Why Self-Help and Development Is Crucial for CEO Success – Yahoo Finance
Posted: November 24, 2020 at 7:52 am
TipRanks
Investors are in the market to make a profit, and that means finding the stocks with proven growth potential. Yes, its a clich to remind everyone that past performance does not guarantee future results, but when a stock consistently shows strong share appreciation, over an extended period, its a positive sign for investors.With more than ten months behind us, the stocks that are now showing a combination of strong gains and a high near- to mid-term potential are going to attract investor interest.Bearing this in mind, we set out to find stocks flagged as exciting growth plays by Wall Street. Using TipRanks database, we locked in on three analyst-backed names that have already notched impressive gains and boast strong growth narratives for the long-term. Bandwidth, Inc. (BAND)We start in the communications software sector, where Bandwidth is a leading provider of VoIP systems, using its application programming interfaces (API) to offer customers both text and voice capabilities. The company's products include applications for voice calling, text messaging, local phone numbers via internet, and 911 emergency phone system access. Bandwidth has developed and built its own network for voice over internet, helping to guarantee connectivity.Like many online tech companies, BAND has benefitted from the 2020s shift to remote work. The move into the virtual office space has put a premium on internet communications, and BAND shares have reflected that the stock is up an impressive 135% year-to-date. The companys Q3 earnings were also strong and at 14 cents per share were far above the 12 cent net EPS loss expected. Revenues for the third quarter came in at $84.8 million, for a 40% year-over-year increase.In addition to positive revenues and earnings, Bandwidth has also shown sound liquidity. The company had over $300 million in cash and cash equivalents available at the end of September, while liabilities totaled only $57.8 million.Finally, earlier this month, Bandwidth completed its acquisition of the European cloud communications company Voxbone. The deal was valued at 446 million Euros, or more than $520 million in US currency. The transaction included 354.6 million Euros in cash, and the remainder in stock.Bandwidths growth and healthy future prospects caught the attention of 5-star analyst Michael Walkley. Writing from Canaccord, this top analyst said, With Covid-19 impacting the way we work, learn, and interact for the foreseeable future, we believe Bandwidth is a long-term beneficiary from anticipated strong growth trends due to increased customer usage of their platform. We believe revenue growth should remain strong given our expectations for some permanent long-term changes with an increased remote work environment driving both increasing usage from existing customers and layering in the potential for stronger new customer growth.To this end, Walkley puts a Buy rating on BAND shares, and his $225 price target suggests room for nearly 50% upside in the next 12 months. (To watch Walkleys track record, click here)Overall, BAND gets a Moderate Buy rating form the analyst consensus, based on 5 reviews, including 4 Buys and 1 Sell. The shares are priced at $150.50, and the average price target of $192.20 implies a one-year upside of ~28%. (See BAND stock analysis on TipRanks)Wayfair, Inc. (W)From cloud communications we move on to e-commerce, where Wayfair is a leader in the home goods and furniture sector. E-commerce has seen heavy gains during the COVID pandemic, as customers moved larger portions of their shopping online. The stock shows that, having grown 180% year-to-date.Earnings have also reflected strong sales during the pandemic period. EPS turned positive in Q2, coming in at $2.54 against a 55-cent forecast. In Q3, the earnings per share was $1.80, beating the estimate by 300%. Revenues are high, too, with the $3.8 billion in Q3 representing a 66% year-over-year gain. And like Bandwidth above, Wayfair has a sound balance sheet, with $2.6 billion in cash and liquid assets reported at the end of the third quarter.These fiscal gains stand on the shoulders of solid sales performance. Wayfair reported 11.3 million orders from repeat customers in Q3, making up almost 72% of the quarters total orders. Active customers in the companys Direct Retail business segment increased 50% yoy, and reached 28.8 million.Peter Keith, 5-star analyst with Piper Sandler, writes of Wayfair, Looking forward, KPI's repeat customers (% of orders) and revenue per average customer (LTM) both hit all-time highs and suggest Wayfair will grow revenues nicely off a larger base of customers We maintain our bullish thesis as above-trend sales growth is likely to persist at least into early 2021, and margins are expanding far above expectations with longer-term drivers coming into focus."It should come as no surprise, then, that Keith stays with the bulls. In addition to an Overweight (i.e. Buy) rating, he left a $370 price target on the stock. Investors could be pocketing a gain of 47%, should this target be met in the twelve months ahead. (To watch Keiths track record, click here)Overall, Wayfair has 20 reviews on record, including 10 Buys, 7 Hold, and 3 Sell, making the analyst consensus view a Moderate Buy. W stock is selling for $251.70 and has an average price target of $312.63, making the upside potential 24% for the coming months. (See Wayfairs stock analysis on TipRanks)Schrodinger (SDGR)Last but not least is Schrodinger, a software company that develops applications for the life sciences and materials sciences industries. In short, the company builds the software platforms that allows customers to evaluate experimental compounds. Schrodinger describes its software as a physics-based platform, integrating solutions for collaboration, data analytics, and predictive modeling in chemistry. The platform is used extensively in the pharmaceutical industry, but also in aerospace, energy, and semiconductors.Schrodinger went public in February of this year, just as the corona crisis was ramping up, and quickly saw strong share gains. At the IPO, the stock sold for $26 per share, well above the initial pricing of $17. The company sold well over 11.8 million shares, making the opening one of the years most successful. Since then, SDGR shares have more than doubled, gaining nearly 140% in their first nine months of public trading.Revenues have remained consistent during the year, with the first three quarters of 2020 showing the top line between $23 and $26 million. The Q3 number, at $25 million, is right in the middle of that range. The Q3 top line beat the forecast by 10%Covering this stock for BMO, 5-star analyst Do Kim writes, We believe the 42% y/y growth in software revenues reflects the accelerating adoption of computational drug discovery, in addition to a growing customer base. We expect software growth to continue into 2021, as we believe the pandemic trend of remote work is sticky, with increasing platform validation from collaborations.In line with this upbeat outlook, Kim rates SDGR shares an Outperform (i.e. Buy) along with a $94 price target. This figure indicates confidence in a 37% one-year upside potential. (To watch Kims track record, click here)All in all, Schrodingers Strong Buy consensus rating is based on 3 Buys and 1 Hold. The stock has an average price target of $83, giving it a 21% upside from the current trading price of $68.52. (See SDGR stock analysis on TipRanks)To find good ideas for growth stocks trading at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that unites all of TipRanks equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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Why Self-Help and Development Is Crucial for CEO Success - Yahoo Finance
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