The future is even dirtier than normal for investors these days. Stocks have risen since the end of March, but it is hard to deny that the spread of the coronavirus has been problematic for the economy. And everything indicates that the next season of earnings will be full of ugly results.
However, there are some growth names too juicy to pass up in almost any investment environment. Assuming this recession is finally ignored, getting into certain names as soon as possible could be a move that pays big (proverbial) dividends.
Here is a roundup of three growth stocks you can buy right now, knowing that they are strong enough to survive, and perhaps even prosper, in more difficult times.
Image source: Getty Images.
1. PayPal Holdings solves the poignant problem
A long-standing agreement between the name of digital payments PayPal Holdings (NASDAQ: PYPL) and online auction platform ebay (NASDAQ: EBAY) he has just finished. As of July 17, eBay is guiding users toward a similar (and rival) payment broker named Adyen. Shoppers will still have the option to use their PayPal account as a payment option, but somehow PayPal is what it is today specifically due to eBay’s growth. In fact, until 2015, eBay and PayPal were a combined company.
However, the circumstances, meanwhile, have worked decisively in PayPal’s favor. Mobile / digital wallets like PayPal’s have been slowly crowding cash and even credit card accounts for years. The arrival of the coronavirus outbreak, however, fueled that growth at a faster rate as consumers searched for ways to buy goods without physically touching anything they didn’t have to. PayPal’s vice president of global sales, Peggy Alford, told PaymentsJournal just a few days ago that in April, when the consequences of COVID-19 were more hectic, new net active accounts rose by a record 7.4 million. That is more than double the typical growth rate.
And a return to the old ways seems less likely after several weeks of using new payment approaches. Alford goes on to explain “consumer needs, behaviors, and demands have changed,” forcing merchants to respond. As the chart below illustrates, sales and earnings per share have grown and should continue to grow at a strong double-digit rate.
Data source: Thomson Reuters / Refinitiv. Graphic by author.
2. Slack Technologies makes working at home work
It’s not just consumers who develop new habits in the COVID-19 era and beyond. Employees are also learning some new habits, such as continuing to communicate with coworkers even while working at home. They just need the right tools to help make that happen.
Loose technologies (NYSE: JOB) is one of the providers of this tool. Its main application, for example, works essentially as an online chat room but with more bells and whistles. Employees can be divided into individual groups, and private conversations are made possible by direct messaging. The service even offers video conference calls and integrates with AlphabetGoogle G Suite of business productivity tools.
Eventually, more people will be able to return to their offices, but that doesn’t necessarily mean that companies will cancel their Slack subscriptions. At the very least, companies will want to retain the ability to navigate through future pandemics that force deadlocks. Meanwhile, various organizations include Facebook and Twitter They plan to let significant portions of their workforce work permanently from home.
That’s a key reason analyst estimates call for top line growth of 38% this year and just a modest slowdown next year.
No, Slack is not yet profitable, but his progress towards that end may be enough to continue driving the stock up. The earnings portion of the chart below suggests that the company could go from red to black the following year.
Data source: Thomson Reuters / Refinitiv. Graphic by author.
3. Marvell Technology Group is wonderfully well protected
Finally add Marvell Technology Group (NASDAQ: MRVL) to your list of growth stocks that could drive a portfolio better than other names.
Odds are good that most investors can’t name a specific technology product that Marvell makes. On the contrary, it is highly likely that those same investors will benefit from Marvell Technology’s goods without even realizing it. The organization manufactures hardware for everything from Ethernet controllers to computer drives and server computer processors, just to name a few. It has wireless operators, cloud computing companies, and even automakers as its customers, diversifying its business into several stable sources of income.
It appears that these industries could be adversely affected by a global economic slowdown linked to the COVID-19 pandemic. And to be fair, that concern is legitimate. The IDC technology market research team even suggested in May that, due to the contagion, semiconductor sales would fall between 4% and 7% in the 2020 calendar. However, given the great difficulty of the challenges that arose in late from last year, that’s not bad. Actually, it involves a kind of rebound during the second half of the year.
On the other hand, the Semiconductor Industry Association reported earlier this month that semiconductor sales increased 5.8% in May, marking the fifth month in a row that industry revenue improved despite the coronavirus. Those data obviously cast doubt on IDC’s pessimistic numbers, but more than that, it aligns with the 11% growth that analysts continue to model for Marvell Technology Group this year. Next year will be even better with an estimated 16% revenue increase, and earnings for both years are expected to reflect that growth.
The image below paints that image, showing uninterrupted double-digit growth in sales and profits that is expected to continue through 2022.
Data source: Thomson Reuters / Refinitiv. Graphic by author.
