PENN: 3 Growth Stocks That Doubled in 2020 and Still Have More Room to Run

Growth stocks have been some of the best performing securities this year. Many of these companies have defied the economic slump to report impressive results amid the pandemic-driven global economic doldrums. The market-beating performance of growth stocks is evident in the iShares Russell 1000 Growth ETF’s (IWF) 36.4% gains over the past year.

These companies, primarily operating in the tech space, have benefited from the remote lifestyle people worldwide have been forced to adopt. And, as a new strain of coronavirus is now causing the resumption of lockdowns in many European countries, these stocks are expected to keep climbing in the coming months.

Penn National Gaming, Inc. (PENN), Twilio Inc. (TWLO), and Redfin Corporation (RDFN) operate in the cloud computing, online gaming and betting, and real estate sectors. They are some of the best performing growth stocks this year. Their unique business models and strategic expansions should translate into further upside in the coming months. As coronavirus vaccination efforts are unlikely to contain the spread of the existing virus and the new strain for many months, betting on these “stay-at-home” stocks now could be wise.

Penn National Gaming, Inc. (PENN)

PENN owns and manages gaming and racing facilities and video gaming terminal operations with a focus on slot machine entertainment. The company conducts business through its various properties in the four segments: Northeast, South, West, and Midwest. It also operates in the retail sports betting industry through its interactive division, Penn Interactive.

PENN entered a definitive agreement with Gaming and Leisure Properties, Inc. (GLPI) in December to acquire the operations of Hollywood Casino Perryville for $31.10 million, and to lease associated real estate assets. This agreement will allow the company to expand its foothold nationwide.

PENN’s revenue has increased at a CAGR of 7.9% over the past three years, while its total assets have risen at a CAGR of 38.6% over the same period. This reflects the company’s strong growth potential.

PENN’s operating income has increased 9.1% year-over-year to $196.20 million in the third quarter ended September 30. Its adjusted EBITDA has increased 10.3% from the year-ago value to $343.60 million, while its EPS rose 144.7% from the same period last year to $ 0.93.

3 STOCKS TO DOUBLE THIS YEAR

Analysts expect PENN’s revenues to rise 34.7% to $4.95 billion for the next year ending December 31, 2021. The consensus EPS estimate of $1.63 for the next year represents a 133.7% rise from the previous year. PENN has gained 270.8% over the past year. The company has an impressive earnings surprise history; it beat the Street EPS estimates in three t of the trailing four quarters.

How does PENN stack up for the POWR Ratings?

A for Trade Grade

B for Buy & Hold Grade

A for Peer Grade

A for Overall POWR Rating.

The stock is currently ranked #2 of 23 stocks in the Entertainment – Casinos/Gambling Industry.

Twilio Inc. (TWLO)

TWLO is an international cloud-communications Platform-as-a-Service (PaaS) company. Its platform consists of Programmable Communications Cloud, Super Network, and Business Model for Innovators, which enable developers to build, scale, and operate communications within software applications.

In late September, TWLO announced the launch of Microvisor, an IoT connectivity and device management platform that offers embedded developers a place to build connected devices, keeping them secure, and managing them through their lifetime. This will enable TWLO to adapt itself to industry trends and build new IoT solutions faster, with enhanced security and reliability.

Earlier in November, TWLO acquired Segment, a market-leading customer data platform, for $3.20 billion worth TWLO class A stock. This should help TWLO make its customer experience seamless by providing a personalized, timely, and impactful engagement service across multiple divisions.

TWLO’s revenue has increased at a CAGR of 61.7% over the past three years, while total assets rose at a CAGR of 147.5% over the same period. The company’s impressive track record positions it well we think to emerge as a leading player in the cloud computing industry.

TWLO reported total revenue of $447.97 million for the third quarter ended September 30, up 51.8% year-over-year. Its non-GAAP EPS has increased 33.3% from the year-ago value to $0.04. Active customer accounts increased 20.9% year-over-year over this period.

Analysts expect TWLO’s revenue to grow 37.1% to $454.20 million in the current quarter ending December 31, 2020. The company has an impressive earnings surprise history as well; it beat the Street EPS estimates in each of the trailing four quarters. The stock has gained 260.9% over the past year.

It is no surprise that TWLO is rated “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade and Industry Rank, and a “B” for Peer Grade. It is currently ranked #1 of 11 stocks in the Software – SAAS Industry.

Redfin Corporation (RDFN)

RDFN is a technology-oriented residential real estate brokerage company operating in the United States and Canada. It is an online marketplace which offers brokerage, iBuying, mortgage, and title services, along with a host of online tools to consumers, including the Redfin Estimate.

Earlier in October, RDFN expanded its iBuying service platform, RedfinNow, to Sacramento, providing homeowners a convenient new way to purchase and sell properties. It also launched the platform in Seattle and San Francisco this month. This should help it attract a large volume of potential homeowners amid the pandemic-driven rise in retail real estate demand.

RDFN’s revenue has increased at a CAGR of 36.9% over the past three years, while total assets rose at a CAGR of 38.2% over the same period.

RDFN’s operating income has increased 397.7% year-over year to $37.01 million in the third quarter ending September 30. Its EPS has risen 328.6% from the year-ago value to $0.30 over this period.

Analysts expect RDFN’s revenues to rise 11.4% to $868.66 million for the current year ending December 31, 2020. The consensus EPS estimate of $0.03 for the current quarter ending December 31, 2020 represents a 137.5% improvement year-over-year. The company has an impressive earnings surprise history as well; it beat the Street EPS estimates in each of the trailing four quarters. RDFN has gained 246.5% over the past year.

RDFN’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade and Industry Rank. It is currently ranked #3 of 46 stocks in the Real Estate Services Industry.

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PENN shares were trading at $88.27 per share on Tuesday afternoon, down $0.43 (-0.48%). Year-to-date, PENN has gained 245.34%, versus a 17.57% rise in the benchmark S&P 500 index during the same period.

About the Author: Rishab Dugar

Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More...