$FUTU $INSP $IRTC $KC $LSPD $MMYT $NFE $NIU $OCFT $ONEM
26 stocks under $10 billion market cap with huge growth potential (part 2)
Unfortunately I was unable to fit all 26 stocks into a single post/email so you’re going to get 3 different emails. Hope you enjoy.
$FUTU - Futu Holdings
Current price = $43.08
Market cap = $5.8 billion
Headquarters = Hong Kong
Website = https://www.futuholdings.com
2020 revenue growth (est.) = +175%
2021 revenue growth (est.) = +60%
Chart: https://chrt.biz/FUTU/19074820jax/chart/
Futu operates as a mobile-first investment and wealth management platform in Hong Kong, China, the United States, and internationally. The company’s platform offers investing services including trading in stocks, warrants, options and ETFs along with wealth management services, which offers various products such as money market accounts, fixed income, and equity fund products.
In my opinion this could be the next Robinhood or Charles Schwab of the Asian markets. I also like that Tencent is a significant equity owner and that Sequoia and Matrix were early VC investors. The company also has an office in Silicon Valley.
My take: I first saw this company come through one of my screeners a couple months ago but foolishly ignored it because it was based in Hong Kong. At the time it was trading in the low $30s which would have been an ideal time to buy it. More recently I heard about it on the Pounding the Table Podcast and decided to take a deeper look. I really liked what I saw and decided to start a position a couple weeks ago in the high $40s because I think this could be a $100 stock next year. Since I made my first purchase the stock has drifted down into the low $40s but I’ve been adding the entire time so my cost basis is around $45 and $FUTU is now a top 12 position for me. I honestly didn’t intend to let this position get so big but I feel very good about this company especially knowing that Tencent is a major shareholder. Tencent seems to have the Midas Touch, they own 20-25% of $SE which is another one of my top 5 holdings.
$INSP - Inspire Medical Systems
Current price = $191.50
Market cap = $5.1 billion
Headquarters = Golden Valley, Minnesota
Website = https://www.inspiresleep.com/
2020 revenue growth (est.) = +38%
2021 revenue growth (est.) = +54%
Chart: https://chrt.biz/INSP/190748217ws/chart/
Inspire Medical Systems is a medical technology company, focusing on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea (OSA).
The company also develops a novel, a closed-loop solution that continuously monitors a patient’s breathing and delivers mild hypoglossal nerve stimulation to maintain an open airway.
My take: Medical device companies always make me nervous because I don’t follow the industry very closely so it’s hard for me to know who the big competitors are and how their products compare. I also have very limited knowledge about the regulatory landscape, insurance reimbursements, etc so I’m including this company because everything I’ve seen and read looks very promising and I know the sleep apnea market relatively well since several of my friends use CPAP machines and hate them. I’m going to mention this company to them and see if they’ve looked into these alternative solutions before. I know some people get scared off by “minimally invasive” which is fair.
$IRTC - iRhythm Technologies, Inc.
Current price = $192.21
Market cap = $5.5 billion
Headquarters = San Francisco, California
Website = https://www.irhythmtech.com/
2020 revenue growth (est.) = +24%
2021 revenue growth (est.) = +42%
Chart: https://chrt.biz/IRTC/190748229zg/chart/
iRhythm Technologies is a digital healthcare company that provides ambulatory electrocardiogram (ECG) monitoring products for patients at risk for arrhythmias. It offers Zio service, a cardiac monitoring solution that combines a wire-free, patch-based, and wearable biosensor with a cloud-based data analytic platform to help physicians monitor patients and diagnose arrhythmias.
My take: If you’re looking for a smaller medical device company with a great product that customers seem to really like then take a look at $IRTC. The stock was down 20% yesterday because of growing concerns about insurance coverages/reimbursement from Medicare and Medicaid. The stock actually closed on Tuesday at $240 then dropped all the way down to $165 yesterday morning before rebounding to $192. I was already planning to include this stock on my list prior to yesterday’s big drop so perhaps the entry price is more attractive now or perhaps this stock could drift lower. I honestly don’t know but it’s a name I’ll be watching closely in the coming weeks.
$KC - Kingsoft Cloud
Current price = $41.30
Market cap = $9 billion
Headquarters = Beijing, China
Website = https://en.ksyun.com
2020 revenue growth (est.) = +80%
2021 revenue growth (est.) = +65%
Chart: https://chrt.biz/KC/19074822uew/chart/
Kingsoft provides cloud hosting and infrastructure services in China. The company offers public cloud services to customers in multiple verticals, including gaming, video, streaming, AI, e-commerce, education, healthcare, financial services and others.
My take: We all know that companies are moving all of their applications and date into the cloud at a record pace. In the US that market is dominated by Amazon AWS, Microsoft Azure and Google Cloud (with a few others). In China the three equivalents to that would be Alibaba, Tencent and Kingsoft. All three of them are growing their cloud businesses by more than 50% with Kingsoft being the smallest and purest way to play this secular trend so that’s why I like it and that’s why I started a position this week in $KC. I understand this is a speculative stock (despite the $9 billion market cap) but there’s still a lot to get me excited about and think this could be a $50 billion company in 4-5 years. The stock is only trading at 5.6x 2021 sales although the gross margins in this business are low compared to traditional SaaS businesses. Given the size of $BABA and $TCEHY I do wonder if one of them will end up acquiring $KC just to get them out of the way or perhaps some other Asian conglomerate gobbles them up.
$LSPD - Lightspeed POS Inc.
Current price = $58.12
Market cap = $5.8 billion
Headquarters = Montréal, Canada
Website = https://www.lightspeedhq.com/
2020 revenue growth (est.) = +62%
2021 revenue growth (est.) = +60%
Chart: https://chrt.biz/LSPD/19074823hc5/chart/
Lightspeed POS (point of sale) is a SaaS platform for small and midsize businesses including retailers, restaurants, and golf courses that enables the business to engage with consumers, manage operations, accept payments, and much more. The company’s platform covers the front-end such as point of sale, omni-channel engagement, home delivery, order management and loyalty programs. The platform also covers the back-end of the business like accounting, inventory, scheduling, membership, workflow, reporting, analytics, and real-time dashboards. Lightspeed also sells a suite of third-party hardware products to complement its software solutions for the retail and hospitality segments, such as customer facing displays, stands, barcode scanners, receipt printers, cash drawers, payment terminals, and an assortment of other accessories. Lightspeed offers 5 pricing plans, depending on what features your business needs. The plans start at just $79 per month (+$29 per month for each register) when you also integrate Lightspeed Payment Solutions. Lightspeed has 900+ employees across 14 global offices, customers in 100+ countries and has completed multiple acquisitions to expand their product offerings and customer list.
My take: I actually started a position in Lightspeed this week after digging into the company and better understanding what they do and who they serve. I’ve been looking for some stocks that could give me huge growth potential while also giving me exposure to the “recovery” sectors and I think $LSPD is one of them. They offer such a comprehensive platform for small businesses and they do it at a very fair price. There’s a lot to like about this company and I don’t think it’s getting enough attention from institutional investors, perhaps because it’s a Canadian based company (like Shopify) so once that changes this stock could have a very strong 2021.
$MMYT - MakeMyTrip
Current price = $24.98
Market cap = $2.6 billion
Headquarters = Gurugram, India
Website = https://www.makemytrip.com/
2020 revenue growth (est.) = -75%
2021 revenue growth (est.) = +225%
Chart: https://chrt.biz/MMYT/190748246kv/chart/
MakeMyTrip is an online travel company offering products and solutions in a dozen or so international markets but India is their biggest. The company operates in multiple verticals including Air, Hotel, Bus, Train, Cruise, Taxi, Chartered, Groups and more. The company allows travelers to research, plan, book, and purchase a range of travel services and products through their different websites: makemytrip.com, goibibo.com, redbus.in, makemytrip.com.sg, and makemytrip.ae -- that company also works with other distribution channels such as call centers, travel stores, and travel agents’ network. As of March 31, 2020 the company had 14 company-owned travel stores and 150 franchisee-owned travel stores.
My take: I’m tempted to take a position in this company because they should have a very strong rebound in 2021 once people around the world start traveling again. $MMYT looks to me like they are the Expedia of the emerging markets especially India where more people are moving into the middle class thus allowing more leisure travel. It’s on my watchlist for now. If you know this company well please feel free to shoot me a message and give me some additional insights.
$NFE - New Fortress Energy
Current price = $42.66
Market cap = $7.2 billion
Headquarters = New York, NY
Website = https://www.newfortressenergy.com/
2020 revenue growth (est.) = +152%
2021 revenue growth (est.) = +143%
Chart: https://chrt.biz/NFE/1907482gdls/chart/
New Fortress Energy operates as an integrated energy infrastructure company. They fund, build, and operate natural gas infrastructure and logistics to deliver energy solutions that enhance environmental stewardship and transform local industries and communities. New Fortress Energy was founded in 2014 by Wes Eden with the belief that access to affordable, reliable, cleaner energy is not a privilege, but a human right. New Fortress identifies places around the world where affordable, reliable, cleaner energy is in short supply. Then they build and operate LNG import terminals and facilities to supply natural gas locally, creating access to a better energy source. They also help finance, design, and build the gas-fired power generation and industrial facilities to help customers convert to natural gas.
My take: I have mixed feelings on this one because I’m certainly no expert on clean energy or natural gas however everytime I do a stock screener looking for high-growth stocks this one always comes through so I felt compelled to finally dig into it. The company does look interesting and they clearly have a mission of making the world a better place by bringing clean, affordable energy to all parts of the world which you have to respect. To be honest the growth projects look so extreme I’d definitely be a little cautious but feel free to dig in deeper and let me know what you think.
$NIU - Niu Technologies
Current price = $29.59
Market cap = $2.2 billion
Headquarters = Beijing, China
Website = https://www.niu.com/en/
2020 revenue growth (est.) = +25%
2021 revenue growth (est.) = +80%
Chart: https://chrt.biz/NIU/1907482h6eo/chart/
Niu Technologies designs, manufactures and sells smart electric-scooters across Asia but primarily in China. The company offers NQi, MQi, UQi, and Gova series e-scooters; RQi and TQi series urban commuter electric motorcycles as well as NIU Aero series professional mountain and road bicycles under the NIU brand name. NIU sells and services its products through city partners and franchised stores as well as third-party e-commerce platforms and the company’s online store. Currently NIU operates through 235 city partners and 1,050 franchised stores in approximately 180 cities in China plus 29 distributors across 38 countries.
My take: This company is a great way to invest in micro-mobility which is a huge theme throughout Asia and now other parts of the world thanks to the pandemic. This stock is probably high risk but also high reward versus some of the other China stocks you could buy like $BABA $JD $PDD etc. The company appears to have done a nice job getting distribution but now we have to see if they can deliver the revenues.
$OCFT - OneConnect Financial Technology Co.
Current price = $21.80
Market cap = $8.5 billion
Headquarters = Shenzhen, China
Website = https://www.ocft.com/index.php?s=en/
2020 revenue growth (est.) = +52%
2021 revenue growth (est.) = +58%
Chart: https://chrt.biz/OCFT/1907482hriu/chart/
OneConnect Financial provides cloud-platform-based Fintech solutions, information and operating support services for financial institutions across China. OneConnect is the largest technology-as-a-service platform for financial institutions in China by number of customers. The platform provides more than 50 cloud-native products that can be deployed on a modular basis to quickly respond to customer requirements or combined to deliver end-to-end solutions. OneConnect focuses on 12 different verticals across the financial services industry including retail banking, risk management, SMB/SME financing, auto insurance, asset management, asset liability, insurance sales, blockchain and AI powered customer service [read more].
The company also operates: Regtech, an end-to-end regulatory solution to help enterprises automate and digitalize their operations; GammaO, an open API platform-as-a-service; and Blockchain network-as-a-service that enables their customers to create their own blockchain-based networks.
My take: Investing in China inherently carries some extra risk but there’s no denying the growth potential with this company given the industries they sell to and how quickly financial services, banking, insurance and asset management are growing throughout Asia. If you want to invest in China but want to stay away from e-commerce and electric vehicles then this might be a stock to consider. Personally I think $OCFT is one of the smarter, safer ways to invest in China.
$ONEM - 1Life Healthcare dba OneMedical
Current price = $34.82
Market cap = $4.5 billion
Headquarters = San Francisco, California
Website = https://www.onemedical.com/
2020 revenue growth (est.) = +32%
2021 revenue growth (est.) = +32%
Chart: https://chrt.biz/ONEM/1907482icy6/chart/
OneMedical operates a membership-based primary care platform (memberships start at $199 per year). Their mission statement is to “To transform healthcare for all through a human-centered, technology-powered model”.
OneMedical has developed a healthcare membership model based on direct consumer enrollment, as well as employer sponsorship. Membership includes the ability to text their PC doctors, schedule same-day appointments, video chat, requesting prescription renewals, 24/7 access to virtual care and access into the company’s digital health and information platform. The membership model includes seamless access to digital health services paired with inviting in-office care routinely covered under health insurance programs. At the start of 2020, OneMedical had approximately 90 locations across 9 markets with 422,000 members and 7,000 enterprise clients including companies like Google and Airbnb. The company has focused their efforts on the major cities like San Francisco, Boston, Chicago, Los Angeles, New York, Seattle and DC [see all locations].
My take: One of my college friends was an early employee at OneMedical so I’ve known about this company for over a decade even though they came public less than a year ago. I have a dozen friends that are OneMedical members and they truly love this company. OneMedical is a great example of why there’s so much opportunity for companies in old, slow moving industries like healthcare that decide to adopt technology and innovation and make it a core part of their business model.