Breaking News
0

3 Hidden Gem Tech Stocks Worth Considering Before They Report

By Investing.com (Jesse Cohen/Investing.com)Stock MarketsFeb 07, 2019 09:43
au.investing.com/analysis/3-hidden-gem-tech-stocks-worth-considering-before-they-report-200199626
3 Hidden Gem Tech Stocks Worth Considering Before They Report
By Investing.com (Jesse Cohen/Investing.com)   |  Feb 07, 2019 09:43
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Major U.S. indices have had a strong start to 2019. The S&P 500 enjoyed its best January performance in three decades, gaining 7.8%, as markets successfully bounced back from a dismal end to 2018. The NASDAQ has gained about 11.5% since the year began.

Marquee names such as Facebook (NASDAQ:FB) (NASDAQ:FB), Amazon (NASDAQ:AMZN) (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) (NASDAQ:NFLX) and Google parent Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOGL)—collectively dubbed the FAANGs —have all experienced strong gains over the period, with Facebook and Netflix respectively up around 30% and 33% for the period. That's impressive till you dig a bit deeper into the performance of tech sector shares.

It turns out there's a less well known group of tech stocks that have been riding even higher: the Software & Services Industry Group (NYSE:XSW), currently trading just below an all-time high. It has rallied roughly 18% since the start of 2019, significantly outperforming the NASDAQ.

XSW ns Nasdaq
XSW ns Nasdaq

XSW vs NASDAQ

Household names such as Microsoft (NASDAQ:MSFT) (NASDAQ:MSFT) (+5.5% this year), Adobe (NASDAQ:ADBE) (NASDAQ:ADBE) (+12.6%) and Salesforce (+16%) are all associated with the sector, but it's some of the smaller, lesser-known names in the group that have had eye-popping activity, yet have gone relatively unnoticed.

Of the 164 stocks in the group, we've honed in on three that we consider hidden gems. Indeed, they could provide investors strong long-term growth potential. Each is well worth considering ahead of their quarterly earnings reports later this month.

1. Twilio: Cloud Communications Platform Provider

Shares of Twilio (NYSE:TWLO), a cloud communications platform specialist, are up 27.5% since January 1. Even better, the stock has gained roughly 90% since being highlighted as a top software sector play back in June.

Twilio shares has nearly doubled in the less than five weeks since its most recent low of $73.15 on December 24. It's currently trading at an all-time high of $113.89 as of last night's close.

TWLO 300 minute chart
TWLO 300 minute chart

TWLO 300 Minute Chart

Twilio next reports earnings after the U.S. market closes on Tuesday, February 12. Consensus calls for EPS of $0.04 on revenue of $184.43 million for the fourth-quarter. The company announced a loss of $0.03 per share in the same period a year earlier on revenue of $115.24.

More importantly, investors will keep an eye on Twilio's update regarding their active customer accounts to see if the software provider can maintain its torrid pace of growth as it diversifies its customer base away from Uber, which was once 25% of its revenue. The company announced on its Q3 earnings report that it had 61,150 customers.

In terms of innovation, Twilio has been busy. In 2018, the company launched general availability of Twilio Flex Roadmap, the company's fully programmable application platform contact center, and pushed Twilio Pay, which lets businesses easily and securely accept payments over the phone.

As well, the firm made strategic acquisitions of Ytica, an analytics-driven workforce optimization software company, and SendGrid, the world's largest cloud-based email delivery platform, positioning Twilio to become a leading name in the cloud communications space in coming years.

Shares have gained 212% since its IPO in July 2016.

2. Trade Desk: Digital Ad-Purchasing Platform

Trade Desk (NASDAQ:TTD) shares have been on a tear so far this year, rising almost 34%, with investors growing increasingly bullish on the digital ad-buying specialist. The company, which operates a self-service software platform where customers can buy and manage data-driven digital advertising campaigns using their own teams, has benefited from a burgeoning wave in digital ad-buying.

The stock has gained 45% since hitting a recent low of $102.35 on December 24. It's currently trading at $155.16 as of yesterday's close, just below its record high of $161.50 reached in late September.

TTD daily chart
TTD daily chart

TTD Daily Chart

Trade Desk is scheduled to release fourth-quarter earnings on Thursday, February 21, after the close. Consensus calls for EPS of $0.80 on $147.79 million in revenue. The company reported earnings of $0.54 per share in the year-ago period and $102.65 in revenue.

Investors will be keen to hear if the company plans to hike its guidance again, something it has done in each of the last three quarters.

According to International Data Corporation, global digital advertising spending is expected to grow from $229 billion in 2017 to $360 billion in 2021, making up nearly half of the total advertising market. No surprise then that Trade Desk has seen shares rally a staggering 415% from its September 2016 IPO price of $29.12. The company is in prime position to capitalize on this trend in the years ahead.

3. Workday: Enterprise Software Solutions

Workday (NASDAQ:WDAY) offers enterprise-level software solutions for financial management and human resources, such as payroll tools. It was founded by David Duffield, founder and former CEO of PeopleSoft, and former PeopleSoft chief strategist Aneel Bhusri following Oracle (NYSE:ORCL)'s (NYSE:ORCL) hostile takeover of PeopleSoft in 2005.

The stock, which is currently trading at an all-time peak of $189.29, has gained about 18.5% so far this year. It is up 290% since it went public in November 2012 at a price of $49.10.

WDAY 300 minute chart
WDAY 300 minute chart

WDAY 300 Minute Chart

Workday is expected to publish fourth-quarter earnings after the markets close on Thursday, February 28. Consensus calls for EPS of $0.32 on $776.52 million in revenue. The company reported earnings per share of $0.28 and revenue of $582.48 million in the same period a year earlier.

Perhaps of greater interest, Wall Street will be closely watching subscriptions revenue, which jumped 34.7% year-over-year in the third quarter to $624.4 million.

William Blair analyst Justin Furby wrote in a research note on January 31 that the human resources software maker has won a large contract with Accenture (NYSE:ACN) (NYSE:ACN), a major information technology services company. "With close to 500,000 employees globally, Accenture ranks as one of the world's largest employers and would likely be a top-five customer for Workday measured by head count," Furby said in the report.

"A deal of this size could easily be over $20 million of subscription revenue annually (when fully ramped up) and upward of $100 million or more of backlog."

Taking all this into consideration, Workday appears to be quickly transitioning into the go-to name in HR management.

3 Hidden Gem Tech Stocks Worth Considering Before They Report
 
3 Hidden Gem Tech Stocks Worth Considering Before They Report

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email