is which names jumped on Monday. I can't help but notice that energy-related names, like Helmerich and Payne (NYSE:HP) and National Oilwell Varco (NYSE:NOV) outperformed. Perhaps with the noise President Donald Trump's administration has been making geopolitically, investors see value in recently undervalued companies. How to Approach OKTAOverall, I have reservations about engaging a technically overheated play like OKTA stock. Even with Monday's decline, I still have these reservations.Irrespective of your opinion about Okta stock, we must respect that the markets severely penalized it. With the volatility, shares are now sandwiched in between the 50-day moving average and the 200-day moving average. It's currently straddling an area of weak support, suggesting further volatility.For conservative investors, I'd stay away for now. If on the other hand you're bullish on OKTA, you might enjoy this discount. Still, my bet is that a deeper discount lies ahead for those who wait.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Donat Try to Catch Okta Stock's Falling Knives appeared first on InvestorPlace.
On Monday morning, while the rest of the markets were rising, a few stars fell out of the sky. Incredible momentum champion stocks like Okta (NASDAQ:OKTA), Twilio (NYSE:TWLO) and The Trade Desk (NASDAQ:TTD) had a really bad day. What made it seem worse is that this was happening while markets were enjoying a nice rally. Even the mighty Shopify (NYSE:SHOP) suffered. Some of the 2019 winners are stocks to buy now.This dip may be a great opportunity to add a little risk to your portfolio. Logic suggests that if the overall stock markets are headed higher, then OKTA, TWLO and TTD stock will find footing and rally too. Onus is still on the bears to prove that they can sustain the selling in these three Software-as-a-service (SaaS) stocks. Until then, dips are buying opportunities. * 7 Best Stocks That Crushed It This Earnings Season OKTA, TTD, and TWLO stocks all fall under the umbrella of SaaS stocks and this rising sector not a fad. SaaS is a movement that Salesforce.com (NYSE:CRM) started years ago, and now, the whole world has adopted it. The best example of this is Microsoft (NASDAQ:MSFT) and how well they switched to the subscription model versus selling individual software hard copy releases and upgrades.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Okta (OKTA)When I say OKTA had a bad day, it is most definitely a relative statement. Year-to-date Okta stock is still up 71% -- so this is by no means a catastrophe yet. This is 3 times better than the NASDAQ Invesco QQQ Trust (QQQ) for example.A few red ticks do not not erase the enthusiasm in the stock. But technically, the rise in OKTA stock was so fast that it left weak hands below. Meaning there are fast profits that could shake out quickly on bad days. But every dip builds a stronger base. That's why this one may actually be a good entry point opportunity for the next few months.OKTA is not a cheap stock. the company loses money and sells at 35 times its sales. Clearly, if the markets in general correct, it would leave OKTA stock vulnerable for much more pain ahead. So the those looking to trade it shorter term should use tight stops.The lines to trade OKTA for the short term are clear. Once it lost $125 per share, $110 became the target and that filled on Monday afternoon. So from here the bears will have to work a lot harder to go much further. The zone below Monday's low is support. Below $100 per share OKTA could fall another $10 before it would hit the next pivot level.For investors who believe in the longer-term profit potential for the company, they should just buy the stock on this dip. I personally prefer to do it through options. Buying calls or shares here carries a lot of hopium. I'd much prefer selling the November $80 puts for the chance to generate income without even needing a rally. If OKTA stock stays above my level then I achieve maximum gains. Worst case scenario I keep my profit and own the shares at a 25% discount from Monday's close. I don't accrue losses unless OKTA falls below $79 per share. Twilio (TWLO)Twilio stock is also expensive as it sells at 25 times its sales. Clearly Twilio is also bloated based from traditional valuations. However, the company is poised to continue to benefit from the expansion of software services. So I don't judge entirely on today's valuation metrics. As long as they grow their top line, the P/E almost doesn't matter -- for a while at least.Nevertheless, there is risk from the charts. Once TWLO stock lost $120 per share, it triggered a bearish pattern with about $20 of potential downside. So far, it has priced in almost half of it as of Monday. So here it could bounce a little before it finishes the rest of the pattern.If I catch the Twilio stock knife today, I should know that there might be more pain ahead. So it's a good idea to start with half a position then add to it to manage risk if needed. As far as levels, TWLO stock has a pivot near $102 per share. This is not a hard line in the sand but rather a rubber band zone.For the same reasons as above, I like TWLO here or if it finishes the bearish pattern.Just like with OKTA, TWLO stock bulls have the responsibility to prove that these red candles are a mere shakeout of weak hands. And that the control is still in their hands. If I'm already long TWLO, then I stay long it into the support below. If I'm looking for an entry point, this dip is as good as any especially if I do it in tranches. * 10 Stocks to Sell in Market-Cursed September Alternatively, I like to sell downside puts into what others fear. For example I can sell the TWLO November $85 put and collect $2 to open. This way Twilio stock can fall 25% and I can still retain my maximum gains. If it does fall that much, I end up long TWLO stock and break even at $84 per share. The Trade Desk (TTD)TTD stock also lost its footing near $230 per share and is almost completely at the measured target of $200 per share. That is an important number because it is also the point of control for the whole year. Meaning the bulls and bears like to fight hard over it. The TTD 10-month range is huge as it rallied 180% off of the December lows. Coming back to $200 is still 100% gains from the Christmas Eve dip.This is normal price action because when a stock rises so quickly, at a certain point it has to give back some of it in order to build a better base from which the bulls can remount another rally even higher. So as long as TTD stock bulls hold above $190 per share, this drop is a non-event. If I own the shares, this is not the right time to bail on them.On the other hand, this is a momentum stock so technically, it could fill lower gaps like the one near $160 per share. But to get there, the bears will have to work a lot harder than they did to get here. So until then this dip is a buying opportunity.Alternatively here I would rather use options to profit and while leaving a margin of error. For example, I can sell the TTD November $135 put option and collect more than $2 to open. This means that I will profit even if TTD falls another 35% from current levels. If it falls below $133 then I would accrue losses.Fundamentally, TTD is also bloated from the traditional valuation perspective. Its trailing P/E is 100, and it sells at 22 times at sales. But then again this is a case where investors are paying up for future potential and not current profitability levels.Once hot stocks lose a lot of their froth, it's hard to regain the same level of enthusiasm on Wall Street. So the extreme sustained rallies become harder to achieve. That's why I prefer using options so to bank on downside support rather than upside potential.It is also important to note that I never sell naked puts unless I intend to own the shares. And I never risk more than I can afford to lose.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post 3 SaaS Stocks to Buy Now: OKTA, TWLO, TTD appeared first on InvestorPlace.
Overvalued tech stocks such as Alteryx and Twilio lost market value yesterday. They're also sliding today as investors are wary about valuations and growth.
(Bloomberg) -- Shares of some of this year’s highest-flying software stocks tumbled Monday as investors re-evaluate this year’s rally in light of the premium valuations their rapid revenue growth commands.Data-management software developer Alteryx Inc. plunged as much as 15%, while cybersecurity firm Crowdstrike Holdings Inc. sank 13%. They have been among 2019’s top performers, more than doubling since the start of the year. Both had revenue growth that exceeded 70% in the second quarter and trade at more than 20 times estimated sales, according to data compiled by Bloomberg. The average for the S&P 500 Software Index is about 7 times.Enterprise-software companies have been among the standout gainers in the S&P 500 this year, as investors have been have been willing to pay higher prices for faster revenue expansion amid concerns about slowing global growth. They’ve also been helped by limited China exposure, which has increased their appeal amid the Sino-American trade war. Monday’s slump comes after the broader market retraced almost all of its August losses as trade and economic worries eased.“Most of the names getting hit are high-multiple names that have had impressive run ups,” said Rishi Jaluria, a D.A. Davidson analyst. “This suggests some level of profit taking.”Other notable decliners on Monday include:Fastly Inc. -16%Slack Technologies Inc. -12%MongoDB Inc. -11%Pagerduty Inc. -11%Zoom Video Communications Inc. -9.6%Okta Inc. -11%Twilio Inc. -10%Coupa Software Inc. -11%Trade Desk Inc. -11%Shopify Inc. -7.8%(Adds S&P 500 Software Index average multiple in second pargraph.)To contact the reporter on this story: Jeran Wittenstein in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Catherine Larkin at email@example.com, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Russell 2000 index, the benchmark for small-cap investing, is officially in correction. The index is down 14% from its 52-week high point. At the same time, the S&P 500 is only 4% down, making an odd juxtaposition that signals investors are reluctant to back smaller companies. Tavis McCourt, of Raymond James, describes the current market environment as “a classic liquidity premium, and noticeable in all recent periods of global economic fear.”Aside from the economic implications, this situation makes it all too easy to miss some fine investments among the smaller tech firms. We’ll take a look here at three small-cap tech companies from the TipRanks Stock Screener, that merit close attention from investors. Two have shown sustained gains, and the third has shown a recent jump after strong earnings. All three offer innovative products in the cloud computing industry. Okta, Inc. (OKTA)Okta went public just two years ago, in 2017, and has since reached a market cap of $14.6 billion. The company specialized in identity and access management, offering cloud-based solution for managing user authentication and identity controls. Earlier this year, Okta boasted over 100 million registered users on its networks. Since going public, OKTA shares have appreciated steadily, and the stock is now trading at over 5 times its initial value.All of that makes OKTA a compelling buy. Cowen’s Nick Yako lays out a vigorously bullish case for this fast-growing tech company. He writes, “Large enterprise adoption remains a key driver for the company. OKTA continues to add customers at a healthy clip, adding 450 net new customers in the quarter… The company also continues to have success growing its enterprise customer base, which it defines as customers with average contract value (ACV) of $100K+. Moreover, OKTA added 80 new enterprise customers in the quarter, as large customer growth once again outpaced overall customer growth.” His price target, $150, suggests room for 23% more growth.Needham analyst Alex Henderson agrees that OKTA is a strong buy and a growth case. While he does not set a price target, he does say, “Expect 31-34% growth for the October quarter, which leaves plenty of room for upside.”Okta’s analyst consensus rating is a Moderate Buy, derived from 8 buys and 4 holds. OKTA shares are selling for $121, and the average price target of $141 suggests a 16.8% upside. Coupa Software, Inc. (COUP)Coupa has quickly positioned itself as a leader in Business Spend Management, offering cloud software that permits managers to track and control the money and resources companies spend. It’s a niche market, but one with true potential, as Coupa offers a service that every business absolutely needs. The company’s growth tells the tale: in the last three years, COUP has climbed from $29 per share to $146. Even the market correction in the second half of 2018 did not seriously derail Coupa’s upward trajectory.Writing from Oppenheimer, 5-star analyst Koji Ikeda notes “the strong momentum the business is displaying will likely continue in the future unabated, and with Pay generating strong initial interest, more "good results" are on the way.” Ikeda also appreciated that the company has recently raised its growth outlook. In turn, he raised his price target by 6.25%, to $170, suggesting an upside potential of 14%.RBC Capital’s Alex Zukin is also bullish on Coup, giving the stock a $165 target and 11% upside. He says, “The company's best-in-class position in application platform, along with a large networked user/supplier community make it a legitimate market standard... We believe that Coupa Software has a long runway toward sustaining growth rate of over 30% and meaningful near-term upside potential.”Overall, COUP shares hold a Moderate Buy from the analyst consensus. This rating is based on 10 buys and 4 holds given in the past three months. The average price target of $157 implies a 5.7% upside premium from the share price of $148. Box, Inc. (BOX)Of the stocks in this list, BOX carries the highest risk. Box is another cloud software company, offering content management and file sharing as its specialty. The company has been volatile in the past year, and operates at a loss, but the Q2 earnings report showed spots of good news. Revenues, at $172.5 million, were well above the $169.5 million forecast, up 20% year-over-year. The guidance for the current quarter was set at $174 to $175 million – far above the $73.6 expected. Full-year revenue guidance is also bullish, at $690+ million.Company CEO Aaron Levie said in the earnings call, “With the combination of a large installed base of enterprise customers, strong product roadmap and advanced capabilities and focus on improved sales productivity, we feel confident in our ability to capitalize on the opportunities ahead.” His optimism was shared by investors, and BOX shares have gained 23% since the quarterly report.It’s a bullish picture, but Chad Bennett of Craig-Hallum set out the bear case: “The time has come for material changes in leadership… Box is potentially an activist investor's dream, but five of the nine board members being founders or venture capitalizes presents a bit of a roadblock.” Bennett says to Hold this stock, with a price target of $15.Well Fargo analyst Philip Winslow makes the case for the bulls. His $20 price target implies an upside of 14% for the stock, and explains, “We see two primary avenues to potentially unlock shareholder value, namely growth versus margin and M&A.”Overall, BOX has a Moderate Buy from the analyst consensus, based on 4 buys and 3 holds. Shares are continuing to gain, and the price is up to $17.41 after the bullish quarterly report, slightly above the $17 average price target.Visit TipRanks Trending Stocks page to find Wall Street's best-rated stocks right now.
The company went public at a time of slowing revenue growth, yet the tiny rival to Microsoft seems to be winning the instant-messaging war.
Dow Jones futures jumped Wednesday, signaling a stock market rally on Hong Kong and other news. Coupa Software stock soared to a buy zone.
Okta, Inc. (“Okta”) (OKTA) today announced its intention to offer, subject to market conditions and other factors, $1.0 billion aggregate principal amount of Convertible Senior Notes due 2025 (the “notes”) in a private offering (the “offering”) to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Okta also expects to grant the initial purchasers of the notes a 13-day option to purchase up to an additional $150 million aggregate principal amount of the notes. The notes will be senior, unsecured obligations of Okta, and interest will be payable semi-annually in arrears.
In my years of investing, I've learned that when it comes to picking high-quality stocks, everything matters. It's not just about identifying stocks with low price-to-earnings multiples, or high yields. It's not just about finding stocks that always beat Wall Street's revenue and profit expectations. Nor is it just about insider buying, or the technical indicators, or any single thing.Instead, it's about all those things. As it turns out, stock picking is a multi-dimensional analysis, and in order to be the best stock picker possible, you need to intimately understand all those dimensions.Given that, I've developed a three-pronged framework for identifying winning stocks.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThat framework is simple. First, and foremost, the stock needs to have favorable fundamentals, meaning the long-term fundamental growth prospects need to warrant upside in the stock from current levels. Second, the stock needs to have favorable optics, meaning that there needs to be a reason or set of reasons why investors will want to buy this stock both now and for the foreseeable future. Third, the stock needs to have favorable technicals, since good technicals provide psychological support for continued bullish investor sentiment.If a stock checks off all three of those boxes, I call it a "Triple Threat Stock" -- and in my experience, these Triple Threat Stocks have been big winners over the long run. * 7 Best Tech Stocks to Buy Right Now With that in mind, let's take a look at 7 of my favorite Triple Threat Stocks to buy for the long term. Shopify (SHOP)Source: BalkansCat / Shutterstock.com The Fundamentals: The fundamentals supporting e-commerce solutions provider Shopify (NYSE:SHOP) are about as good as you're going to find in the market. Shopify is powering a new era of direct decentralized commerce, enabling merchants of all shapes and sizes to successfully sell directly to their customers. This is a huge growth market, since we are migrating to a do-it-yourself economy with consumers who favor decentralized systems over centralized ones.The growth trajectory is consequently robust, with steady 50%-plus sales volume growth over the past several quarters. The long-term revenue potential is huge, as Shopify accounts for less than 2% of total e-retail sales. The long-term profit potential is also huge, because gross margins here are north of 50% and the opex rate has tremendous room to fall with scale.Net net, Shopify projects as a big revenue and profit grower for a lot longer as secular tailwinds expand the direct decentralized retail model from niche, to mainstream. All that growth firepower will inevitably push SHOP stock higher long term.The Optics: The optics supporting SHOP stock are similarly favorable across the board. For starters, SHOP stock has been working in a flat market. Since the trade war started, the stock has more than tripled, while the market has gone nowhere. Existing investors are going to what to stick with what's working. New investors are going to want to pile into what's working.Further, Shopify is a big growth stock in a super low rate environment. That's an attractive combo since low rates help support long duration assets. Even further, Shopify's growth narrative has almost nothing to do with China and the trade war. Thus, this stock is side-stepping the market's biggest risk right now.The Technicals: SHOP stock is up nearly 200% year-to-date, and the chart looks like a steady, straight-line up from ~$150 to ~$400. As far as charts go, they don't get much prettier than this one. SHOP is a prime stock to buy. Walmart (WMT)Source: Jonathan Weiss / Shutterstock.com The Fundamentals: The fundamentals underlying Walmart (NYSE:WMT) have been, still are, and will remain for the foreseeable future, rock-solid.Walmart is the world's biggest retailer. They got to this position for two reasons. One, they've dominated on price -- that is, they have always offered the lowest prices in the market, and because consumers are always attracted to low prices, consumers have consistently been attracted to Walmart's low prices. Second, they've dominated on convenience. Walmart has an extensive real estate footprint that puts Walmart's stores within reasonable driving distance of almost every U.S. consumer. Because consumers are also always attracted to high convenience, consumers have consistently been attracted to Walmart's unparalleled convenience.Over the past several decades, dominance on these two fronts has powered big comparable sales, revenue, and profit.This dynamic will continue for the foreseeable future. Walmart's prices are still the lowest in the market -- recent studies support that Walmart.com offers lower prices than even Amazon.com (NASDAQ:AMZN). Also, Walmart's convenience is only going up, as the company is rapidly expanding its e-commerce business and its omni-channel capabilities so that consumers can shop how they want and when they want.Consequently, Walmart's comps, sales, and profits will continue to march higher for the foreseeable future. As they do, WMT stock will power higher, too.The Optics: The optics supporting Walmart as one of are stocks to buy are favorable, led by three big things.First, the U.S. consumer is on fire right now, and Walmart is a U.S. consumer story. Pockets of the global economy are showing weakness. The U.S. consumer is not. So long as the U.S. consumer remains one of the few good things about the global economy, investors will pile into stocks which have big U.S. consumer exposure -- like WMT.Second, Walmart is on fire right now. Thanks to the fact that this company has figured out the digital game and is rapidly expanding its omni-channel footprint, Walmart is firing off decade-best comparable sales and traffic growth numbers. Thus, not only is Walmart exposed to one of the few pockets of the global economy that is working, but that exposure is high-quality exposure.Third, Walmart is recession-proof. Sure, a lot of investors throw that term around a lot. But, Walmart actually is recession proof. When a recession hits, consumers migrate to low-price retailers like Walmart. As such, Walmart can actually experience growth in an economic downturn. Look no further than 2007-09. While the S&P 500 collapsed 60%, WMT stock actually rose more than a percent over that same stretch. * 10 Stocks to Buy for September The Technicals: WMT stock has formed a solid uptrend over the past five years of higher lows and higher highs. That uptrend has remained in-tact in 2019. Indeed, it isn't showing any signs of breaking. As such, the technicals here point to continued secular strength. The Trade Desk (TTD)Source: Shutterstock The Fundamentals: Over at programmatic advertising leader The Trade Desk (NASDAQ:TTD), you have similar long-term growth fundamentals as at Shopify. That is, you have a hyper-growth company with a huge opportunity in front of it, which operates at sky high margins, and has visibility towards huge profits in the long run.The narrative at The Trade Desk begins and ends with automation and data. That is, automation and data are transforming work flows and processes everywhere -- making them smarter, faster, and cheaper. The Trade Desk applies automation and data to the advertising world through what is called programmatic advertising -- which is just leveraging data and machine learning to automate and optimize the way companies spend their ad dollars.Companies left and right are adopting programmatic advertising in bulk. That's why The Trade Desk has rattled off multiple consecutive quarters of 40%-plus revenue growth. These big growth quarters will stick around for a lot longer. Less than 1% of global digital-ad spend went through The Trade Desk last year, meaning this company has tons of room to expand share in a secular growth market for a lot longer.Gross margins are big, too, so as scale drives positive operating leverage over time, The Trade Desk stands to produce a ton of profits in the long run. All of those profits will add up to a TTD stock price in 5 years that is way higher than today's price tag, which is key when you're looking for stocks to buy.The Optics: The optics on TTD stock support continued strong investor demand for the foreseeable future. These favorable optics break down into two parts.First, The Trade Desk has worked in a flat market. Since the trade war started in January 2018, the major indices have gone nowhere. TTD stock has risen nearly five-fold over that same stretch. Existing investors want to stick with this beacon of strength. New investors will want to buy into it.Second, TTD stock is a big-time growth stock that derives essentially all of its value from future profits. In a low rate environment -- like the one we find ourselves in today -- those future profits have a higher present value. As such, today's environment is one wherein investors will continue to look for exposure to high-quality, long-duration assets. TTD stock is one of those assets.The Technicals: Over the past three years, TTD stock has formed a pattern. Rally big for a few months, and then consolidate around the 50-day moving average for a few months, all while maintaining a big spread over the 200-day moving average. Early 2019 was part one -- the multi-month surge. Mid-2019 has been part two -- the consolidation around the 50-day. Presumably, this ends with a repeat of part one -- another multi-month surge higher towards $300. Okta (OKTA)Source: Sundry Photography / Shutterstock.com The Fundamentals: Lather, rinse, and repeat the Shopify and Trade Desk fundamental growth narratives for the next of our Triple Threat Stocks to buy. Security giant Okta (NASDAQ:OKTA) is a big growth company with tons of room to grow, operating at sky high margins with the potential to produce enormous profits at scale.Okta is a cloud security company. But they are a unique cloud security company. They focus on what is called identity access management. That is, as opposed to outfitting an entire enterprise ecosystem with a castle of cloud security defense, Okta outfits each individual in the enterprise ecosystem with their own personalized armor of cloud security defense.This solution is optimal, mostly because overarching security systems can be restrictive and identity-based ones are flexible, and flexibility is extremely important to dynamic enterprises who often utilize many different software applications. Consequently, Okta's Identity Cloud solution has been swiftly adopted across the enterprise world, with customer and revenue growth rates at Okta consistently hovering north of 40%.There's also plenty of room to grow here. At last count, Okta had 7,000 customers. There are over 30 million enterprises in the U.S. -- all of whom could use Okta's Identity Cloud. There are several hundred million enterprises worldwide. Thus, this growth narrative is still in its first few innings.On top of it all, Okta runs at 70%-plus gross margins, so the company has visible runway to producing huge profits at scale. Over the course of the next several years, as Okta's profits do run significantly higher, OKTA stock will run significantly higher, too.The Optics: There are three big drivers of the favorable optics supporting OKTA stock at the current moment.The first two we've already discussed in this gallery. First, the stock has been working in a flat market -- up 300%-plus since the trade war started -- and investors will want to stick with what has been working. Second, this is a big time growth stock supported by exceptionally low rates.The third point is a bit more unique. Okta is a cloud company. The cloud space is on fire right now. It also has minimal exposure to China and the trade war. Indeed, an economic downturn could actually help the cloud industry by accelerating the on-premise to cloud shift. After all, cloud is supposed to cheaper, and cheaper wins out when money becomes tight. * 4 Triggers That Could Kick Gold Into High Gear The Technicals: OKTA stock has been on fire over the past year. But every once in a while, it does go through rough patches. In those rough patches, the stock tends to consolidate around the 50-day moving average before sprinting higher -- see late 2018 and February/March 2019. It appears OKTA is going through a similar consolidation right now. History says this consolidation around the 50-day will end in a big move higher. Facebook (FB)Source: Ink Drop / Shutterstock.com The Fundamentals: In 2018, the core growth fundamentals underlying Facebook (NASDAQ:FB) looked shaky. But now that the company has put those issues behind it, the long term growth fundamentals for this stock to buy look as strong ever.In a nutshell, Facebook's owns four of the world's favorite and most-used digital properties -- Facebook, Instagram, Messenger, and WhatsApp. For most consumers, these applications are more than just fun apps. They are utilities digital consumers use everyday to keep in touch with friends, communicate with others, and stay up-to-date with current events. As such, consumers are hooked to these platforms and they aren't leaving anytime soon. If the 2018 Cambridge Analytica scandal didn't get people quit (and it didn't), I don't know what will.So long as users stay in the Facebook ecosystem, ad dollars from across the world will continue to flood into the ecosystem. Facebook is also pushing the envelope on commerce. Considering the ecosystem is essentially the world's largest marketplace with 2.7 billion active potential buyers, these commerce growth initiatives could produce big results.Bottom line: ad revenue growth rates will remain big for the foreseeable future, and new e-commerce revenue will supercharge the overall top-line growth trajectory. Gross margins across the board will remain healthy. The opex rate will fall as big data security investments phase out. Net profits margins will move higher. So will profits.As profits move higher, FB stock will, too. That's because, at 23-times forward earnings, this stock is still cheap relative to its long-term growth potential.The Optics: The optics here are better than they've been in a long time. Facebook is shaking off the rust from an ugly 2018. In so doing, investors are starting to see that the company really wasn't damaged -- at all -- during one of the most controversial issues in corporate America in the past decade. Investors are therefore starting to realize just how sticky the Facebook ecosystem is, and how strong and healthy the long-term growth prospects are for Facebook.As they realize this, they want back in. That's why we've seen a big YTD rally in FB stock. But the stock is still well off its 2018 highs. Thus, investors will keep wanting "in" until the stock breaks through those highs. That gives the stock plenty of runway to keep moving higher.The Technicals: FB stock has formed a clean uptrend in 2019 of distinct higher highs and higher lows. The stock recently tested and held the support line in this uptrend. It is now bouncing off that support line -- a strong sign that the uptrend is in-tact. If so, the technicals here reasonably point towards a rally to a new higher high, or somewhere above $210. Lululemon (LULU)Source: Richard Frazier / Shutterstock.com The Fundamentals: The fundamentals for Lululemon (NASDAQ:LULU) are exceptionally favorable in the long run for two big reasons. First, the athletic apparel market is on fire and projects to remain on fire. Second, Lululemon is the hottest brand in that athletic apparel market and should remain so for the foreseeable future.On the first point, the athletic apparel market is the shining star of the retail world. Retail sales have been moving higher at a steady pace, thanks to healthy labor conditions. But athletic apparel sales have been outpacing the crowd. This is due to secular trends, such as eating right, being fit, and staying healthy, the sum of which have pushed consumers to workout more and live healthier, more active lifestyles. A big part of that is buying the right clothes to fit that lifestyle -- hence, the big surge in athletic apparel spend over the past few years.On the second point, Lululemon is the hottest and most relevant brand in the athletic apparel space. Thanks to genius marketing and merchandising, Lululemon has struck the sweet spot of controlling high prices and still driving big demand, all while maximizing brand equity. That is to say, Lululemon's clothes are expensive enough to where they are a status symbol, and yet aren't expensive enough to where they eliminate mass market demand.In striking this sweet spot, Lululemon is driving mass market demand at favorable price points. The result? Big comparable sales growth, big margin expansion, and even bigger profit growth.This dynamic projects to persist for the foreseeable future. Why? Because Lululemon is still small. They did just $3.5 billion sales over the past 12 months. Nike (NYSE:NKE) did about $40 billion. Thus, Lululemon has plenty of runway to keep growing at a robust rate for a lot longer.The Optics: The optics here are simple and favorable. The U.S. consumer -- and to a lesser extent, the global consumer -- is working right now. Many other parts of the global economy aren't working. Thus, investors today are craving consumer exposure.The highest quality form of consumer exposure is exposure to the athletic apparel industry since secular tailwinds have and will continue to promote above-trend growth across this whole space. In that athletic apparel industry, the company that stands out from the pack as the fastest grower with the most long-term potential is Lululemon.For the foreseeable future, investors will follow that same logic train to arrive at the same conclusion. In today's environment, buy LULU stock. * 5 Retail Stocks That Belong on Your Shopping List Today The Technicals: As is the case with many other stocks on this list, LULU stock has found tremendous support over the past year in its 50-day moving average. See late 2018, late March 2019, and early June 2019. Today belongs in that list, too. LULU stock is consolidating around its 50-day moving average amid trade war turbulence. The implication is that once this trade war turbulence passes, LULU stock will fly higher. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com The Fundamentals: High-flying digital-education company Chegg (NASDAQ:CHGG) is yet another growth stock supported by very favorable long-term growth fundamentals. Specifically, this is a big growth company, in a secular growth market, with very little competition, which runs at huge margins, with a ton of runway to keep growing, and the potential to produce huge profits at scale.Long story short, Chegg is the digital education company that high school and college students across America have needed for the past decade. Everything high school and college students interact with these days is all digital. The one big exception? School. The academic world has been slower to pivot to the digital revolution. Chegg is changing that. They have made a digital education companion built for students in the 21st Century, complete with digital on-demand tutoring services, e-textbooks, tutorial videos, solution manuals, writing help, citation makers, so on and so forth.Chegg bundles all these services into a subscription offering, and sells that to students across America. Demand has been robust thus far -- services revenue growth has exceeded 30% in each of the past several years. The best part? Chegg is only getting started. They have about 3 million subscribers on their connected learning platform. There are 36 million high school and college students in the U.S. alone -- and far, far more globally. Thus, Chegg is penetrating a very small portion of its addressable market.Over the next several years, then, Chegg will rattle off several more 20%-plus and 30%-plus revenue growth quarters. All those big growth quarters will be accompanied by big profit growth, too, since the Services business runs at ~80% gross margins.Fast forward 5 years. Chegg will have a lot more subscribers, a lot more revenues, and a lot more profits. CHGG stock price should be significantly higher, too.The Optics: With CHGG stock, there are three components to the favorable optics underlying the stock.First, Chegg has been a shining star in a flat market. It's up 130% since the trade war began. Investors will want to stick with this strength so long as the trade war hangs around.Second, Chegg is a big growth stock with a big valuation. The stock derives a ton of its value from future profits. As mentioned earlier, those profits get a boost when rates are low. Thus, today's low rate environment is favorable for CHGG stock.Third, this is a U.S.-only growth story. While the global economy may be slipping, the U.S. economy appears to be doing just fine. Further, this is a U.S. student growth story. U.S. students will likely continue to pay for educational services regardless of the economic backdrop.The Technicals: In 2019, CHGG stock has formed a clean uptrend of higher highs and higher lows. The stock is currently testing the support line of that uptrend. Will it hold? Given the favorable fundamentals and optics, probably. If it does, the technicals would imply a rally in CHGG stock towards a new higher high, or somewhere north of $48.As of this writing, Luke Lango was long SHOP, WMT, TTD, OKTA, FB, LULU, NKE, and CHGG. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post 7 Triple Threat Growth Stocks to Buy for the Long Term appeared first on InvestorPlace.
In late January 2018, U.S. President Donald Trump announced tariffs on solar panels and washing machines from China, officially starting the U.S.-China trade war. That was 19 months ago. Over the subsequent 19 months, the stock market has gone nowhere. The S&P 500 peaked at 2,870 in late January 2018. Nineteen months later, at the end of August 2019, the S&P 500 is at 2,870.That isn't a coincidence. The U.S.-China trade war has created a flat market. Why? Because no one is sure exactly how this volatile trade war will play out, and how it does play out will have profound implications on the global economy. Either the U.S. and China come to a trade resolution, the trade war ends and global economic activity ramps back up (and stocks fly higher), or they don't, the trade war drags on, and corporate uncertainty drags the global economy into a recession (and stocks plunge).As such, until investors have clarity as to which way the trade war will swing, the stock market will likely remain flat. At the current moment, the most likely scenario is for trade war uncertainty to persist, and for the stock market to remain stuck in neutral.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHow do investors make money in a flat market? It's pretty simple. Look for three things.One, look for stocks that have been working in this flat market. Two, look for stocks with minimal exposure to the market's big headwind, which today is the trade war. Three, look for stocks with plenty of long-term growth potential -- enough long-term growth potential that investors are willing to ignore near-term noise for the promise of long-term gain once the noise passes. * 7 Best Fidelity Funds for 2019 With that in mind, let's take a look at a list of seven stocks to buy in this flat market. Stocks to Buy in a Flat Market: Shopify (SHOP)Source: BalkansCat / Shutterstock.com % Gain Over Last 19 Months: 215%Exposure to China: MinimalRevenue CAGR Estimate over Next Two Years (from YCharts): 35%Up first, we have one of the market's hottest socks, e-commerce solutions provider Shopify (NYSE:SHOP).SHOP stock checks off all the boxes you'd want it to check off in a flat market. The stock has more than tripled since the trade war started, so clearly the stock is working. It's working because Shopify has very little exposure to China, so the growth trajectory has remained robust despite escalating trade tensions (Shopify's revenue growth rates have remained in excess of 45% in each of the past several quarters). Further, Shopify controls less than 2% of global retail sales, and given current consumer trends promoting do-it-yourself mentalities and economic decentralization, it's easy to see Shopify running up toward 5-10% share in the long run.That means that this growth narrative is just getting started. That's why analysts see Shopify growing revenues at a 35% compounded annual growth rate over the next two years.In other words, with Shopify, you have a big growth stock that has been on fire over the past 19 months, has minimal exposure to the U.S.-China trade war and which has tons of long-term growth potential. That's a winning combination in a flat market. Roku (ROKU)Source: Michael Vi / Shutterstock.com % Gain Over Last 19 Months: 240%Exposure to China: MinimalRevenue CAGR Estimate over Next Two Years (from YCharts): 33%Shopify stock has been red hot over the past 19 months, but Roku (NASDAQ:ROKU) stock has been even hotter.Roku stock is up 240% since the trade war started, mostly because this company is supported by secular growth tailwinds, which have remained vigorous despite escalating trade tensions. That is, consumers in the U.S. are still shifting in bulk from linear to internet TV. At the same time, media companies everywhere are still launching multiple streaming services. Thus, both supply and demand in the streaming TV market are still rapidly rising, meaning that there remains robust demand for a streaming service aggregator like Roku to connect all the demand in the streaming TV world to all the supply, in a seamless, friction-less and low-cost manner.Consequently, Roku has fired off huge user engagement and revenue growth rates over the past several quarters. As it has, ROKU stock has popped.Meanwhile, Roku has very little exposure to China, with the only exposure really being that they manufacture their streaming devices in China. But, the hardware part of this business is largely irrelevant to the software side, so hardware manufacturing exposure to China is a null point in the big picture. Further, Roku only has 30 million active streamers. There are over a billion internet households in the world, meaning that Roku is still a long runway ahead of it for future growth -- hence the 30%-plus revenue CAGR projected over the next two years. * The 10 Reasons to Buy Alibaba Stock Net net, Roku -- much like Shopify -- has been red hot during the trade war, has minimal exposure to China, and projects as a big grower for a lot longer. Again, that's a winning combination, which should continue to produce gains in a flat market. The Trade Desk (TTD)Source: Shutterstock % Gain Over Last 19 Months: 380%Exposure to China: MinimalRevenue CAGR Estimate over Next Two Years (from YCharts): 28%Up nearly 400% over the past 19 months, programmatic advertising leader The Trade Desk (NASDAQ:TTD) checks off all the boxes you'd want checked off for a winning stock in a flat market.First, TTD has risen nearly five-fold over since early 2018. That's a huge gain. Clearly, whatever this company is doing, it's working.Second, what The Trade Desk is doing -- providing programmatic advertising solutions to automate and optimize the ad spend process by leveraging data and machine learning -- is revolutionary. Indeed, it's already disrupting the entire ad industry, as companies left and right are adopting TTD's automated ad spend solutions. Still, the ~$2.4 billion of ad spend that flowed through TTD's platform in 2018 amounted to less than 1% of total digital ad spend globally. Thus, the runway for growth here is very long and very big.Third, TTD has minimal exposure to China. International gross billings amounted to just 15% of total gross billings in 2018. While that number will grow over time -- and while China could one day be a huge market for TTD -- The Trade Desk presently lacks meaningful exposure to China, meaning that weakness in China won't show up in TTD's numbers.Overall, then, TTD stock is a stock that has outperformed big in this flat market, has big growth potential in the long run, and lacks meaningful exposure to China -- a trio of winning features that should keep TTD stock on an uptrend in this flat market. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com % Gain Over Last 19 Months: 130%Exposure to China: NoneRevenue CAGR Estimate over Next Two Years (from YCharts): 22%Digital education leader Chegg (NASDAQ:CHGG) has been less hot compared to many of the other stocks on this list, but it still checks off all the boxes of a winning stock in a flat market.First, CHGG stock is up big since the trade war started, more than doubling over that stretch as the company has powered consistently favorable results that comprise big subscriber, revenue and profit growth.Second, CHGG stock lacks trade war exposure. This is a U.S. company, which services U.S. high school and college students. The U.S.-China trade war has zero impact on those students, or their willingness to spend on Chegg's digital education service. Thus, it's fair to say that Chegg has zero trade war exposure.Third, CHGG stock is far from being done growing. The platform has 3.1 million subscribers. There are 36 million high school and college students in America. That means Chegg is at roughly 8% market penetration. Further, Chegg has very little competition in that market, and is supported by secular demographic trends such as the fact that most Generation Z students prefer to learn online. As such, all signs point to the fact that Chegg is in the first few inning of a long-term growth narrative that will result in 20%-plus profit growth for a lot longer. * 10 Mid-Cap Stocks to Buy All in all, CHGG stock -- like all the other stocks on this list -- has all the attributes of a winning stock in a flat market. As such, so long as the market remains flat due to trade war concerns, Chegg stock is a good place to hangout. Okta (OKTA)Source: Sundry Photography / Shutterstock.com % Gain Over Last 19 Months: 335%Exposure to China: MinimalRevenue CAGR Estimate over Next Two Years (from YCharts): 31%One of the market's favorite growth stocks over the past 19 months -- cloud identity management company Okta (NASDAQ:OKTA), up more than 300% since the trade war started -- has turned into a market favorite for good reason.First, Okta's secular growth narrative is very promising. Okta's Identity Cloud is a unique identity-focused approach to cloud security, wherein Okta outfits each employee in an enterprise with their own "identity armor" as opposed to outfitting the ecosystem with a "security castle". The logic is that if everyone in an ecosystem has armor, there's no need to build a castle around the ecosystem -- everyone is safe. And, without a castle, individuals are unrestricted and can move freely -- this enhanced flexibility is increasingly important in enterprise ecosystems with multiple software applications.Consequently, enterprises have been quick to adopt Okta's Identity Cloud. But, Okta is still a small company, with revenues projected at just $550 million this year. Global cybersecurity spend amounts to over $100 billion every single year. Thus, Okta has plenty of room to grow its share in the cybersecurity market in the long run.Second, Okta's secular growth narrative has very little do with China. At least for now. Less than 20% of revenue comes from outside of America, and of that 20%, China is such a small part that it wasn't mentioned once in either the company's most recent annual report or most recent conference call. Further, even if the U.S.-China trade war dampens global corporate investment, one thing corporations are not likely to cut back on is security spend.Consequently, with OKTA stock, you have a red hot stock that is supported by robust secular growth tailwinds which are largely unaffected by the U.S.-China trade war. That's a winning combination in today's flat market. Twitter (TWTR)Source: Worawee Meepian / Shutterstock.com % Gain Over Last 19 Months: 75%Exposure to China: NoneRevenue CAGR Estimate over Next Two Years (from YCharts): 15%Another high-growth U.S. technology company that looks like a good buy in a trade war afflicted market is Twitter (NYSE:TWTR).First, and foremost, Twitter has no China exposure. The Twitter platform is blocked in China, and all of the platform's users are from outside of China. Thus, U.S.-China trade war turbulence shouldn't have any impact on the user base, and it likely won't have much impact on the ad business until business uncertainty escalates to the point where they start cutting ad spend -- and we appear to be far from that point today.Second, Twitter has been on fire over the past near two years. The company's revenue growth rates have come surging back, and have remained vigorous as the company has figured out how to optimally advertise on its platform. Meanwhile, user growth trends have been stable, and margins have tracked higher alongside big revenue growth, thereby powering huge profit growth. Alongside this big profit growth, TWTR stock has flown higher -- to the tune of a 75% gain since the trade war started in early 2018.Third, Twitter still has a lot of growth firepower left. The company is a 1% (and expanding) share player in a secular growth global digital ad market projected to grow at a double-digit rate for the foreseeable future. That combination of share expansion and double-digit market growth implies that mid-teens revenue growth is achievable over the next several years, which is what analysts are modeling for. On top of that, operating margins are just 14%, versus over 30% at Facebook (NASDAQ:FB), so Twitter has plenty of runway to drive further positive operating leverage in the long run. * 10 Mid-Cap Stocks to Buy Big picture, Twitter has very minimal exposure to the trade war, has been on fire lately in terms of growth and share price appreciation, and has plenty of room to keep growing at a big pace for a lot longer. Those are the exact features which investors will continue to be attracted to in a flat market. Twilio (TWLO)Source: rafapress / Shutterstock.com % Gain Over Last 19 Months: 400%Revenue Exposure to China: MinimalRevenue CAGR Estimate over Next Two Years (from YCharts): 30%Last, but not least, on this list of hot stocks to buy in a flat market is cloud communications leader Twilio (NASDAQ:TWLO).As with all the other stocks on this list, Twilio checks off all the right boxes. Red hot stock? Check. TWLO stock is up 400% since the trade war begun, thanks to a series of consecutive beat-and-raise reports. Minimal exposure to China? Check. Only a quarter of revenue comes from outside of the U.S.Big growth potential? Check. Every company is integrating cloud communications into their customer experiences, and as they do, Twilio's revenue growth trajectory will remain robust for the next several years - hence analysts expecting a 30% revenue CAGR here over the next two years.Net net, Twilio is a winning stock in a flat market. It projects to remain so for the foreseeable future, too.As of this writing, Luke Lango was long SHOP, ROKU, TTD, CHGG and OKTA. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post 7 Stocks to Buy In a Flat Market appeared first on InvestorPlace.
Revenue growth for the secured identity management company has been strong in the first half of 2019 but could cool slightly for the year overall.
Okta co-founder and COO Frederic Kerrest joins The Final Round to discuss how his company is surviving this latest bout of market volatility, the future of cyber security, and the IPO landscape.
Gains in U.S. stocks lost steam, with the three major indices ending mixed by the close of Monday’s session. Yahoo Finance's Myles Udland, Jen Rogers and Andy Serwer discuss.
For startups, the appeal of enterprise clients is not surprising — signing even one or two customers can make an entire business, and it can take just a few hundred to build a $1 billion unicorn company. But while corporate counterparts increasingly look to the startup community for partnership opportunities, making the jump to enterprise sales is far more complicated than scaling up the strategy startups already use to sell to SMBs or consumers. Hear from enterprise leaders at Okta, SAP, and VMware as they address how startups can adapt their strategy with the needs of the enterprise in mind. Sponsored by SAP.