Categories
growth stocks

3 Top Growth Stocks to Buy Right Now – Motley Fool

These stocks all grew by more than 40% in their most recent quarters.

David Jagielski

Investing in growth stocks can enhance your portfolio. These stocks tend to be more popular than plain old dividend stocks because growing businesses also tend to rise in value. Plus, the capital appreciation you can gain from investing in a top growth stock can often be much more than the recurring income you’ll earn from a dividend stock.

But picking a growth stock that can consistently deliver strong results is no easy task. Below are three companies that have produced impressive results of late and that still have lots of potential. 

1. Valens

Valens (OTC:VLNCF) may not be one of the big pot stocks in the industry just yet, but it’s taken every step to get on investors’ radars. In each of its last three quarters, Valens not only recorded a profit, but also generated strong growth.

Bar chart showing numbers going up.

Image source: Getty Images.

On April 14, the company released its first-quarter results of fiscal 2020. Sales of $32 million Canadian dollars were up from just CA$2.2 million in the prior-year period. The top line was a 4.4% improvement from the fourth quarter, and 94% higher than the third. This represents 263% growth the CA$8.8 million that Valens brought in during the second quarter.

Valens is still in its early growth stages, so the high percentages may be a little misleading. That shouldn’t take away from the impressive numbers the company has generated of late. That Valens is still getting more products out into the market is particularly exciting, as that means it’s likely to drive even more revenue growth this year.

The British Columbia-based company noted in its quarterly release that there are 25 SKUs in its pipeline across five product lines. They include vape pens, concentrates, edibles, beverages, topicals, tinctures, and capsules. With many different products hitting the markets this year, Valens’ numbers could look even better.

This cannabis stock could quickly grow — which is why it would be smart to buy it before it gets big.

2. Snap

Snap (NYSE:SNAP) could soon become much more popular with ad buyers thanks to Facebook, which is coming under fire from fed-up clients. Critics say the company isn’t doing enough to keep hate and disinformation off its platforms.

The end result may be that some of Facebook’s customers end up spending their advertising dollars elsewhere. That’s where Santa Monica-based Snap comes in. Snap is a camera company. While it may not be a Facebook replacement, it’s still an oft-used platform for young people to communicate and share stories. Its popularity and youthful audience carry a lot of value with ad buyers.

It also helps that Snap’s been growing its user base consistently in recent quarters, making it more appealing to advertisers. In the company’s first-quarter results, released April 21, it reported average daily active users of 229 million. That was up 5% from Q4, and represented a 20% increase from the prior-year period.

Sales in Q1 also grew by an impressive 44% year over year, reaching $462 million. Over the trailing 12 months, the company’s top line totaled $1.9 billion, up 46% over the same period a year ago. The bottom line has been a bit underwhelming for investors, however, as Snap has posted a loss every year.

3. Square

Square (NYSE:SQ) is another high-growth stock that investors should consider adding to their portfolios. In its first-quarter results May 6, Square reported net revenue of $1.4 billion — a year-over-year increase of 44%. In 2019, Square reported revenue of $4.7 billion, or a 43% increase from the year prior and more than double the $2.2 billion the company recorded in 2017. This past year was also the first time Square posted a profit, with a net income of $375 million.

What’s most exciting about Square, however, is that the company’s business is evolving to become more diverse and versatile. In Q1, Bitcoin revenue of $306 million accounted for 22.2% of the company’s net revenue. A year ago, that percentage was just 6.8%. Transactions make up 54.9% of Square sales, while subscriptions and services represent 21.4% of the top line. Hardware sales are about a modest 1.5% of revenue.

The company’s future growth won’t come without challenges. In an update from March 24, Square acknowledged that gross processing volume in its seller ecosystem was beginning to slow amid the COVID-19 pandemic. Still, with many paths forward and various revenue streams contributing to its top line, the company is in good shape to continue growing despite this adversity.

Which stock is the best buy today?

Let’s take a quick look at how these stocks have performed so far in 2020:

VLNCF Chart

VLNCF data by YCharts

Only Valens’ stock isn’t beating the S&P 500 this year. But even with a worse performance, the pot stock may be a better buy given its more modest price-to-sales valuation:

VLNCF PS Ratio Chart

VLNCF PS Ratio data by YCharts

Investors are paying much larger premiums for both Snap and Square today. Valens is a bit of an underrated buy, but with strong growth, profits in three straight quarters, and a cheaper valuation, the cannabis company is the better choice of the three.


David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Square. The Motley Fool recommends Valens GroWorks and recommends the following options: short September 2020 $70 puts

Read More

Categories
growth Record

Record U.S. job growth expected in June, but masks labor market weakness – Reuters

WASHINGTON (Reuters) – The U.S. economy likely created jobs at a record clip in June as more restaurants and bars resumed operations, which would offer further evidence that the COVID-19 recession was probably over, though a surge in cases of the coronavirus threatens the fledgling recovery.

FILE PHOTO: People line up outside Kentucky Career Center prior to its opening to find assistance with their unemployment claims in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston

The Labor Department’s closely watched monthly employment report on Thursday would add to a stream of data, including consumer spending, showing a sharp rebound in activity.

But the reopening of businesses after being shuttered in mid-March has unleashed a wave of coronavirus infections in large parts of the country, including the populous California, Florida and Texas.

Several states have been scaling back or pausing reopenings since late June and sent some workers home. The impact of these decisions will not show up in the employment data as the government surveyed businesses in the middle of the month.

Federal Reserve Chair Jerome Powell this week acknowledged the rebound in activity, saying the economy had “entered an important new phase and (had) done so sooner than expected.” But he cautioned the outlook “is extraordinarily uncertain” and would depend on “our success in containing the virus.”

“As the economy is reopening a lot of the jobs lost have come back and activity is coming back as well,” said Steven Blitz, chief U.S. economist at TS Lombard in New York. “The problem is the virus still has a big say in determining the trajectory of the recovery.”

According to a Reuters survey of economists, nonfarm payrolls likely increased by 3 million jobs in June, which would be the most since the government started keeping records in 1939. Payrolls rebounded 2.5 million in May after plunging by a historic 20.687 million in April.

Despite two straight months of eye-popping gains, employment would still be about 16.6 million jobs below its pre-pandemic level. The unemployment rate is forecast dipping to 12.3% from 13.3% in May.

Employment is increasing largely as companies rehire workers laid off when non-essential businesses like restaurants, bars, gyms and dental offices among others were closed to slow the spread of COVID-19.

Economists have attributed the burst in job gains to the government’s Paycheck Protection Program, giving businesses loans that can be partially forgiven if used for wages. Those funds are drying up.

LAYOFFS STILL ELEVATED

In an economy that had already fallen into recession as of February, many companies, including some not initially impacted by lockdown measures, are struggling with weak demand.

Economists and industry watchers say this, together with the exhaustion of the PPP loans, has triggered a new wave of layoffs that is keeping weekly new applications for unemployment benefits extraordinarily high.

A separate report from the Labor Department on Thursday is expected to show initial claims for state unemployment benefits likely totaled a seasonally adjusted 1.355 million for the week ended June 27 down from 1.48 million in the prior week, according to another Reuters survey of economists.

“Job losses are starting to bleed to other sectors of the economy, income groups and different skill sets,” said Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania.

The claims report is also expected to show the number of people receiving benefits after an initial week of aid likely fell to 19 million in the week ending June 20 from 19.5 million the week before. These so-called continued claims, which are reported with a one-week lag, have dropped from a record 24.912 million in early May.

For a more accurate picture of the labor market, economists recommend focusing on continuing claims and data on the total number of unemployment checks recipients. About 30.6 million people were collecting unemployment checks in the first week of June.

The jobless rate, which is the more standard measure of unemployment, has been biased down since March by people incorrectly misclassifying themselves as “employed but absent from work.” The Labor Department’s Bureau of Labor Statistics has been working with the Census Bureau to rectify this.

Without the misclassification issue, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at about 19.7% in April.

Job gains last month were likely concentrated in the typically low paying leisure and hospitality industry. The return of these workers is expected to have further depressed average wages in June. Some companies are cutting wages and reducing hours. Average hourly earnings are forecast declining 0.7% after dropping 1.0% in May. The average workweek is expected to dropped to 34.5 hours from 34.7 hours.

States and local governments likely laid off more workers as they confront reduced revenues and stressed budgets caused by the pandemic.

“A federal government failure to aid state and local governments and avoid income cliffs over the summer would further jeopardize the recovery,” said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York.

Reporting by Lucia Mutikani; Editing by Chizu Nomiyama

Read More