The United States has been witnessing a surge in the number of coronavirus cases with each passing day. According to data from John Hopkins University, more than 3 million new cases were reported between November 1st and 22nd. This year’s Thanksgiving is also expected to be much different. While the news that the Covid-19 vaccine, developed by Pfizer, Inc. (PFE) and BioNTech SE (BNTX), is more than 90% effective and has raised hopes that things will be back to normal, market volatility is still high due to the rising number of coronavirus cases.
As there are still uncertainties related to how soon the spread of the virus can be controlled, it is perhaps the right time to invest in stocks that still have immense growth potential based on their pandemic-perfect business models. The Robinhood 100 list contains a number of high growth stocks. So, it could be a good idea to select stocks from the list that have fundamental strength. Going into 2021, popular stocks like Square, Inc. (SQ – Get Rating), Uber Technologies, Inc. (UBER – Get Rating), and Snap Inc. (SNAP – Get Rating) could see significant upside.
Based in San Francisco, California, SQ develops and provides point-of-sale software worldwide. With the help of its easy to use tools and software, the company aims to help everyone participate in the economy and also helps sellers to start, run, and grow their businesses. SQ’s Cash App lets people send money to friends and family instantly. SQ is on the Robinhood 100 list having 47% of analyst ratings as a ‘Buy.’
SQ’s total revenue increased 139.6% year-over-year to $3.03 billion for the third quarter that ended September 2020. Bitcoin revenue increased 1001.8% year-over-year to $1.63 billion and the stock should benefit as bitcoin skyrockets. The number of average daily transacting active Cash App customers nearly doubled from the same period last year. Net income increased 24.2% year-over-year to $36.5 million. EPS increased by 36% year-over-year to $0.34.
Analysts expect SQ’s revenue to increase 387.2% for the fourth quarter ending December 2020, and 37.8% next year. The company’s EPS is expected to increase 13% in the fourth quarter, 44.9% next year, and at a rate of 38% per annum over the next five years. The company’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
SQ unveiled Square KDS on November 17th which is a kitchen display system software that easily displays and organizes order tickets no matter where they’re placed. Be it a curbside pickup, local delivery, on-demand delivery through delivery partners, or self-serve ordering through QR codes, all types of business will gain from this. Last month, the company invested $50 million in Bitcoin. SQ has been thriving this year, gaining 224.3% year-to-date. It is currently trading 3.1% below its 52-week high of $209.36, which it reached on November 23rd.
How does SQ stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industry Rank
A for Overall POWR Rating
The stock is also ranked #2 out of 236 stocks in the Financial Services (Enterprise) industry.
Founded in 2009, UBER is famous for its ride-hailing services. The company operates through five segments, namely Rides, Eats, Freight, Other Bets, and Advanced Technologies Group (ATG) and Other Technology Programs. While UBER went public in May 2019, its journey has been full of ups and downs. Fortunately for the company, voters in California approved Proposition 22, exempting it from classifying its drivers as employees. UBER is on the Robinhood 100 with 80% of the analyst ratings it a ‘Buy.’
With people spending more time at home due to the pandemic, there has been a decline in the number of customers hailing rides, but UBER has managed to stay afloat with the help of its delivery services. Non-GAAP delivery revenue increased 189.5% year-over-year to $1.1 billion for the third quarter that ended September 2020. Freight revenue increased 32.1% year-over-year to $288 million. Uber Pass + Eats Pass subscribers exceeded 1 million paid subscribers.
Analysts expect UBER’s revenue to increase 8.6% for the quarter ending March 2021, and 40.9% next year. The company’s EPS is expected to increase 15.6% in the fourth quarter ending December 2020, 59% next year, and at a rate of 57.3% per annum over the next five years. The company’s loss per share of $0.62 surpassed the consensus estimate by 4.6%.
A couple of days back, UBER along with Lyft, Inc. (LYFT), was awarded a federal contract worth up to $810 million to offer their ride-hail services to public agencies. This allows the companies to formally launch their services within agencies and directly work with officials to promote the service. UBER was also awarded an 18-month license to operate in London. The stock has gained 68.3% year-to-date and is currently trading just 1.7% below its 52-week high.
UBER’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade.
Operating for nearly a decade, SNAP is primarily a camera company. That is because of its flagship product Snapchat, a camera application that helps people to communicate through short videos and images called Snaps. With daily active users (DAUs) of roughly 249 million, the company’s main revenue driver is its advertising revenue. More than 4 billion Snaps are created everyday on average. SNAP is on the Robinhood 100 with 64% of analyst ratings as a ‘Buy.’
SNAP’s strong third quarter (ended September 2020) results also ignited buying interest in other social media stocks. Revenue increased more than 52% year-over-year to $678.7 million. Daily active users (DAUs) increased 18.6% year-over-year to 249 million. While the average number of Snaps created every day increased 25% year-over-year, the average revenue per user increased 28.8% year-over-year to $2.73.
Analysts expect SNAP’s revenue to increase 51.2% for the fourth quarter ending December 2020, and 41.5% next year. The company’s EPS is expected to increase 133.3% in the fourth quarter, 344.4% next year, and at a rate of 67.4% per annum over the next five years. The company’s earnings surprise history looks impressive with the company missing the consensus estimate in just one of the trailing four quarters.
On November 23rd, SNAP launched its new video platform Spotlight. Now available in 11 countries, including the United States, the company said it will reward the most popular creators by distributing over $1 million to its users every day through the end of 2020. SNAP has been expanding on its Augmented Reality (AR) lenses. Last month, Major League Baseball (MLB) added the AR lenses built on SNAP to its app.
Amid the pandemic, the company evolved through technological advancements and better advertisement targeting capabilities, which helped it gain 177.2% year-to-date to close yesterday’s session at $44.29. During the past six months, SNAP soared 156.1%.
It’s no surprise that SNAP is rated a “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade, and Industry Rank, and a “B” for Peer Grade. In the 59-stock Internet industry, it is ranked #5.