$OZON $PRPL $RPD $SABR $SLQT $SWAV $TTCF $VRM
26 stocks under $10 billion market cap with huge growth potential (part 3)
This is the final installment of my growth stocks watchlist. Feel free to connect with me on Twitter and let me know if you start positions in any of these companies. As always I encourage you to do your own research before buying anything but I hope some of the stocks in this list make you some money.
$OZON - Ozon
Current price = $42.81
Market cap = $7.7 billion
Headquarters = Nicosia, Cypus
Website = https://www.ozon.ru/
2020 revenue growth (est.) = +80%
2021 revenue growth (est.) = +70%
Ozon is an online marketplace connecting buyers and sellers throughout Russia. The company offers products in various categories that include electronics, home and decor products, children's goods, fast moving consumer goods, fresh food, and car parts. It also manages an online marketplace that enables third-party sellers to offer their products to consumers on its mobile apps, as well as ozon.ru and ozon.travel websites. In addition, the company provides advertising services and payment solutions to vendors and third-party sellers.
Some investors are already calling Ozon the “Amazon of Russia” which might be true given how fast they are growing and how fast they are investing in logistics and fulfillment (although Amazon is a $1.6 trillion company so please keep things in perspective). Ozon has already said they are likely to spend the proceeds from their recent IPO to add 2.7 million square feet of distribution space and open five new fulfilment hubs. The company has already developed a nationwide logistics infrastructure consisting of nine fulfillment centers, 43 sorting hubs, 7,500 parcel lockers, 4,600 pickup points, and 2,700 couriers.
Here’s a recent interview with the CEO on CNBC [click here]
My take: I love ecommerce companies in general, I believe there are massive secular tailwinds to keep this sector growing for many years to come. Given my desire to own ecommerce companies on every continent as my favorite way to invest in international growth then it only makes sense to have some $OZON in my portfolio. I already own $ETSY $SHOP $MELI $SE $BABA $JMIA $FTCH
$PRPL - Purple Innovation
Current price = $29.75
Market cap = $1.8 billion
Headquarters = Lehi, Utah
Website = http://Purple.com
2020 revenue growth (est.) = +56%
2021 revenue growth (est.) = +30%
Chart: https://chrt.biz/PRPL/1907482lxj0/chart/
Purple is a “sleep company” that designs and manufactures mattresses, pillows, cushions, sheets, and blankets. The company sells its products through direct-to-consumer online channels, retail brick-and-mortar stores, wholesale partners, and third-party online retailers, as well as through its factory outlet and the company owned showrooms. The bulk of the company's revenues still come from their Purple mattresses which start at $1050 (Queen) and go up to $2800 (Queen) for the Purple Hybrid Premier mattress.
My take: I am worried about the “mattress wars” since there’s probably 10-12 DTC competitors but Purple has one of the best products in the industry plus the size and scale to keep growing especially as more people keep moving from cities into the suburbs and want to upgrade their comforts because we all know that sleep is extremely important to our mental and physical well-being. I’m actually in the market for a new mattress and Purple is at the top of that list.
$RPD - Rapid7
Current price = $76.26
Market cap = $3.9 billion
Headquarters = Boston, Massachusetts
Website = https://www.rapid7.com/
2020 revenue growth (est.) = +25%
2021 revenue growth (est.) = +20%
Chart: https://chrt.biz/RPD/1907482n1rh/chart/
Rapid7 is a cyber security company providing everything from threat detection and response to endpoint analytics to API protection to workflow insights. The company offers a cloud-native platform that enables customers to create and manage analytics-driven cyber security risk management programs. Its platform include vulnerability management solutions comprising InsightVM that is designed to provide a way to collect vulnerability data, prioritize risk, and automate remediation; InsightIDR, an incident detection and response solution; InsightAppSec provides application security testing that analyzes web applications for security vulnerabilities; and InsightConnect, a SOAR solution that is used by security professionals. The company’s other products include Nexpose, an on-premise version of company's vulnerability risk management solution; AppSpider, an on-premise version of company's application security testing solution; Metasploit, a penetration testing software solution; and InsightOps that enables organizations to store and search data in real time. Rapid7 offers their products through software licenses, cloud-based subscriptions, and managed services. The company serves customers in many industries including technology, energy, financial services, healthcare and life sciences, manufacturing, media, retail, education and government. The company has customers in the Americas, Europe, Middle East, Africa, and Asia Pacific.
My take: I prefer CrowdStrike which is a top 5 position for me but the market cap is over $35 billion whereas Rapid7 is much smaller (under $4 billion) and could be an acquisition target someday. If you are looking for a smaller company in the cyber security industry this is definitely a company to consider.
$SABR - Sabre Corp
Current price = $11.56
Market cap = $3.7 billion
Headquarters = South Lake, Texas
Website = https://www.sabre.com/
2020 revenue growth (est.) = -65%
2021 revenue growth (est.) = +82%
Chart: https://chrt.biz/SABR/1907482oj51/chart/
Sabre is a technology solutions provider to the $8 trillion global travel, tourism and hospitality industries. In many ways they are the backend data source/platform that powers these massive industries. The company processes more than 1.1 trillion system messages each year, including 100,000 messages per second during peak times and 1.5 billion daily API requests. More than 12 billion shopping requests are processed through Sabre annually and more than one billion people use Sabre technology every year to plan, book and experience travel. It operates in three segments: Travel Network, Airline Solutions, and Hospitality Solutions. Sabre travel marketplace transacts more than $120 billion of travel spend per year. Sabre has joint ventures and distribution partnerships across the globe [read more].
My take: As the travel and hospitality industries rebound in 2021, I believe $SABR could have a very strong year. I would rather get exposure to the recovery sectors via a $SABR versus owning the airlines, hotels, etc.
$SLQT - SelectQuote
Current price = $21.36
Market cap = $3.5 billion
Headquarters = Overland Park, Kansas
Website = http://www.SelectQuote.com
2020 revenue growth (est.) = +62%
2021 revenue growth (est.) = +35%
Chart: https://chrt.biz/SLQT/1907482pdlm/chart/
SelectQuote, Inc. operates a technology-enabled, direct-to-consumer distribution platform that sells a range of insurance policies to consumers from various insurance carriers. The company operates through four segments: Senior, Life, Auto and Home. It’s basically a lead generation service for insurance companies.
My take: SelectQuote went public just 6 months ago and unfortunately I didn’t give it much attention or perhaps I would have realized this company has much more growth than one would expect. As I mentioned earlier, insurance is not the sexiest industry but it is huge and impacts almost every single adult in the country from life to auto to home or all three of them. I’m not in this stock yet but I do love companies leveraging technology, digital marketing, artificial intelligence and big dataI to disrupt big boring legacy industries like insurance so I’ll be keeping a close eye on $SLQT.
$SWAV - Shockwave Medical
Current price = $86.25
Market cap = $3 billion
Headquarters = Santa Clara, California
Website = https://shockwavemedical.com/
2020 revenue growth (est.) = +53%
2021 revenue growth (est.) = +92%
Chart: https://chrt.biz/SWAV/1907482stof/chart/
ShockWave is a medical device company that develops and commercializes intravascular lithotripsy technology to treat calcified plaque in patients with peripheral vascular, coronary vascular, and heart valve diseases. The company offers M5 catheters for treating above-the-knee peripheral artery disease; C2 catheters for treating coronary artery disease; and S4 catheters for treating below-the-knee peripheral artery disease. It serves interventional cardiologists, vascular surgeons, and interventional radiologists through sales representatives and sales managers, and distributors.
My take: I’m not going to pretend that I’m an expert in this industry or truly understand this company’s products (yet) but I did spend a couple hours reading about Shockwave and I’m pretty impressed so far or I would not have included them on this list. Knowing how many millions of people suffer from vascular and coronary diseases makes me think Shockwave could grow at 50-60% per year for many years to come assuming they have the best product in the market (which I’m still trying to figure out). I have a few friends in the medical field so I’m planning to speak with them in the next week or so in hopes they can provide me with some additional information or insights on this company. In the past few days this stock pulled back from $101 down to $84 so there’s a decent chance I grab a few shares in the mid $80s just to start a position while I keep doing my due diligence. As you can probably tell I’m trying to add more non-tech growth stocks to my portfolio.
$TTCF - Tattooed Chef
Current price = $15.42
Market cap = $1 billion
Headquarters = Costa Mesa, California
Website = https://tattooedchef.com
2020 revenue growth (est.) = +74%
2021 revenue growth (est.) = +52%
Chart: https://chrt.biz/TTCF/1907482teif/chart/
Ittella International, LLC provides plant-based food products to fit into various lives, routines, and diets. Its principal products include ready-to-cook bowls, zucchini spirals, riced cauliflower, acai and smoothie bowls, and cauliflower pizza crusts, which are available in the frozen food sections of retail food stores across the United States. The company also sells its products online.
My take: Several of the people I follow on Twitter had been banging the table on $TTCF over the past couple months but it was a SPAC deal and too many of them had traded poorly after their merger so I decided to stay away. Turns out I was right because the stock has since pulled back from $28 to under $16 but now I believe the risk/reward is extremely appetizing (pun intended). Over the past couple weeks I have dug into this company, I have tried their products and I’m thoroughly impressed with the quality. I actually had their cauliflower pizza for dinner last night because I’m addicted. I prefer their pizza over regular pizza because it’s less filling but just as tasty. In my opinion if you want to invest in the “plant based foods” theme/trend you’re better off doing it with $TTCF than you are with $BYND which is already sporting a $9 billion valuation. I believe $TTCF outperforms $BYND over the next couple years as this small cap gets more attention from retail and institutional investors. Their food is not cheap but it’s very high quality, it’s convenient and it’s still more affordable than going out to a restaurant.
$VRM - Vroom
Current price = $33.65
Market cap = $4.4 billion
Headquarters = NYC, New York
Website = https://www.vroom.com/
2020 revenue growth (est.) = +15%
2021 revenue growth (est.) = +85%
Chart: https://chrt.biz/VRM/1907482tzzw/chart/
Vroom, Inc. operates an e-commerce platform for buying, selling, and trading of new and used cars in the United States. It also offers financing solutions.
My take: Vroom has had a volatile year that included their IPO in June 2020. After the IPO the stock ripped higher to $75 and has since fallen down into the mid $30s. In my opinion expectations are very low for this company right now so there’s potential upside over the next 12-18 months. I don’t have a position yet but I’m getting close to starting one. If you believe that more cars will be bought and sold over the internet in the coming years then you really have two options to invest in that theme which is Carvana ($40 billion market cap) and Vroom ($4.4 billion market cap). In my opinion I think both companies have a bright future post-pandemic especially with more people moving out of cities and into the suburbs which should increase the number of cars that households will own. I also believe less people will want to commute into cities via public transportation which could also push up the demand for new and used cars ie Vroom. It’s very likely that Carvana is the better company long term however $CVNA is up 150% YTD while $VRM is down more than 50% from the early September highs.
Here’s a list of other stocks that were strongly considered but didn’t make the cut for various reasons. Some of them might make my next list.
$ACAD - Acadia Pharmaceuticals
$AFYA - Afya Ltd.
$ARCE - Arco Platform
$AEYE - AudioEye
$BIGC - BigCommerce
$BLNK - Blink Charging
$BYND - Beyond Meat
$CDLX - Cardlytics
$CLSK - CleanSpark
$CRSP - Crispr Therapeutics
$DAO - Youdau
$EHTH - eHealth
$EXPI - eXp World Holdings
$FLGT - Fulgent Genetics
$FROG - Jfrog
$FRPT - Freshpet
$FTHM - Fathom Holdings
$GAN - Gan Ltd.
$GBT - Global Blood Therapeutics
$GSHD - Goosehead Insurance
$HQY - HealthEquity
$IPOB - OpenDoor
$JMIA - Jumia
$JYNT - Joint Chiropractic
$KNDI - Kandi Technologies
$KNSL - Kinsale Capital
$LMND - Lemonade
$LMPX - LMP Automotive
$LPRO - Open Lending
$MGNI - Magnite
$MWK - Mohawk
$MXL - Maxlinear
$NNOX - NanoX
$PD - PageDuty
$PLAN - Anaplan
$PLMR - Palomar Holdings
$QFIN - 360 DigiTech
$SII - Sprott
$SMAR - SmartSheet
$SPWR - SunPower
$UPWK - UpWork
$WKHS - Workhorse Group