Twitters (TWTR) was once the laughing stock of the investment world. That’s because it IPOed with much fanfare. Then quarter by quarter earnings prospects went lower and lower which is why shares tumbled nearly 80% from their peaks.
Then something changed. Management found a winning formula in late 2017 and has been on that positive roll ever since with 7 straight earnings beats. This had Twitter, Inc. (TWTR - Get Rating) up 3X over the past couple years before this recent market pullback took some starch out of these shares.
Buy & Hold Grade = C
This is based on a myriad of factors including the price action the past year where we see a middle of the pack gain of +11%. Plus shares have pulled back quite a bit from their highs. Add it together and the long term trajectory only computes to a C…but it is a high C bordering on B.
Trade Grade = C
I’ll be honest…I believe this mark is low given that shares have performed well this year with over a 30% gain. Couple that with 2 more impressive earnings reports and I believe that shares has better near term catalysts then noted in this Trade Grade. It is likely the oversized sell off from the recent high that leads to lower marks in this category.
Industry Rank = B
Now we are starting to see higher marks for these shares as they are keeping good company in the Internet group which ranks #16 out of 123 industries. Stocks run in packs. Rarely can a growing company outperform if investors are turned off by the group as a whole. Gladly this is one of the biggest positives for the stock.
Peer Grade = B
Once again it peaks its head above the crowd as shares are rated #17 out of 56 in the group. You add this section and the one above together and you have an attractive stock in an attractive group. That’s a pretty good combination.
POWR Rating = C (Neutral)
I’ll be honest…I find this final rating of C a touch unfair. Yes, mathematically I see how it computes given the factors above. However, when you appreciate the fundamental catalysts at play, with nearly 2 years of impressive beat and raise quarters under their belt, then prospects for shares are better than advertised with this neutral rating.
Those investors who are a bit more forward looking, can consider some bottom fishing on shares as they have sold nicely from the recent peaks. They may not be timely given the information above, but the fundamental and value proposition points to shares making new highs later this year and thus a solid ROI for investors getting on board now.
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Twitter Inc NYSE: Twitter, Inc. (TWTR - Get Rating) shares closed at $282.78 on Friday, up $0.64 (+0.23%). Year-to-date, has gained 13.65%, versus a % rise in the benchmark S&P 500 index during the same period.
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