There is a perennial issue with growth investing that once a stock starts being talked about, it’s already too late. The hype train has left the station and you’ve missed your chance to board. While this thinking may save you from buying overpriced stocks, it may also cause you to miss out on some life-changing investment opportunities. Would you have passed on Amazon (NASDAQ:AMZN) at $1200 because it was overbought? Or maybe Shopify (NYSE:SHOP) at $400 because it’s bound to slow down soon? These are just two examples of growth stocks only getting warmed up, in spite of the surrounding hype.
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Here at MyWallSt, we don’t let the short-term fluctuations of a stock affect our long-term outlook. A big run-up won’t stop us from adding a business to our shortlist, nor will a short-term dip. It’s this ethos that has led us to consistently beat the S&P 500 (NYSEARCA:VOO) for the past 5 years with our collection of over 100 stock picks.
This week sees earnings season wind down, and while the big names have already announced their results for the previous quarter, there are still 3 stocks reporting that have plenty of room left to run on their growth stories.
StoneCo (NASDAQ:STNE) is a South American fintech company focused on payment processing and merchant solutions. It’s been called ‘The Square (NYSE:SQ) of Brazil’ and has been backed by Berkshire Hathaway (NYSE:BRK.B), who owns about 5% of the business. The company is providing a much-needed service in a severely-underbanked region of the world and had a great outlook BC (before corona). However, Brazil has been hit particularly hard by the pandemic and StoneCo’s customers, small and medium-sized businesses, will be the ones to suffer.
On its earnings call tomorrow, investors will get a chance to see the extent of the fallout for the company, and most pertinently, management’s plans for recovery. The stock has been particularly volatile since the original market sell-off at the end of February and is currently trading at 47% below its 52-week highs.
StoneCo reports Tuesday, May 26 after the closing bell.
Workday (NASDAQ:WDAY) is a B2B software company that allows businesses to manage their finances and human capital easily and efficiently. While the product may be a bit of a snooze-fest, the stock’s recent performance is anything but. The company was having a run-up for the ages up until about July of last year when investors slammed the brakes, rethinking the valuations they were willing to pay for loss-making tech companies. The sell-off saw Workday lose 25% of its market cap over the following six months. However, 2020 started off on a much better foot for the company, and a return to its former highs looked on the cards before the global pandemic took hold of the markets.
Wednesday’s earnings report will tell us a lot about whether it has capitalized on the digital transformation many companies have been forced to undertake. With B2B office software seeing a purple patch with the recent performance of Slack (NYSE:WORK), Microsoft Teams (NASDAQ:MSFT), and Zoom (NASDAQ:ZM), could this be an opportunity for Workday’s cloud-based software to see a similar uptick?
Workday reports Wednesday, May 27 after the closing bell.
Perhaps undercover is a bit of a stretch for a business that has grown 500% in the past 3 years. There seems to be no let-up to the popularity of Okta (NASDAQ:OKTA) amongst investors, who have sent the stock soaring to over 100% gains in the past two months alone. The recent run-up can be attributed to the cloud-based cyber-security platform’s applicability to the work-from-home economy, which was recently decreed as here to stay by companies like Facebook (NASDAQ:FB) and Twitter (NYSE:TWTR).
This earnings report will be subjected to the highest of expectations thanks to the stock’s recent performance and the company will have to log some truly jaw-dropping results to match them. Much like Workday, the focus will be on if they have capitalized on businesses across the world being pushed toward a rapid digitization of their processes.
Okta report Thursday, May 28 after the closing bell.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above Read our full disclosure policy here.
Content Manager at MyWallSt
Michael's first and favorite stock is Square, which he sees becoming a massive player in the payments industry and a leader in the war on cash.