As June comes to a close, let’s look at stocks that could perform well over the second half of the year. Growth has slowed in many companies throughout the world due to the economic shock felt by the coronavirus. Some companies have been able to withstand the blow more than others. Growth companies, in particular, have struggled.
In this article, I have found three growth stocks that have withstood the pandemic’s economic effects and will continue to grow. I also believe that these stocks are positioned to perform well for the second half of the year.
AutoDesk, Inc. (ADSK)
Autodesk, Inc. operates as a software design and services company worldwide. ADSK dominates the architecture, engineering, and construction (AEC) software vertical. Their most significant products are AutoCAD, which is used for 2D and 3D modeling, and Revit, which is used for Building Information Modeling. ADSK is the software of choice for engineering and manufacturing companies. The company also has a future in digital technologies, including augmented reality and the internet of things.
ADSK has a strong pipeline built up due to their new feature releases over the last couple of years. The company has been moving customers to the cloud-based subscription model, from a license and maintenance model. The pandemic has been kind to ADSK. The move to software as a service (SaaS) is more accommodating for employees working from home.
For the first quarter of this year, the company’s revenues increased by 20% over the year to $886 million. It has a five-year EPS growth estimate of 33.0%. The company’s management expects its full-year 2020 revenues to increase to 15% and adjusted earnings per share to increase to 40%. ADSK has a Strong Buy rating in our POWR Ratings and is ranked #3 out of 47 companies in the Software-Business industry.
The company represents a significant growth story and is worth a second look.
GoDaddy Inc. (GDDY)
GoDaddy Inc. designs and develops cloud-based technology products that provide domain name registration. If you have watched a super bowl in the last few years, I’m sure you have seen their ads. The company does very well with a return on equity of 34.7%. The company is benefiting from digital growth and more people working from home due to the pandemic. More people are becoming interested in creating a new digital footprint online.
GDDY’s domain registrations have been growing over the past several years. Domain bookings in the first quarter rose 9% year over year, and revenue from domains climbed 11% year over year. Management expects revenue in the second quarter to be 1% higher than in its previous outlook.
The company has a 5-year EPS growth estimate of 30.0% and a forward PEG ratio of 2.4. GDDY has a Buy rating in our POWR Ratings and is ranked #8 out of 34 companies in the Software-Business industry. With high growth rates and a Buy POWR Rating, GDDY might have a place in your portfolio.
Netflix, Inc. (NFLX)
Netflix is and will continue to be the dominant global player in the streaming video business. The company was doing well before the pandemic, but more people have flocked to the service as they have been in lock down. While other entertainment options like movie theaters and cable TV have significantly been affected by the pandemic due to the production being shut down, NFLX creates seasons far in advance. That has left them with a ton of content to provide their viewers.
The company should also expect more subscribers as consumers continue to ditch cable. NFLX has enjoyed double-digit membership increases for years. In each of the previous four quarters, the company’s revenue grew by over 26%. Management is forecasting higher subscriber growth for Q2. They expect 7.5 million more paid memberships.
NFLX has a 5-year EPS growth estimate of 35.9% and an estimated 18% in sales growth. Analysts have an average target price of $467.53. NFLX has a Strong Buy rating in our POWR Ratings and is ranked #5 out of 52 companies in the Internet industry. This excellent growth company continues to fly high.
These three growth stocks are in an excellent position for the second half of the year.
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NFLX shares were trading at $443.99 per share on Monday afternoon, up $0.59 (+0.13%). Year-to-date, NFLX has gained 37.22%, versus a -4.95% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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|GDDY||Get Rating||Get Rating||Get Rating|