Vvolatility is in the air, and that’s not necessarily a bad thing. Lots of stocks are in motion these days, but not all names are rising. Earnings season has shrunk to the point where only dozens of companies — instead of hundreds — are reporting each week. But strong finances could be the catalyst for breathing new life into some investments.
Adobe (NASDAQ: ADBE), vital farms (NASDAQ: VITL)and momo (NASDAQ:MOMO) are three stocks that have a lot to prove in the coming week. They will all provide financial updates, and strong performance could make them stand out.
The only known name on this list makes a difference as stocks enter the new week trading 18% below all-time highs reached in early September last year. Adobe is the software publishing giant behind many iconic platforms, and it released new financials for its fiscal first quarter on Tuesday afternoon. You don’t need to fire up Photoshop to make the numbers look good.
Adobe is growing much faster than you probably think for a decades-old software company. He had five straight years of 20% or more revenue growth before proving deadly in fiscal 2020 with a still respectable 15% increase. Analysts see it back on track with a 22% year-over-year increase in Tuesday’s report.
Wall Street pros see earnings per share also rising 22% for the fiscal quarter, which ended in February, but that’s where the story gets even better. Adobe has consistently exceeded market expectations. It beat Wall Street’s profit targets in all four fiscal quarters of 2020, and that was in a disabled year for the company. If Adobe stock hits last year’s highs, it would need a strong quarter to hold onto its gains, but the stage is set for a big upside if it materializes with another pace and short-term outlook. term somewhat pink.
Investors hoping to get in on the humane farming trend drove shares of Vital Farms on its IPO to $22 last summer. The ethically produced food company — in partnership with about 200 family farms producing eggs and butter products in more than 13,000 stores — has been a hot IPO.
Vital Farms opened at $35, flirting with highs in the $40s in each of its first three months of trading. It returned most of its post-IPO gains, closing at $26.60 on Friday.
Some beginners stumble, but growth hasn’t been an issue here. Vital Farms entered the market after recording 32% revenue growth in 2019, rising to 44% in the first quarter of last year. It got increases of 84% and 57% in its first two reports as a public company. The pasture egg specialist can hatch a recovery in its stock (see what I did there?) with a solid financial update Wednesday morning.
On Thursday, Momo has a chance to woo investors with its fourth-quarter results after market close. The Chinese company behind its eponymous social search platform and Tinder-like dating app Tantan has had a tough time lately.
Momo’s revenue went from nearly quadrupling in 2016 to more than doubling in 2017, and the deceleration escalated to the point where revenue fell 9% in the first nine months of last year.
You can’t just consider this a pandemic weakness. Online dating and social discovery continues to be a growth story outside of Momo. parent tinder Matching group (NASDAQ:MTCH) and recent IPO Bumblebee (NASDAQ: BMBL) grew their revenue lines by 17% and 19%, respectively, in 2020. But you gotta love Momo as a value stock with growth turnaround potential.
Match Group and Bumble trade at an enterprise value that is 14 to 18 times revenue. Momo, with its cash-rich balance sheet, will seek less than its leakage income. It is also very profitable right now with a single-digit earnings multiple.
Did I mention it also gives nearly 5%? Momo has declared an annual dividend with its fourth quarter financial statements in consecutive years. As tough as 2020 may have been, the company is still profitable and still has enough cash on hand to announce another hefty payout on Thursday. Momo is so out of favor that even a whiff of a turnaround can lift stocks Friday.
10 stocks we prefer to Adobe Systems
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Rick Munarriz has no position in the stocks mentioned. The Motley Fool owns stock and recommends Adobe Systems, Match Group and Vital Farms, Inc. The Motley Fool recommends Momo. The Motley Fool has a disclosure policy.
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