3 Monster Growth Stocks that still have room to run
Investors are in the market for a profit, and that means finding stocks with proven growth potential. Yes, it’s a cliché to remind everyone that past performance is no guarantee of future results. However, if a stock shows consistently strong appreciation in the stock over an extended period of time, that is a positive sign for investors. With more than ten months behind the stocks, they are now showing a combination of strong earnings and high short to medium-term potential that will pique investor interest. With that in mind, we’ve set out to find stocks that Wall Street characterizes as exciting growth games. Using TipRanks’ database, we’ve picked three analyst-backed names that have already made impressive profits and have strong growth narratives over the long term. Bandwidth, Inc. (BAND) We start in the communications software space, where Bandwidth is a leading provider of VoIP systems and uses its application programming interfaces (API) to provide both text and voice capabilities to customers. The company’s products include applications for voice calls, text messages, local telephone numbers over the Internet and access to the 911 emergency call system. Bandwidth has developed and built its own network for Voice over Internet to ensure connectivity. Like many online tech companies, BAND has benefited from the 2020 move to remote working. The move to the virtual office space has made internet communications a high priority, and BAND shares have reflected that – the stock is up an impressive 135% since the start of the year. The company’s earnings in the third quarter were also strong – at 14 cents per share, well above the expected net EPS loss of 12 cents. Third quarter revenue was $ 84.8 million, up 40% year over year. In addition to positive sales and earnings, Bandwidth also has solid liquidity. The company had cash and cash equivalents of over $ 300 million at the end of September while debt was only $ 57.8 million. Finally, Bandwidth completed the acquisition of European cloud communications company Voxbone earlier this month. The deal was worth € 446 million, or more than $ 520 million. The transaction comprised 354.6 million euros in cash and the remainder in stock. The growth in bandwidth and good future prospects caught the attention of 5-star analyst Michael Walkley. This top analyst wrote from Canaccord: “With Covid-19 affecting the way we work, learn and interact for the foreseeable future, we believe bandwidth will be a long-term beneficiary of the expected strong growth trends as customers use more of it Platform. We believe that revenue growth should remain strong given our expectations for some permanent long-term change with an increased remote work environment that encourages both increased usage by existing customers and the potential for greater growth for new customers. To that end, Walkley is making a buy. The BAND stock rating and target price of $ 225 suggest that an uptrend of nearly 50% is possible over the next 12 months. (To see Walkley’s track record, click here.) Overall, BAND received a moderate buy rating from analyst consensus based on 5 reviews, including 4 purchases and 1 sale. The share price is $ 150.50 and the average target price of $ 192.20 implies an uptrend of ~ 28% for a year. (See BAND stock analysis on TipRanks.) Wayfair, Inc. (W) Moving from cloud communications to e-commerce, where Wayfair is the leader in housewares and furniture. E-commerce saw strong gains during the COVID pandemic as customers misplaced larger portions of their purchases online. The stock shows that it has grown 180% since the start of the year. The profits also reflect strong sales during the pandemic. EPS turned positive in the second quarter, at $ 2.54 versus a 55 cent forecast. Earnings per share for the third quarter were $ 1.80, beating estimate by 300%. Revenues are also high: the $ 3.8 billion in the third quarter represents an increase of 66% over the previous year. And like the range above, Wayfair has a solid balance sheet with $ 2.6 billion in cash as of the end of the third quarter. These tax gains stand on the shoulders of a solid sales trend. Wayfair reported 11.3 million orders from repeat customers in the third quarter, representing nearly 72% of total orders for the quarter. Active customers in the company’s Direct Retail division grew 50% year over year to reach 28.8 million. Peter Keith, 5-star analyst at Piper Sandler, writes of Wayfair: “Looking ahead, KPI’s repeat customers (% of orders) and average sales customers (LTM) both hit all-time highs, suggesting that Wayfair will significantly increase sales to a larger customer base. We are sticking to our optimistic thesis that the above-trend sales growth is expected to continue until at least the beginning of 2021 and the margins will rise far beyond expectations – with longer-term drivers in focus. “It should come as no surprise, then, that Keith is sticking with the bulls. In addition to an overweight (ie buy) rating, he left a target price of $ 370 on the stock. Investors could pocket 47% profit if that target came in the future twelve months. (To see Keith’s track record, click here.) In total, Wayfair has had 20 valuations including 10 buys, 7 holds and 3 sells which results in the analyst’s consensus being moderate. B. uy The W share is selling for $ 251.70 and has an average price target of $ 312.63, which means the upside potential for the coming months is 24%. (See Wayfair’s stock analysis on TipRanks) Schrödinger (SDGR) Last but not least Schrödinger is a software company that develops life science and materials science applications.In short, the company develops software platforms that customers can use to evaluate experimental connections . Schrödinger describes its software as a physics-based platform that integrates solutions for collaboration, data analysis and predictive modeling in chemistry. The platform is used extensively in the pharmaceutical industry, but also in the aerospace, energy and semiconductors. Schrödinger went public in February of this year as the corona crisis deepened and quickly posted strong stock gains. When it went public, the stock sold for $ 26 per share, well above its original price of $ 17. The company sold well over 11.8 million shares, making the opening one of the most successful of the year. Since then, SDGR stocks have more than doubled, up nearly 140% in the first nine months of public trading. Revenues were flat throughout the year, with the first three quarters of 2020 showing profits between $ 23 million and $ 26 million. The Q3 number is right in the middle of this range at $ 25 million. The top line of the third quarter exceeded the forecast by 10%. 5-star analyst Do Kim, who covers this stock for BMO, writes: “We believe software sales growth of 42% year over year reflects accelerated adoption of computational drug discovery and growing customer base. We anticipate software growth to continue through 2021 as we believe the pandemic trend of remote working will continue as the platform validates through collaborations. “Consistent with this bullish outlook, Kim rates SDGR shares as outperforming (ie buying) and targeting $ 94. This number shows confidence in a one-year upside potential of 37%. (To see Kim’s track record, click here.) Overall, Schrödinger’s consensus rating for strong buy is based on 3 buy and 1 hold. The stock has an average price target of $ 83, up 21% from its current trading price of $ 68.52. (See SDGR Stock Analysis on TipRanks.) To find great ideas for trading growth stocks at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a newly launched tool that brings together all of TipRanks’ stock insights. Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.