The US stock market experienced a choppy run in early October. Investors are worried about rising inflation and corporate results in the third quarter. While short-term volatility is of concern, there are still several high-growth stocks fundamentally backed by secular favorable winds that have the potential to create significant wealth for long-term investors.
If you have excess cash that isn’t needed to pay bills, pay off debt, or bolster an emergency fund, consider picking up stocks in Reached (NASDAQ: UPST), Zillow Group (NASDAQ: ZG) (NASDAQ: Z), and MongoDB (NASDAQ: MDB) this month of October. Let’s find out a little more about these three growth stocks.
Not so long ago, it would have been unfathomable for banks to have a robust and forward-looking alternative to the traditional FICO credit rating for assessing a borrower’s creditworthiness. However, Upstart Holdings made this possible. By leveraging the power of several cutting-edge technologies, including artificial intelligence, machine learning, predictive modeling and big data, Upstart can track more than 1,600 data variables across millions of transactions to determine creditworthiness. ‘one person.
Upstart claims its lending platform results in 75% less defaults compared to traditional banking risk models at the same credit approval rates. This allows its partner banks to approve more loans, which improves customer satisfaction while reducing their loss rates. The company’s success is evident when you consider that 25 banks and credit unions were on the Upstart platform at the end of the second quarter (end of June 30), more than double the number at the end of September 2020.
In the second quarter, Upstart’s revenue grew 1,018% year-over-year to $ 194 million, while Adjusted EBITDA fell from a loss of $ 3.1 million. dollars in the same quarter of the previous year to a profit of $ 59.5 million. The company is targeting $ 750 million in revenue for fiscal 2021, a 211% year-over-year jump. While not yet profitable, analysts expect the company to post adjusted earnings per share (EPS) of $ 1.33 in fiscal 2021.
Upstart’s share price has jumped around 821% so far this year. Although its primary focus is on personal loans, Upstart has now started to enter the auto refinance market, which is supposed to be the next big opportunity for the business. With more financial institutions rapidly adopting the company’s platform and Upstart entering new markets, the company is well positioned for a solid long-term growth trajectory.
2. Zillow Group
Zillow Group is best known as the company behind several popular real estate websites and mobile apps, such as Zillow, HotPads, Trulia, and StreetEasy. In the second quarter (ending June 30), there were 2.8 billion visits to the company’s internet properties.
Zillow provides advertising, marketing and a technology platform to real estate agents, brokers and other real estate players through its Internet, Media and Technology (IMT) segment. IMT is the only profitable business, with an adjusted EBITDA margin of 46%. Not resting on its laurels, the company has also embarked on the direct buying and selling of homes, or iBuying, through its housing segment and offers home loans through its mortgage segment.
Zillow Homes became a key competitive advantage for the business and accounted for 59% of second quarter sales. The company reported a 70% year-over-year increase in revenue to $ 777.1 billion in the second quarter. Zillow Homes will continue to disrupt the iBuying real estate space as it provides a frictionless environment.
Zillow has not been immune to the labor and supply constraints that have plagued the US economy as a whole. This has led to operational delays in the construction, renovations and closures of real estate spaces. Subsequently, the company now plans to stop buying new homes in the United States for its iBuying business for the remainder of 2021. While the news appears to have scared investors, it is very likely not to affect the figure. the company’s business only in the short term.
Zillow reported losses in 2020, but analysts expect its Adjusted EPS to be $ 1.14 in 2021. iBuying activity (which is still in deficit) is expected to slow in the remaining months of 2021, with the the likelihood that Zillow will now exceed these estimates remains high. Therefore, given the strength of the company’s brand, strong revenue momentum, and expected return to profitability, stocks are well positioned to grow much more in the coming months.
Database systems specialist MongoDB’s share price has risen by around 36% so far this year – and for several good reasons.
MongoDB has released strong results for the second quarter of fiscal 2022 (ending July 31), with revenue and earnings significantly exceeding consensus estimates. The company raised its revenue forecast for fiscal 2022 from $ 805 million to $ 811 million, up from its previous estimate of $ 771 million to $ 784 million and ahead of the consensus estimate of $ 786 million. of dollars. MongoDB also expects the non-GAAP loss per share for fiscal 2022 to be $ 1.20 to $ 1.13, a significant improvement from the previous loss estimate of $ 1.38. at $ 1.25.
MongoDB’s database-as-a-service offering, Atlas, has been a major beneficiary of the accelerated shift of enterprises to hybrid cloud infrastructure (a mix of on-premises and public cloud). The company’s on-premises database server coupled with Atlas enables seamless data migration to the cloud, without rewriting application code. The company’s freemium pricing strategy (core software is open source, while new additions are chargeable) and developer-centric approach have played an important role in the adoption of its products by businesses.
Atlas currently accounts for 56% of MongoDB’s total revenue. Atlas revenue jumped 83% year-over-year in the second quarter, far faster than the 44% year-over-year jump in overall company revenue. ‘business. A shift in revenue mix towards offering database as a higher margin service implies improved profitability as well as greater revenue visibility for the business in the years to come.
MongoDB is not yet profitable but is slowly reducing its losses. Against the backdrop of a strong business strategy and a rapidly improving financial situation, the company’s stock price still has plenty of room to rise in the coming months.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.Source link