3 Ignored Tech Stocks With Great Momentum
After a dismal 2018 fourth quarter, when the markets sold off in October and witnessed a meltdown in December, the major stock indices have performed well so far in 2019.
In fact, the markets posted the best January for stocks in 30+ years. The S&P 500 advanced 7.8% while the tech-heavy Nasdaq was up 11.9%.
And the momentum continues.
While the FAANG stocks—Facebook, Inc. (NASDAQ:FB), Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Google aka Alphabet Inc (NASDAQ:GOOG)—have been hogging the spotlight, a large number of hidden tech stocks have been performing just as well (or better).
Here are three of the best hidden tech stocks killing it in 2019.
MiX Telematics Ltd
Workday Inc (NASDAQ:WDAY), a global leader in enterprise cloud applications for finance and human resources, has been bullish since it reported strong quarterly results at the end of November 2018.
Things are so good, in fact, that the Pleasanton, California-based tech company weathered the broad-based December meltdown and rebounded more quickly than most.
As of this writing, since November 29, 2018, WDAY stock has advanced by about 29%. Since the start of 2019, the stock has grown by about 18%.
Chart courtesy of StockCharts.com
Workday Inc Posts Great Third-Quarter Results
On November 29, Workday announced its financial results for the third quarter of fiscal-year 2019 (ended October 31, 2018).
Total revenue was $743.2 million, an increase of 33.8% from the third quarter of fiscal-year 2018. Subscription revenue was up 34.7% year-over-year, at $624.4 million. (Source: “Workday Announces Fiscal 2019 Third Quarter Financial Results,” Workday Inc, November 29, 2018.)
The company reported a third-quarter net loss of $0.70 per share, compared to a net loss of $0.41 per share in the third quarter of fiscal-year 2018.
Non-generally accepted accounting principles (GAAP) net income per diluted share was $0.31, compared to a non-GAAP net income per diluted share of $0.24 in the same prior-year period.
Cash, cash equivalents, and marketable securities were $1.6 billion as of October 31, 2018.
Robynne Sisco, co-president and CFO, said:
The strength in our business is allowing us to raise our fiscal 2019 outlook and we now expect subscription revenue of $2.375 to $2.377 billion, or growth of 33%. We continue to prioritize investing in long-term growth initiatives, while delivering solid operating and cash flow margins over time.
Workday plans to announce its fiscal-year 2019 fourth-quarter and full-year results after market close on February 28, 2019.
Analysts are looking for earnings per share (EPS) of $0.32 on $777.1 million in revenue. In the fourth quarter of the previous fiscal year, Workday reported EPS of $0.28 on $582.5 million in revenue. (Source: “Workday, Inc. (WDAY),” Yahoo! Finance, last accessed February 8, 2019.)
MiX Telematics Ltd
MiX Telematics Ltd (NYSE:MIXT), a leading global provider of driver safety fleet management and driver safety vehicle tracking services, has had—for the most part—great momentum since early 2016.
Like the rest of the stock market, MIXT stock took a hit in September and October 2018 during the sell-off, but its share price rebounded sharply on strong second-quarter results.
That momentum wasn’t sustained during the December meltdown, but the company’s share price was saved in January 2019 by strong third-quarter results.
On February 1, MiX Telematics stock hit an intraday high of $18.44, for a year-to-date gain of 18.2%. Furthermore, MiX stock is up about 11% since the start of 2019.
Chart courtesy of StockCharts.com
MiX Telematics Reports Another Strong Quarter
On January 31, 2019, MiX Telematics announced its financial results for the third quarter of fiscal-year 2019 (ended December 31, 2018).
The South-African based tech company reported third-quarter revenue of $35.7 million, a 16.3% increase over the $30.7 million recorded in the same prior-year period. (Source: “MiX Telematics Announces Financial Results for Third Quarter of Fiscal 2019,” MiX Telematics Limited, January 31, 2019.)
Subscription revenue was $30.5 million, a 16.6% increase from $26.1 million in the third quarter of fiscal-year 2018.
Subscription revenue benefited from a net increase of more than 71,200 subscribers from January 2018 to December 2018, representing an increase in the annual subscriber base of 10.7%. Subscription revenue has also benefited from higher average revenue per user.
Third-quarter net income was $3.9 million, or $0.17 per share. Also in the quarter, MiX Telematics reported net income of $4.1 million. Adjusted earnings for the period were $4.4 million, compared to $2.8 million in the third quarter of fiscal-year 2018.
CEO Stefan Joselowitz said:
Our results were driven by ongoing robust demand globally for our services from our customers across all verticals…We are confident the strength of our diversified portfolio of subscribers will enable us to maintain our market momentum for the balance of fiscal 2019 and beyond.
MiX Telematics Business Outlook
For the full 2019 fiscal year, which ends on March 31, 2019, MiX Telematics expects subscription revenue of between $124.1 million and $124.6 million, which would represent year-over-year subscription revenue growth of 18%–18.6%.
Total revenue for 2019 is expected to be between $143.0 million and $144.3 million, which would represent total year-over-year revenue growth of 13.9%–15%.
The company raised its projected adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to $41.8 million–$42.8 million, which would be year-over-year growth of 29.2%–32.2%. Adjusted EPS is projected to be $0.667–$0.707.
For the 2019 fourth quarter, MIXT expects subscription revenue to be in the range of $32.5 million and $33.0 million, which would be a year-over-year increase of 18.6%–20.7%. (Source: Ibid.)
Look for MiX Telematics to announce its fourth-quarter financial results in late April or early May.
Twilio Inc (NYSE:TWLO) has been impressing investors since the beginning of 2018. And that momentum has carried into 2019. The leading provider of cloud communications platforms, Twilio stock entered 2018 trading at $24.13 and ended the year at $89.30—an increase of 270%.
That doesn’t mean the San Francisco-based tech company’s share price didn’t face any hurdles in 2018. It did, but its troubles echoed the broader market in October and December.
Still, successive pullbacks were higher. After bottoming at $73.15 on December 24, the company’s share price has been bullish. Since that date, TWLO stock has increased by about 50%. Since the start of 2019, it has increased by about 26%.
Chart courtesy of StockCharts.com
Another Strong Quarter of Revenue Growth for TWLO Stock
Investors continue to reward Twilio because the company continues to report strong quarterly financial results.
In the first quarter of 2018, revenue increased 48% year-over-year to $129.1 million. In the second quarter, total revenue jumped 54% year-over-year to $147.8 million. In the third quarter, total revenue advanced 68% year-over-year to $168.9 million.
(Sources: “Twilio Announces First Quarter 2018 Results,” Twilio Inc, May 8, 2018; “Twilio Announces Second Quarter 2018 Results,” Twilio Inc, August 6, 2018; and “Twilio Announces Third Quarter 2018 Results,” Twilio Inc, November 6, 2018.)
Non-GAAP net income was $0.07 per share, compared with a non-GAAP net loss of $0.08 in the third quarter of 2017.
Twilio will be announcing its financial results for the 2018 fourth quarter and full-year 2018 after market close on February 12.
The company expects to report fourth-quarter revenue of between $183.0 million and $185.0 million. At the midpoint, that would roughly represent a 60% increase over the $115.2 million recorded in the fourth quarter of 2017.
Twilio also expects to report a non-GAAP net income per share of $0.03–$0.04 in Q4 2018. In the fourth quarter of 2017, Twilio reported a non-GAAP net loss of $0.03.
It also expects to announce non-GAAP net income per share of $0.10–$0.11 for fiscal-year 2018. In fiscal-year 2017, Twilio reported a non-GAAP net loss of $0.70.
The company expects to report full-year revenue of between $629.0 and $631.0 million. At the midpoint, that would be a 58% increase over the $399.0 million in 2017. (Source: “Twilio Announces Fourth Quarter And Full Year 2017 Results,” Twilio Inc, February 13, 2018.)
Most tech investors are focused on the household names that get bantered about on a daily basis. But there are a lot of other great tech stocks out there.
While they may not be as exciting or flashy as the FAANG stocks, they can provide investors with much greater returns.
There’s always a bull market going on somewhere in the tech sector; you just have to look for those hidden, overlooked stocks outperforming their peers.