Last week turned out to be difficult for growth stocks. Many of the latest fastest growing technologies on the market were affected, especially during the second half of the week. The rebate was probably a function of some profit-making after many of those stocks declined since the coronavirus market crash in March.
Sure, many of these stocks had to be corrected. After all, stocks can’t tend to rise sharply forever. Over time, they are overrated. Therefore, a decline in these stocks was largely deserved. But the decline could also cause some stocks to overflow.
Three major growth stocks that look like good buying opportunities after last week’s sale are the cloud database company MongoDB (NASDAQ: MDB), provider of monitoring and analytical platforms Datadog (NASDAQ: DDOG)and telehealth and virtual care companies Teladoc Health (NYSE: TDOC) i Livongo Salut (NASDAQ: LVGO).
MongoDB: down 18%
Following this week’s liquidation, MongoDB shares are already down 18% from an all-time high, getting current investors a much better entry point than many other investors who have paid for the shares this summer.
MongoDB has been able to continue to grow its business rapidly, even through the pandemic. The company’s revenue for the quarter ending April 30, 2020 (MongoDB’s first fiscal 2021 quarter) increased 46% year-over-year. This has been a remarkable acceleration in growth of 44% in the previous quarter. The company even increased the lower part of its tax revenue for fiscal year 2021 by $ 10 million, allowing 2021 tax revenue to be between $ 520 and $ 530 million.
“While the impact of COVID-19 will be longer than initially expected earlier this year, we are seeing clear signs that the current environment reinforces long-term trends towards digital transformation and migration in cloud, ”MongoDB CEO said. Dev Ittycheria at the launch of the company’s tax results in the first quarter. “MongoDB is a clear beneficiary of these trends and we will continue to make investments to take full advantage of this market opportunity.”
Data sheet: down 23%
Shares of Datadog have fallen 23%, hitting a high of $ 98.99 earlier this month. However, Datadog’s underlying business is booming. While second-quarter revenue growth slowed from the 87% growth rate in the first quarter, it still rose a strong 68% year-on-year.
The company’s customers with contracts with recurring annual revenues of $ 100,000 or more at the close of Datadog’s second quarter increased significantly by 71% year-on-year, to 1,015.
With a view, the company provided revenue of $ 566 million to $ 572 million in revenue for an entire year. Analysts expected revenue of $ 564 million in 2020.
Livongo Health and Teladoc: down 19% and 23%, respectively
Finally, there are Livongo Health and Teladoc – two companies whose stocks plummeted last week after announcing they planned to host and merge their businesses – a move that would make them the undisputed leader in telehealth and virtual attention.
The two companies estimate that the combination will drive $ 100 million in revenue synergies by the end of the second year after the merger closes. In addition, they anticipate $ 500 million in revenue synergies based on the pace of execution for 2025. Given that the two companies generate annual revenues of only $ 923 million today, that’s a pretty projection.
Investors who buy into these TV tech companies are participating in an incredible growth story. Livongo Health, a company specializing in virtual care solutions for people with chronic illnesses, increased second-quarter revenue by 125% year-on-year to $ 91.9 million. Telehealth platform provider Teladoc increased its second-quarter revenue by 85% year-over-year.
Of course, there is always the risk that the merger will not close. Although, as individual entities, both Livongo Health and Teladoc Health have an excellent competitive position, and their shares are down 19% and 23%, respectively, from all-time highs.
Expect more volatility
While these stocks look attractive today, that doesn’t mean the prices they saw on Friday will be the lowest they are trading from now on. Growth stocks can be very volatile, as investors try to constantly revalue the current value of the current share based on wild forecasts of future growth. Small changes in sentiment for the growth trajectories of these companies can lead to significant changes in their prices.
Looking back five years, however, these fast-growing technology companies will continue to gain market share and improve supply for their customers, making them critical technologies of the future and ultimately rewarding investors. More importantly, your scalable business models are likely to generate significant long-term profits. But investors will have to be patient because these companies are still investing heavily in the great growth opportunities they face.