This year has certainly been a record year, with investors experiencing both record market slumps and record rallies, all of which last for several months. The stock price hike in late March doesn’t last long, and hesitant investors may feel they miss the boat.
Fortunately, for investors with a keen eye, with a risk factor and a long enough investment period, there is still a chance to boost your long-term returns by adding some growth stocks. high into the mix.
If you have $ 4,000 (or less) in disposable cash for an investment that you don’t need to spend right away or to replenish it with your emergency fund, then getting it to work in these four stocks does can help you become rich.
1. Teladoc and 2: Livongo: Buying and selling two get one healthy
There’s a little doubt that Teladoc Health (NYSE: TDOC) and Livongo Health (NASDAQ: LVGO), with their relationship with telemetry and connected devices, has flared up this year as a result of home orders caused by the coronavirus pandemic. Young and old patients have done their best to avoid going to the doctor’s office for fear of COVID-19 infection.
The ability to remotely serve patients has served these companies well. In its second quarter, Teladoc reported an 85% increase in revenue over the same period last year and a 203% increase in total visits. During the first six months of 2020, revenue increased 63% and visits increased 144%.
Livongo Health performed just as well, with second-quarter revenue up 125% from last year, while patients enrolled in its flagship program – Livongo for diabetes – grew 113%. That’s after 115% revenue growth and 100% patient growth in the first quarter.
As of the beginning of the month, these factors have helped Teladoc’s shares rise nearly 200% year over year, while Livongo increased more than 475%.
Investors seem to completely reject these strong results and the potential for future profits when two suppliers announced in early August that they will merge, creating a “new standard”. in global healthcare distribution, access and experience. ” After the announcement last week, shares of Livongo and Teladoc have fallen 20% and 26% respectively so far.
The stock market’s response defies logic. It is not as if the growth will simply be exhausted as a result of the merger. These are two high-growth companies that will be able to penetrate deeper into the connected medical market, with specialties completely free.
Of course, there is always the possibility that conflicting management styles or corporate cultures could deflect a successful integration, but assuming that happens is a leap too far. I expect the combined company to continue to be brilliant success and the added investors now will very glad they did.
3. DataDog: Take this dog for a walk
The pivot to cloud computing has been and is going on, but in the face of an epidemic, the shift is accelerated to high gear, as remote work has become the rule, not the exception. More important than ever, cloud-based systems are ready to respond to the growing needs of a distributed workforce, with the ability to identify problems before they become critical. important, resulting in unnecessary downtime.
That is what DataDog (NASDAQ: DDOG) bring it to the table. Cloud-based analytics provider monitors servers, databases, tools and services, uses artificial intelligence to detect anomalies, provides real-time information about problems. problems when they do happen, to prevent them from becoming bigger problems. Once the problem is resolved, DataDog provides useful analytics that can be used to help prevent the problem from recurring.
DataDog reported positive results for the second quarter, with sales up 68% year-on-year, down slightly from an 87% increase in the first quarter. Customers bringing in annual revenue in excess of $ 100,000 grew to 1,015, up nearly 71% from the same period last year.
The company continues to be praised by the industry for its stature. DataDog is recognized as 2020 Gartner Customer choice for Peer Insights IT infrastructure monitoring tool, which gets 4.5 out of 5.0 stars from IT professionals using its products.
Management is guiding a 50% year-on-year revenue increase in the third quarter, a slowdown from recent staggering growth, which certainly has contributed to market welcoming. recent results are tedious. Given DataDog’s historical practice of prudent instructional issuance, only to easily surpass its forecast, this move is not entirely unexpected. However, luxury hunters can now get stocks down 20% to recent highs.
4. DocuSign: (E) Login here to grow your sales
Another company that has received a boost from the need to work remotely and away from society is DocuSign (NASDAQ: DOCU). The provider of digital signatures has been an undisputed leader, with around 70% of the market for digital signatures, but the new reality of requiring transactions to be remotely sealed has given the company a sizable advantage.
DocuSign reports first-quarter revenue growth of 39%, in line with growth from 2019. The company has insight into its future revenue, as nearly 95% of its revenue comes. From the subscription packages, it delivers a solid recurring income base that is usually not subject to volatility. At the same time, DocuSign adjusted profit increased by 71%.
The company has another revenue stream that is sure to see significant growth in the coming years. Earlier last year, DocuSign introduced the Agreement Cloud, a suite of products and integrations that automate the entire contract lifecycle, creating a digital process for preparing, signing, acting, and manage the deals.
Even at the top, the digital signature market is still in its early stages. Management estimates the potential market at $ 25 billion, and with just $ 974 million in sales last year, DocuSign still has a big opportunity – and that doesn’t take into account the $ 25 billion market opportunity. Another Cloud deal, bringing the company a long way ahead.
However, the recent rotation of high-flying people has caused DocuSign shares to fall by more than 15%, with no specific company news leading to a drop. This means that forward-looking investors can drop stock prices to recent highs without change in opinion.
Each flower has thorns
Each of the companies highlighted above has the potential to be a multi-pocket company, with return many times the original investment, which is what you would expect from a high-risk, high-reward stock. . That said, eye-catching investors will also find that in addition to their high-flying states, these stocks have another common feature – their expensive valuations.
Teladoc and Livongo Health are currently valued at 15 and 32 times term sales, respectively, when a good price to revenue ratio is generally considered to be one to two. DataDog and DocuSign are both equally expensive, with futures valuations of 40 and 26. In each case, however, investors so far have been willing to pay for impressive and potential revenue growth. success in the future.
Past performance does not guarantee future success, but given the results these bull market stocks have achieved this year, if they continue on their current trajectories, they may leave investors behind. become rich.