This year has certainly been one for the record books, with investors experiencing both a record market run and a record recovery, all within the span of several months. The terrible stock sales that were available at the end of March did not last long, and investors who are hesitant may feel that they are missing the boat.
Fortunately, for investors with a keen eye, a stomach for an element of risk, and a sufficiently long-term investment timeline, there are opportunities to boost your long-term returns by adding some high-growth stocks to the mix.
If you have $ 4000 (or less) in available cash to invest that you do not need for immediate expenses or to replenish your emergency fund, it can work in these four stocks to make you just rich.
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1. Teladoc and 2: Livongo: A healthy two-for-one sale
There is not much doubt about that Teladoc Health (NYSE: TDOC) en Livongo Health (NASDAQ: LVGO), with its connection to connected instruments and telehealth, have been on fire this year as a result of the stay-at-home orders resulting from the coronavirus pandemic. Patients young and old have done their best to avoid travel to the doctor’s office for fear of COVID-19.
The ability to serve patients remotely has done these companies good. For its second quarter, Teladoc reported revenue that grew 85% over the year and total patient visits that grew 203%. For the first six months of 2020, revenue climbed 63% and visits jumped 144%.
Livongo Health performed similarly, with revenue in the second quarter rising 125% year-over-year, while patients enrolled in its flagship program – Livongo for Diabetes – rose 113%. That was after 115% revenue growth and patient growth of 100% in the first quarter.
By the beginning of this month, these factors helped increase Teladoc’s share for almost 200 years so far, while Livongo ran more than 475%.
Investors seemed to fully unleash these robust results and the potential for future gains when the two providers announced in early August that they would merge, creating a “new standard in global healthcare delivery, access and experience.” Following last week’s announcement, shares of Livongo and Teladoc fell 20% and 26% respectively.
The reaction of the stock market by logic. It is not as if growth will simply dry up as a result of the merger. These are two high-growth companies that can make deeper inroads into the emerging healthcare market, with specialties that are fully complimented.
Of course, there is always the potential that conflicting management styles as well as corporate cultures can lead to successful integration, but if you assume this will happen is a leap too far. I expect the combined company to remain huge, and investors to add now heel glad they did.
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DataDog: Take this puppy for a walk
The pivot to cloud computing was already in full swing, but in the face of the pandemic, the shift accelerated in high gear, as telecommuting became the rule instead of the exception. It also became more important than ever that cloud-based systems were ready to meet the increased demands of a distributed workforce, with the ability to identify problems before they became critical issues, resulting in unnecessary downtime.
That’s what DataDog (NASDAQ: DDOG) brings to the table. The cloud-native analytics provider monitors servers, databases, tools, and services, using artificial intelligence to detect anomalies, providing near-real-time information about problems as they occur, to prevent them from becoming even bigger problems . Once the hedge is resolved, DataDog provides useful analytics that can be used to hold back the problem.
DataDog reported robust results for the second quarter, with revenue growing 68% over the year, down 87% in the first quarter. Customers who submit annual sales of more than $ 100,000 grew to 1,015, a year up nearly 71%.
The company continues to solicit the industry distinctions that attest to its statute. DataDog was recognized as being in 2020 Gartner Choice of peer-insight Customers for IT infrastructure for oversight tools receive 4.5 out of 5.0 stars from IT professionals who use their products.
Management leads for 50% year-over-year revenue gains in the third quarter, a slowdown from recent torrid growth, which undoubtedly contributed to the markets’ sluggish reception of their recent results. Given DataDog’s historical practice of issuing conservative guidance, only to easily overcome its prognosis, this move is not entirely unexpected. Dog hunters can get the stock now for a 20% discount on recent highs.
Image Source: DocuSign.
4. DocuSign: (E) Sign up here for revenue growth
Another company that has gotten a shot in the arm from the need for remote work and social distance is DocuSign (NASDAQ: DOCU). The provider of electronic signatures was already the undisputed leader, with about 70% of the market for e-signatures, but the new reality that requires deals to be concluded remotely gave the company a huge advantage.
DocuSign reported first-quarter revenue growth of 39%, matching its growth rate of 2019. The company has sharp insight into its future revenue, as nearly 95% of its revenue came from subscriptions, providing a solid base of recurring income that is typically subject to fluctuation. At the same time, DocuSign’s adjusted profit rose 71%.
The company has another revenue stream that will surely grow in interest in the coming years. Beginning last year, DocuSign introduced the Agreement Cloud, a suite of products and integrations that automate the entire lifecycle of contracts, creating a digital process for preparing, signing, trading and managing agreements.
Even as the leader, the market for e-signature is still in its early stages. Management estimates the potential market at $ 25 billion, and with just $ 974 million in revenue last year, DocuSign still has a massive opportunity – and that does not count as a $ 25 billion market opportunity for the Agreement Cloud, giving the company a long start.
However, the recent rotation from high flyers has sent DocuSign’s stock down more than 15%, with no company-specific news driving the decline. This means that forward investors can get the stock at a discount on recent highs, with no change in the dissertation.
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Every rose has its doors
Each of the companies highlighted above has the potential to be a multi-dredger, returning many times over to their original investment, which is what you would expect from a high risk, high reward. That said, eagle-eyed investors will also have discovered that in addition to their high-flying status, these stocks share another common feature – their expensive valuations.
Teladoc and Livongo Health are currently rated at 15 and 32 times pre-sales, respectively, if a good price-to-sales ratio is generally considered to be between one and two. DataDog and DocuSign are equally priced, with forward ratings of 40 and 26, respectively. In both cases, investors have so far been willing to pay for the impressive growth of the topline and the potential for future success.
Past performance is no guarantee of future success, but given the results these growth stocks have achieved so far this year, if they continue on their current trajectory, they could simply make investors rich.
