Evening all from London.
Thank you for all of your contributions - I am an avid reader.
One thing that has been festering away at the back of my mind is where the next crop of our multi baggers, super star (mainly SaaS) performers are coming from…
The likes of Okta, TDD, Alteryx, Twilio, Shopify, MongoDB have all performed so well but with much higher market caps, it seems the days of 5+ baggers are over for them?
I know the likes of Datadog, Crowdstrike, Zoom are very popular on these boards but they all have a much higher market cap starting point, so I’m wondering what is the next batch in the 1-3b range that your fine selves are getting excited about?
One that stands out for me is LVGO but I’d love to research more suggestions.
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PagerDuty (PD) is a good one to check out. The market cap is about 2 billion, they have an incredible list of customers, gross margins of 84% and Net Retention Rate of 130%+.
Revenue growth is lower than most people would like, around 39% YOY. I believe this is because they don’t do a lot of aggressive sales which keeps margins unusually high.
Here are some of their customers:
DataDog
Zoom
Okta
Twilio
Shopify
Cloudflare
DropBox
IBM Cloud
Netflix
Peloton
They compete with OpsGenie and VictorOps. OpsGenie is Atlassian’s (TEAM), but it’s not Atlassian’s specialty. PagerDuty is basically the best in class solution and customers are paying up for it slightly (PagerDuty costs ~50% more than OpsGenie).
One interesting fact is that DataDog is a customer of PagerDuty, and PagerDuty is a customer of DataDog. They essentially plus into each other.
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One thing that has been festering away at the back of my mind is where the next crop of our multi baggers, super star (mainly SaaS) performers are coming from…
My three…
The Covid-19 tripod: EVBG, TDOC, ZM
https://discussion.fool.com/the-covid-19-tripod-evbg-tdoc-zm-344…
The likes of Okta, TDD, Alteryx, Twilio, Shopify, MongoDB have all performed so well but with much higher market caps, it seems the days of 5+ baggers are over for them?
Just because a stock has gone up does not mean it can no longer go up. They would have stopped going up after the first time they went up! LOL
That does not mean a stock can go up forever but one needs a more logical reason for thinking the stock has topped out. It’s a question of market penetration. A new market can absorb a lot of product, a mature market can’t, it relies mostly on replacement or “vegetative” growth. Growth rates are best represented by the “S” or sigmoid curve:
https://www.google.com/search?q=sigmoid+curve&newwindow=…
A company can have more than one “S” curve, for example Apple has the iPod, iPad, iPhone, and iWatch growth spurts if not more. Covid-19 is creating a bunch of brand new markets, people working and playing at a distance, etc., etc., etc. This is one of the most exciting times to be investing in the covid-19 paradigm shift bull market.
Denny Schlesinger
14 Likes
I can give a few from the top of my holdings. BILL is relative new. FIVN, EVBG are couple years old. But For growth stocks, they can keep growing for a long time. They can easily grow for another 5 to 10 years.
FIVN, EVBG, BILL
For new IPO, Schrödinger has good potential to be multi-beggar. Its growth rate is only 30% but it has big moat and is a potential disrupting force.
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“so I’m wondering what is the next batch in the 1-3b range that your fine selves are getting excited about?”
Patience! I had the same thoughts all the years before: What is the next AOL, the next Cisco, next Yahoo, next Amazon, next Shopify. You see the pattern?
The next great company and stock will come, but not next week or next months. So patience.
At the moment the best stocks are the same stocks like 2019: AYX, CRWD, ROKU, DDOG, ZM, DOCU, COUP.
BILL is a new stock, could be interesting. But stock price at the moment very extended.
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A FWIW throw-away post for anybody that cares; my best performing investments that are under $5B market cap include:
APPN
FSLY
APPF
NET
KNSL
BL
LVGO
I am not recommending these for the board as I believe many would not meet the high-growth qualifier that is required of this board.
In the spirit of this board, perhaps some of the recommended companies in this thread will spur others to present write-ups on these or other companies that could be considered going forward.
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Livongo (LVGO) is the one I’m watching most closely. Revenue grew 115% YoY, gross margins consistently in mid-70%, customer base growing around 100% YoY.
Remote-care model isn’t impacted by COVID (other than rising unemployment, sadly).
Their diabetes treatment program is their largest source of revenue, but they’ve quickly expanded to include hypertension. Next up: Chronic pain? Stress? Cholesterol? I can easily see them expanding to address the next big health trends down the road. They quickly rolled out COVID-and WFH-specific content to their members over the last quarter.
According to Q1 2020 call, more than 147 million Americans live with a chronic condition, so they believe they have a huge addressable market. Even if we factor in an unemployment rate of 25% for the foreseeable future, TAM is still over 100 million Americans!
In my view, they are in the perfect sweet spot:
- Saving customers money and improving their health
- Saving employers money by reducing their healthcare costs
- “Stickiness” factor is very high - what HR dept is going to replace a provider that provides great ROI and improves the health of their employees?
Just my two cents - I’d love to hear others’ thoughts.
MVR (long LVGO)
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Livongo (LVGO) is the one I’m watching most closely. Revenue grew 115% YoY, gross margins consistently in mid-70%, customer base growing around 100% YoY.
Remote-care model isn’t impacted by COVID (other than rising unemployment, sadly).
Yes, LVGO is still one that I can get the most enthusiastic about. I think Covid actually is a net positive for them since it accelerates adoption of their monitoring paradigm when they are at the forefront. If they leverage their platform well, their potential TAM is massive.
I like to buy on dips but couldn’t help but buy a little more over $50.
Others I still like due to huge potential and relatively smaller market caps:
AYX
DDOG
CRWD
Larger market caps but still massive potential are a couple ecommerce companies:
MELI
SE
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