A New Growth Stock To Invest In October 2020
Buying new stocks that you have never owned before is always a scary thing for most investors, especially if the cost of buying these stocks is high. Some may call it high growth stocks, but I call it taking calculated risks. When investing, it is always good to take those risks as long as you strongly believe you can always get the results.
Are you uncertain of where you want to begin your journey into stock investments? I have an answer for you in one of my blogs captioned “How to Do Better and Succeed in the Stock Market?“. There are different trading apps in the world today, but I prefer and suggest you try trading 212. The link is attached below in the description.
Why do I use and suggest this app for you? It is because you get a free stock recommendation immediately after signing up. I have written lots of books and done some courses that can help young investors, and you can check them in the links below. However, my personal favorite “The Intelligent Investor” is available for those who want to invest in the future but find it hard to save money for such investment. This blog is opinion based, and you are free to further your research before making any choices. Any figures and numbers mentioned here are accurate for September 9, 2020.
Hello readers, and welcome to another exciting blog I have made especially for you as an investor that is looking to invest big into some kind of stocks. As usual, my blog is always centered on making wise choices and taking the right risks as investors, and this one is no different.
I have invested a good amount of money back in April 2020 in this particular growth stock with the hope that it is going to turn out well, just the way I envision it. I still have such plans of investing more money in this stock, and it is because I think it has a very high potential in the next decade, potential as high as 5X – 10X. It simply means there will be massive growth in the company, as well as in its evaluation. So, in this blog, I will be discussing three things, and they are:
What stock do I have so much faith in, what are the numbers that surround the stock, and what are my reasons behind buying these growth stocks?
So, before I continue, I want to point out that I may have had great success in the past, predicting some growth stocks. I may have been right about TSLA, Trade Desk, Apple, Amazon, Zoom. These are stocks that I predicted as growth stocks and the predictions turned out to be right. But then again, I may not always be right because I am human. I know some of you buy stocks because I am buying them.
You are not totally to believe in me, but I do think you need to do your own research most of the time. At least, try to see why I am thinking the way I am thinking. If you do not feel right about some of my investment strategies, you can always sit it out just to avoid regrets.
So, what is that stock I have so much confidence in?
The company is Slack Technologies, Inc. (Work). Its shares sell at $25.53 as at the time of making this blog. This company went public last summer, and it has had some troubled times so far. The current price of its shares is a lot less than the price of last year, which was $37.22. But it does not work like that. Sometimes, investors do not know how influential stocks might be in the end, so they prefer not to invest, and that is why stock prices go down, but it is not a determinant for bad stocks.
Here are some of my assessments. Over the past three years, their total revenues have gone up from $220,554 million to over $630,422 million. Also, their gross profits have gone up from around $194,180 to above $533,231 million. Even their selling and marketing expenses have seen massive growth over the past few years. The research and development numbers have also recorded positive values since they went public.
This company is a game-changer, and if it continues powering just as I predict it will, then we might just be seeing the end of the email era. Slack basically helps you communicate in a business. Basically, every business out there uses Slack or something like Slack for communication. Both small and large companies even use Slack for scaling their businesses, so their importance is growing rapidly. It is no longer news that Microsoft and Slack are the two major companies when it comes to communication.
A year or two ago, most people did not know of Slack, but today the app icon is displayed on just about every electronic device one can use for communication within companies and offices. The interesting thing about Slack and companies like this is they are innovative companies that will continue to innovate. A lot of investors make the mistake of judging these kinds of companies based on the short term. They are well based on short term performances, but they grow better over the years as they keep innovating.
And as they keep innovating and making their products better, their stocks keep rising. The CEO of this rising company once stated that the goal is to make sure his company ends up as big as its direct competitor, Microsoft. That may be a little audacious if you ask me, considering the difference in their market caps. Microsoft has a market cap of about one and a half-trillion dollars while Slack has a market cap of about fourteen billion dollars, but there is no telling to what lengths this company would decide to push its goals.
So, what are the numbers that surround their stocks?
Let’s take a look at its growth numbers. As of September 8, 2020, when the company released its results for the second quarter fiscal year, it was clear that they have amassed a total revenue of $215.9 million up forty-nine percent year-over-year, added over eight thousand paid customers, and also added over eighty-seven paid customers with over a million dollars in annual recurring revenue. Paid customer growth is one of the most important factors of the company over a long period and has accelerated by thirty percent year-over-year in the second quarter, according to the Chief Executive Officer of Slack, Stewart Butterfield.
He also stated that Slack Connect was one of the front-seat drivers because it has been able to offer seamless inter-company collaboration that is way ahead of email. The second quarter ended with over three hundred and eighty thousand connected endpoints, and more than fifty-two thousand paid customers. They also recorded over 130,000 paying customers, which means they went up by thirty percent year-over-year, had a retention rate of about 125%, and even acquired another provider of enterprise directory software, Rimeto.
In terms of prices, as long as its stock is within the 20 – 30 dollar range, I intend to keep buying. And if they eventually go over forty dollars, I won’t be selling, but I definitely won’t be buying anymore. With the current price at $25.30, I will keep buying.
And finally, what is my bull thesis about this stock?
Some people keep asking why I have so much faith in this stock. Well, I try to run a thesis on some of these stocks, and here is my prediction about the company and its stock prices. If you take a look at the balance sheet of the company, the numbers are encouraging. For instance, Slack has over two hundred and sixteen million dollars in marketable securities and more than one billion dollars in cash and cash equivalents.
That is the sign of a company in a strong financial position. Even their revenues are showing positive numbers in sales growth. But remember that I am a long-term investor, so I love to think about stocks for the next ten years, which in this case is the end of the decade. And with all my estimations and calculations, I think this company will generate a revenue of around 7 – 10 billion dollars.
You will agree with me that this number signifies a lot of growth in the next ten years, and not every company can boast of such potential. Even their net income for the end of the decade should be around 2 – 5 billion dollars, and that is also massive.
Buying stocks requires some level of predictions, calculations, and risk-taking. However, when you start buying stocks for the long-term, you will realize that some companies are worth investing in when they are in a growth stock. One of these companies is Slack, and when you have done your research, I hope to see it in your portfolio. If this blog was useful, please like and share it, subscribe, and let me know your thoughts.
Recommended for further reading:
- Stock Market Investing For Beginners: The Investment Guide
- A Plain English Guide to Thinking Globally and Investing Wisely
- The Definitive Book on Value Investing
- Learn how to make more money and transform your life
- A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today