All posts by Tom Taulli

IPOs

4 Upcoming IPOs to Watch That Aren’t Named Lyft

Source: Shutterstock
Source: Shutterstock
With stocks on the rise, the environment is ideal for new IPOs. Today we definitely got evidence of this with the Lyft (NASDAQ:LYFT) offering. The company priced its shares at $72, raising about $2.2 billion. So far in early trading, Lyft stock is up 22%.
The company is one of the largest players in the fast-growing ride-hailing market. Last year, the company posted revenues of $2.2 billion, up from $1.1 billion.
But of course, there are still other new IPOs ready to hit the markets. And it’s important to keep in mind that the Lyft deal could overshadow them.
So what are these deals? Well, let’s take a look at four that will launch within the next week or so …Source: Shutterstock

With stocks on the rise, the environment is ideal for new IPOs. Today we definitely got evidence of this with the Lyft (NASDAQ:LYFT) offering. The company priced its shares at $72, raising about $2.2 billion. So far in early trading, Lyft stock is up 22%.

The company is one of the largest players in the fast-growing ride-hailing market. Last year, the company posted revenues of $2.2 billion, up from $1.1 billion.

But of course, there are still other new IPOs ready to hit the markets. And it’s important to keep in mind that the Lyft deal could overshadow them.

So what are these deals? Well, let’s take a look at four that will launch within the next week or so …

Upcoming IPOs: NGM Biopharmaceuticals

With Trial Results Due, This Could Be a Breakout Year for Cara Stock

Source: Shutterstock

Founded in 2008, NGM Biopharmaceuticals is a clinical-stage biotech company that is developing a variety of treatments, such as for liver, cardio-metabolic oncologic and ophthalmic diseases.

According to the company: “Our process pairs a research approach that generates novel insights into pathways demonstrating powerful biological effect with the expertise in protein and antibody engineering to transform those insights into product candidates. We then rapidly advance the program to evaluate the effect of these product candidates on biomarkers of disease or target activity in order to enable early demonstration of human proof of concept.”

Currently, the company has seven product candidates. And as for the lead, it is NGM282, which will go into Phase 2B trials soon. The drug is focused on non-alcoholic steatohepatitis or NASH.

A key for NGM Biopharmaceuticals is the collaboration with Merck (NYSE:MRK), which the company recently extended by two years. The deal involves up to $20 million in R&D as well as milestone payments. Although, MRK did terminate its license for NGM’s GDF15 program (its focused on obesity).

Regarding the IPO, NGM plans to issue 6.7 million shares at a range of $14 to $16 and to list on the Nasdaq under the symbol of NGM. The lead underwriters include Goldman Sachs, Citi and Cowen.

Upcoming IPOs: Ruhnn

Source: Shutterstock

Ruhnn has built the leading platform for so-called KOLs, or key opinion leaders, in China. These are people who are also known as influencers — that is, they can have much power to impact fashion and culture via social media. Of course, they also have a big impact on commerce. So Ruhnn’s platform connects its KOLs — which account for 148.4 million fans — with brands, online retailers and manufacturers.

Growth has certainly been robust. From 2017 to 2018, revenues jumped from RMB577.9 to RMB947.6. Although, the company continues to lose money.

Yet the market opportunity looks bright. According to Ruhnn’s S-1, the spending on KOL facilitators is forecasted to grow at a 38.9% CAGR (compound annual growth rate) to RMB200.9 billion by 2022.

As for the IPO, Ruhnn plans to issue 10 million shares at a range of $11.50 and to $13.50 and to list on the Nasdaq under the ticker of RUHN. The lead underwriters include Citi and UBS.

Upcoming IPOs: Silk Road Medical

Source: Shutterstock

Silk Road Medical is a medical device company that helps to reduce the risk of stroke. The company’s approach is called transcarotid artery revascularization, or TCAR, which is minimally invasive and leverages innovative endovascular techniques.

Note that the company has received FDA approvals and obtained Medicare coverage. As of last year, there were 4,600 procedures performed for TCAR. From 2017 to 2018, revenues soared by 142% to $34.6 million.

Silk Road Medical estimates that there are 4.3 million people who suffer from carotid artery disease in the United States and there were 427,000 new diagnoses in 2018. Based on this, the company estimates the market opportunity at about $2.6 billion.

In terms of the IPO, Silk Road Medical plans to issue 4.7 million shares at a range of $15 to $17 and list on the Nasdaq under the ticker of SILK. The lead underwriters on the offering include JPMorgan (NYSE:JPM) and Bank of America (NYSE:BAC).

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Source: Investor Place

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3 Strategies to Get the Biggest Tax Refund or Lowest Tax Bill

tax Returns
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So far this year, the average tax refund amount is down about 8.4% to $1,865. As should be no surprise, this has stirred up quite a bit of disappointment. A tax refund is often an important part of people’s spending.

The drop is also perplexing because of the new tax law. Wasn’t it supposed to lower taxes?

Well, this is true. However, even though the withholding levels were lowered, they did not account for some of the key changes in the tax code. The result is that for many Americans there was not enough money withheld from their paychecks.

So what to do to boost your tax return? Unfortunately, the tax law has also cut back on many tax breaks. Here are just some examples:

  • Personal exemptions have been eliminated
  • Moving expenses can no longer be deducted
  • Miscellaneous itemized deductions have been eliminated
  • State and local tax deductions have been limited to $10,000

Despite all this, there are still benefits available and strategies to pursue. So let’s take a look:

Tax Refund Strategy: IRA and HSA Contributions

One of the best tax breaks is the IRA (Individual Retirement Account). It not only provides a lucrative deduction (whether you take the standard deduction or itemize) but is also a great vehicle for savings. The presumption is that when you reach retirement your withdrawals from the account will be at a lower tax rate.

Something else to consider: You can make a contribution by April 15th of this year. This can then be included on your 2018 tax return.

The maximum contribution amount for an IRA is $5,500 per person and this must be based on earned income. But if you are 50 or older, this goes up to $6,500.

Yet there are some wrinkles. If you are eligible for a company retirement plan, then the deduction may be limited or disallowed. This is based on your income.

OK then, what about a Roth IRA?  Can this boost your refund?  The answer is no.  While a Roth IRA has nice tax benefits (withdrawals are not taxed) you do not get deductions for the contributions.

Finally, you can setup a Health Savings Account or HSA, which allows for tax benefits when paying for medical bills. Like an IRA, the deadline for contributions is April 15th.

Tax Refund Strategy: Filing Status

What you indicate as your filing status on your tax return can make a big difference. Keep in mind that the new tax law made some significant changes with the standard deduction levels, which now include the following:

  • Single: $12,000
  • Head of Household: $18,000
  • Qualified Widow(er) $12,000
  • Married Filing Jointly $24,000
  • Married Filing Separate $12,000

The rules for filing status can get complicated, especially with the Head of Household designation. You will need to understand the costs of maintaining the household and what types of dependents qualify (which may include parents who do not live with you). But it is worth evaluating.

Another strategy is to compute your tax return using different filing statuses. And yes, may be surprised by the results.  Consider that filing separate could mean bigger tax savings if you or your spouse has substantial medical expenses.

If anything, all this is a good reason to get some advice from a tax professional, say by setting up an appointment at H&R Block (NYSE:HRB) or seeking out a local CPA or Enrolled Agent. The tax benefits could easily exceed the fee.

Tax Refund Strategy: Credits

A tax credit is can go a long way to boosting your refund. The reason is that you get a dollar-for-dollar reduction of your tax liability. A deduction, on the other hand, is subtracted from your income, which is then subject to a potential tax.

There are a variety of credits available, such as for education (American Opportunity Credit) and lower income households (Earned Income Tax Credit). But they do require some research and record keeping.

The new tax law also has improved the Child Tax Credit, so as to help make up for the elimination of the personal exemption. It has been increased by $1,000 to $2,000 for a qualifying child who is under 17.

There is also a personal credit of $500 for the taxpayer, spouse and other dependents that are not eligible for the Child Tax Credit. These credits phase out at $400,000 in income for joint filers and $200,000 for all other taxpayers.

Tom Taulli is an Enrolled Agent and also operates PathwayTax.com, which is a tax advisory and preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Source: Investor Place

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5 Fintech Stocks to Buy As This Mega Trend Gains Steam

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Fintech, which is short for “financial technology,” has been a booming category during the past few years. Some of the drivers include smartphones, cloud computing, blockchain and artificial intelligence.

Many fintechs are still private, like Stripe, Betterment, Ellevest and Robinhood. According to a report from KPMG, VCs (venture capitalists) invested $14.2 billion across 427 companies during the first half of 2018. In fact, we’ll probably see some of them hit the IPO market this year.

But there are still plenty of fintech companies that are publicly traded. Keep in mind that old-line operators, such as Mastercard (NYSE:MA) and Visa (NYSE:V), are considered part of this class.

With that in mind, here are five of the best fintech stocks to invest in now.

Fintech Stocks To Invest In: PayPal (PYPL)

Source: Shutterstock

PayPal (PYPL)

A key Silicon strategy is to disrupt massive industries. While this can result in enormous profits, it is extremely tough to pull off. There are some industries that are quite resilient, such as financial services.

In light of this, PayPal (NASDAQ:PYPL) has taken a collaborative approach. Part of this has been about integrating many types of payment options, which is what customers prefer. But there has also been an aggressive focus on forming strategic alliances. A prime example is a deal with Walmart (NYSE:WMT) to get a piece of the unbanked market segment.

For the most part, PYPL’s strategy has worked extremely well. In the latest quarter, the net new active accounts increased by 9.1 million to 254 million and the transaction volume jumped by 27% to 2.5 billion. A major driver for engagement has been from mobile devices.

Another strong catalyst for PYPL stock is Venmo, which provides peer-to-peer payments services. Note that the app is a must-have for the Millennial generation. From 2016 to 2018, the total payment volume has gone from 3.2 billion to 16.6 billion.

While still early, PYPL is seeing lots of traction with monetization, with 24% of the user base participating. In fact, Venmo is likely to be a strong lever of growth in the coming years.

Finally, PYPL has a rock solid balance sheet. There is currently about $10.5 billion in liquid assets. In other words, the company has the resources to engage in aggressive M&A to further bolster its strong fintech platform.

Fintech Stocks To Invest In: Intuit (INTU)

Source: Mike Mozart via Wikimedia (Modified)

Intuit (INTU)

Founded in 1983, Intuit (NASDAQ:INTU) is a pioneer among fintech stocks. The company started off with simple check-balancing methods. But since then, INTU has expanded into lucrative categories like small business accounting and personal/business taxes.

These segments certainly generate substantial amounts of data, which allows for interesting use-cases. One example is QuickBooks Capital. It is a lending service that uses Intuit’s accounting data to make loans. Because of Intuit’s data advantage, about 60% of customers have obtained approvals for loans that would generally be deemed “un-lendable” by traditional financial institutions. The loss rate is also less than half the industry average.

It’s also important to note that INTU is bolstering its market opportunity by moving beyond its small business focus. Just look at QuickBooks Online Advanced. This is for the mid-market category (where the employee base ranges from 10 to 100). The market size in the U.S. is about 1.5 million.

In light of the innovation and diversified business assets, it should be no surprise that INTU has been a consistent grower. From 2010 to 2018, revenues have more than doubled to $6 billion.

Fintech Stocks To Invest In: Envestnet (ENV)

Source: Shutterstock

Envestnet (ENV)

Envestnet (NYSE:ENV) develops sophisticated cloud-based technologies for financial advisors, such as independent providers and small- or mid-size firms. EVN’s software provides a full suite of services for front, middle and back office needs.

The company has built a solid base, with about 93,000 advisors (up 5% in the latest quarter). There are over $2.8 trillion in assets and more than 10 million investor accounts on the system.

One of the attractions of ENV is its open architecture. For the most part, the company strives to provide as many options for its advisors as possible. Note that there are over 18,000 products and more than 20,000 data sources.

ENV is also poised to benefit from a secular trend in the financial services industry, as more advisors transition from commissions to fee-based compensation. According to Cerulli, the amounts are expected to go from $9.7 trillion in 2017 to $16.7 trillion in 2021.

Fintech Stocks To Invest In: LendingTree (TREE)
Fintech Stocks To Invest In: Global X FinTech ETF (FINX)

Source: Investment Zen via Flickr (Modified)

Global X FinTech ETF (FINX)

If you do not want to pick individual fintech stocks to invest in, then you can invest in an exchange-traded fund (ETF) that tracks the fintech markets. And a good choice is the Global X FinTech ETF (NASDAQ:FINX), which has about $288 million in assets.

The fund includes 37 stocks that have an average market cap of $9.4 billion. The top five holdings include PYPL, Square (NYSE:SQ), Fiserv (NASDAQ:FISV), SS&C Technologies Holdings (NASDAQ:SSNC) and Fidelity National Information Services (NYSE:FIS). What’s more, about 30% of the portfolio companies are based outside the U.S.

In terms of the themes for the FINX ETF, they are fairly broad. They are P2P/marketplace lending, enterprise solutions, blockchain/cryptocurrencies, crowdfunding and personal finance software/automated wealth management.

The fund has an expense ratio of 0.68% and no dividend yield.

Tom Taulli is the author of High-Profit IPO Strategies, All About 

Technology

7 Big Data Stocks to Buy for 2019

Source: Shutterstock

The Big Data market is likely to grow for the long haul. Let’s face it, the world is undergoing an explosion of data, such as from smartphones, IoT (Internet-of-things), wearables, AI (Artificial Intelligence) and machine learning.

Actually, for just about any company to compete and thrive nowadays, there needs to be a Big Data focus. It’s a strategic imperative. According to research from Statista, global spending is expected to go from $42 billion in 2018 to $103 billion by 2027.

In other words, there is substantial opportunity for investors. But what are the best stocks to buy in the category?

The good news is that the recent wave in IPOs has provided investors a group of next-generation players to choose from. So here’s a look at seven:

Yext (YEXT)

Yext (NYSE:YEXT) operates a knowledge platform, which includes a network of about 150 data providers like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL). For the most part, the company organizes data in ways to help businesses achieve goals, such as getting more customers or providing a better service.

At the heart of this is intelligent search, which is based on context and intent. There is also AI (Artificial Intelligence) that helps provide more relevant results.

The next generation of this technology, called Yext Brain, launched in late October. The system allows customers to sync their data with AI-enabled services like search, voice assistants and chatbots.

In terms of growth for YEXT, it has been robust. During the latest quarter, revenues jumped by 33% to $58.7 million. The company also snagged nearly 80 new enterprise customers.

Big Data Stocks to Buy for 2019: Alteryx (AYX)

Source: Shutterstock

Alteryx (AYX)

Alteryx (NYSE:AYX) was an early player in the Big Data industry, having been founded in 1997. The company also bootstrapped its operations. Note that AYX did not raise any venture capital until 2011.

But this did not hamstring the company. Now AXY is one of the top Big Data stocks in the world. Then again, it has built a platform that is fairly easy for businesses to leverage analytics, such as by using visualizations. Keep in mind that Big Data systems are often focused on specialists like data scientists.

AYX’s strategy has helped to expand the market opportunity. In fact, the company believes that the spending on the category will go from $19 billion in 2016 to $29 billion by 2021.

During the latest quarter, revenues shot up by 59% to $54.2 million and the number of customers rose by 41% to 4,315.

Big Data Stocks to Buy for 2019: Talend (TLND)

Source: Shutterstock

Talend (TLND)

With the rapid growth in new technologies, data integration has gotten even more mission critical. Yet the tools have tended to lag. It is often the case that there needs to be professional services and custom coding.

But Talend (NASDAQ:TLND) is changing this with its innovative platform — called Talend Data Fabric — that integrates data and apps in real time across Big Data systems, cloud environments and on-premise installations. The result is that there is a unified view of data.

To bolster the product, TLND acquired Stitch, which operates a cloud service that moves data into cloud warehouses and data lakes. The service has more than 900 customers.

Granted, TLND stock got crushed on the latest earnings report. But it does look like it was an overreaction. Note that the company continues to grow at a strong pace — with revenues up 36% to $52.1 million in the third quarter.

Big Data Stocks to Buy for 2019: Cloudera (CLDR)

Source: Shutterstock

Cloudera (CLDR)

Cloudera (NYSE:CLDR) has built a sophisticated Big-Data platform that uses machine learning and analytics. It is also optimized for cloud environments.

But CLDR is in the process of a major transformation — that is, the company is merging with Hortonworks (NASDAQ:HDP), which is another of the major Big Data stocks. The combined entity will be a powerhouse, which will have services for the multi-cloud, on-premise environments and the Edge. Consider that HDP has an expertise with streaming and IoT while CLDR’s focus has been AI.

There will also be significant scale, which should help provide a competitive advantage. The merger of CLDR and HDP will result in annual revenues of $720 million, with over 2,500 customers.

Splunk (SPLK)

Founded in 2003, Splunk (NASDAQ:SPLK) is a pioneer in developing systems to analyze machine data, such as from websites, apps, servers, networks and smartphones. The focus was on helping companies gain “operational intelligence.”

Despite the emergence of fierce competitors, SPLK has been able to maintain its leadership. Then again, the company continues to invest heavily in R&D. Consider that at its most recent conference — .conf18 – it had the largest number of new releases. For example, the company now has solutions for areas like IoT and Industrial IoT.

Growth has also remained strong. During the latest quarter, revenues increased by 49% to $325 million. The company also generates strong cash flows, which came to $59.1 million in Q3.

Big Data Stocks to Buy for 2019: Elastic (ESTC)

Source: Shutterstock

Elastic (ESTC)

Elastic (NYSE:ESTC) is essentially a sophisticated search engine for businesses. At the core of this is open-source software, which is downloaded for free. This has not only allowed for rapid adoption of Elastic — which is critical for any search engine — but ongoing innovation.

The platform also allows for searches of structured and unstructured data, say from databases, mobile apps, log files and so on. There is also AI features and machine learning.

And what about the growth ramp? Well, it has been torrid. During the latest quarter, revenues spiked by 79% to $56.6 million. The company has over 5,500 customers across more than 80 countries.

Big Data Stocks to Buy for 2019: Mongodb (MDB)

Source: ©iStock.com/tusumaru

Big Data Stocks to Buy for 2019: Mongodb (MDB)

Relational databases have been around since the 1970s. The technology is also at the core of Oracle’s (NYSE:ORCL) database franchise.

But the problem is that the technology really does not meet the complicated needs of today’s Big Data needs.

So yes, there is an alternative, called NoSQL. And the leader in the category is Mongodb(NASDAQ:MDB). The company’s database has been downloaded over 40 million times and there are more than 7,400 customers across over 100 countries. MongDB also has a thriving ecosystem, which has more than one million members in the MongoDB University.

All this has turned into a standout business. During the latest quarter, revenues soared by 61% to $57.5 million. Actually, given the critical nature of databases to Bid Data, it would not be a surprise that a larger company — say Oracle — would eventually try to buy the company.

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5 Artificial Intelligence Stocks to Consider

Apple (AAPL) self-driving car technology

Source: Apple

I recently attended a meeting of startup founders who pitched their companies. Interestingly enough, many of them touted artificial intelligence.

Yes, this technology has quickly become red hot. After all, the market opportunity is massive. Gartner estimates that spending will grow at an average compound annual rate of 18% to $383.5 billion by 2020.

Yet AI is not easy to develop. There needs to be access to huge amounts of data, so as to find patterns. What’s more, AI requires top-notch data scientists. As should be no surprise, this kind of talent is in short supply nowadays.

Because of all this, when it comes to finding artificial intelligence stocks, they are usually larger companies.

OK then, which names are positioned to benefit? Well, let’s take a look at five that stand out:

Artificial Intelligence Stocks: Alphabet (GOOG)

Source: Harman Kardon

Alphabet (GOOG)

Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) CEO Sundar Pichai refers to the company as “AI first.” And this is certainly not hype. AI has become pervasive across the product line, such as with Gmail, YouTube, Maps, Photos, Google Cloud and so on. The company has also developed its own assistant, which connects with more than 5,000 devices in the home.

Google has been creating industry standards for AI as well, primarily through its own language called TensorFlow. Just some of the companies that use it include Uber, eBay (NASDAQ:EBAY) and Coca-Cola (NYSE:KO).

Something else: Google is a top player in autonomous vehicles. The company’s Waymo unit could be worth as much as $175 billion, according to analysts at Morgan Stanley.

Finally, the valuation of GOOG stock is at reasonable levels, with the forward price-to-earnings ratio is 25X — which is in-line with other mega tech operators like Microsoft (NASDAQ:MSFT). This puts it at the top of the heap among artificial intelligence stocks.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) is the pioneer of GPUs (Graphics Processing Units), which are chips that process large amounts of data cost-effectively. The technology was initially focused on the gaming market.

But NVDA realized that GPUs were also ideal for AI. To this end, the company has leveraged these systems into areas like datacenters and autonomous vehicles.

No doubt, it has been a very good move.  Consider that NVDA has been on a strong growth ramp.  In the latest quarter, revenues soared by 40% to $3.12 billion and earnings per share increased by 91% to $1.76.

It’s true that the valuation of NVDA stock is far from cheap, with the forward price-to-earnings ratio is 36X. But then again, a premium is to be expected for a company that is a leader in a massive industry.

For example, Evercore ISI analyst C.J. Muse recently boosted the price target on NVDA stock to $400, which implies 41% upside. In his report, he noted that the company’s technology is “becoming the standard AI platform.”

IBM (IBM)

Source: Shutterstock

IBM (IBM)

AI is nothing new for IBM (NYSE:IBM). The company has been developing this type of technology for many years. For example, back in 1985, it developed its AI computer called Deep Blue. It would actually beat chess world champion Garry Kasparov in 1996. Then in 2011, IBM created Watson to take on the best players on the quiz show Jeopardy!. And the computer won.

Now, IBM has definitely had its troubles. But the investments in AI and other cutting-edge technologies have been making a difference. Note that during the trailing 12 months, IBM’s Strategic Imperatives — which include cloud computing, security, analytics, Big Data and mobile — generated $39 billion, or about 48% of total revenues. This has helped improve the growth rate of the overall business.

IBM stock also has an attractive dividend, which is at 4.1%. This is one of the highest in the tech industry. Oh, and the valuation is reasonable as well. Consider that the forward price-to-earnings ratio is only 11X.

Yext (YEXT)

AI has been good to Yext (NYSE:YEXT). The reason: the company is a top data provider, with integrations of over 150 services from operators like Google, Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Microsoft, Facebook (NASDAQ:FB) and Tencent. Yext has also added context and intent to all this, which allows for more accurate real-time searches.

On the latest earnings call, CEO Howard Lerman noted: “Today the world is moving to smart databases. AI powered services that do the thinking for you.”

Growth has been strong. In the latest quarter, revenues shot up by 35% to $55.1 million. The company has also been getting much of traction with enterprise customers. Note that the quarter saw 80 new logos, such as AT&T (NYSE:T), Deutsche Telekom, MetroPCS and Vodafone.

Baidu (BIDU)

Baidu (BIDU)

When it comes to the search business, Baidu (NASDAQ:BIDU) remains the king in China. Over the years, the company has transitioned to mobile, which has been critical. But BIDU has also invested heavily in becoming an artificial intelligence stock. This has helped with personalizing the search experience as well as improving the impact of online ads.

But AI has done more than just bolster BIDU’s own platform. The company has created several platforms for third parties. One is DuerOS, which has an installed base of 100 million devices and processes over 400 million queries a month. Then there is Apollo. It is an AI system for autonomous vehicles. During the latest quarter, BIDU used this with King Long Motors to launch the first fully self-driving L4 minibus.

The AI efforts have been paying off. In the latest quarter, revenues jumped by 32% to $3.93 billion and the adjusted EBITDA came to $1.12 billion — or about 29% of total revenues. Yes, BIDU has a highly scalable business model.

BIDU stock has taken a hit this year, going from $273 in June to $218 today. Keep in mind that Chinese stocks have been in the bear phase and that there are concerns about the U.S. trade tensions. But for investors looking for a play on AI in China, BIDU stock does look attractive at these levels.

Source: Investors Alley 

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Technology

3 Breakout Stocks to Spice Up Your Portfolio

Source: Shutterstock

The pace of technology is breathtaking. Just some of the trends include cloud computing, AI (Artificial Intelligence), machine learning and the IoT (Internet of Things). So for investors, there are many opportunities.

But then again, breakout stocks are usually volatile — and expensive. It can be tough to make a purchase decision when the returns have already been over triple digits for the past year! And because the expectations are at lofty levels, it does not take much to deflate the stock when there is some bad news.

This is why investors need to be cautious with breakout stocks. Basically, they really should only be a small portion of your portfolio.

So then, what are some companies to consider that could spice up your portfolio? Here’s a look at three:

Breakout Stocks to Buy: Okta (OKTA)

Breakout Stocks To Buy: Okta (OKTA)

Source: Shutterstock

Okta (NASDAQ:OKTA) is a next-generation cloud operator that develops identity services for enterprises. For the most part, the focus is on helping to secure access to critical information. The platform has more than 5,500 pre-built integrations and over 5,100 customers.

Okta has also been seeing a strong acceleration in its growth. Just look at the latest quarter, as the company pummeled Wall Street expectations. Revenues soared by 57% to $94.6 million, compared to the consensus forecasts of $84.8 million. The company also raised its full-year guidance to $372 million to $375, up from the prior forecast of $353 million to $357 million.

A key is that the company has been getting much more traction with large customers. During the past year, there was a 55% increase in the number of customers that generate subscriptions of $100,000 or more. This is all part of the so-called “land and expand” strategy.

But it does look like the opportunity for Okta is still in the early phases. According to CEO Todd McKinnon, during the latest earnings call: “It starts with the significant market tailwind in our favor. Every organization is moving to the cloud. Every company has to become a technology company and everyone is worried about security. We are seeing identity become mainstream as organizations recognize the critical role that identity plays in their environment.”

Breakout Stocks to Buy: Advanced Micro Devices (AMD)

Breakout Stocks To Buy: Advanced Micro Devices (AMD)

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Despite a rough ride today, the turnaround of Advanced Micro Devices (NASDADQ:AMD) is starting to show big-time results. CEO Lisa Su has done an amazing job of focusing on the major opportunities while also being disciplined with the bottom line.

Even though AMD has been around since the late 1960’s, the company now looks more like a scrappy startup. In the most recent quarter, revenues jumped by 53% to $1.76 billion.

As for the main driver, it is the enormous datacenter market. Keep in mind that AMD’s EPYC server processor has gotten adoption from companies like Cisco (NASDAQ:CSCO) and HP Enterprise (NYSE:HPE). It also helps that rival Intel (NASDAQ:INTC) has stumbled, as it has been slow to introduce new chipsets. The company currently has about 99% of the market for datacenters.

In other words, it is a very juicy target for AMD.

Wall Street is definitely getting excited, with multiple upgrades. For example, FBN Securities analyst Shebly Seyrafi notes that the server-chip market is about $16 billion and that the EPYC chip is poised for strong gains.

Breakout Stocks to Buy: Cloudera (CLDR)

Breakout Stocks to Buy: Cloudera (CLDR)

Source: Shutterstock

Back in early April, big data company Cloudera (NYSE:CLDR) stock got crushed, plunging by more than 40%. The company whiffed on its earnings as the growth engine stalled.

Yet management at CLDR took swift action, especially with the restructuring the sales team. And it looks like things are getting back on track. In the second quarter, revenues rose by 23% to $110.3 million, while the Street was looking for $107.7 million. The 8-cent loss was also much better than the consensus forecast of 15 cents. What’s more, CLDR increased its full-year guidance to $440 million to $450 million, up from $435 million to $445 million.

The company certainly faces tough competition from companies like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). But the market size is large enough for multiple players. Besides, CLDR’s strategy of disrupting the traditional data warehousing market appears to be spot-on, as functions like machine learning, AI (Artificial Intelligence) and analytics move towards cloud platforms.

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Technology

Apple Inc.: So Much For The iPhone Supercycle

Apple Inc.’s (NASDAQ:AAPL) earnings report was certainly awaited with trepidation from investors. And yes, it was justified. The fiscal first-quarter was fairly mixed. So far today, AAPL stock is off about 3.86%.

But keep in mind there had already been ample selling off. Over the past few weeks, AAPL stock has gone from $180 to $163. (And is now about $161).

So let’s take a look at the quarter. Earnings rose 16% to $3.89 a share, up from the Wall Street forecast of $3.86 per share. As for the top line, the revenues jumped by 13% to $88.3 billion, which beat the consensus of $87.28 billion.

But there were two big-time issues with the quarter for AAPL.

First there was the guidance. For the current quarter, the company expects revenues to range between $60 billion to $62 billion. However, analysts were looking for a more robust $65.73 billion. There was also disappointment with gross margins. AAPL predicts they will be 38% to 38.5%, below the Street’s 38.9%

Next, the company showed weakness with the iPhone. Note that units sales reached 77.3 million, down from 78 million in the year-ago quarter. Oh, and Wall Street was looking for 80 million.

But this should be no surprise. AAPL was late with the launch of the iPhone X. And besides, there weren’t as many must-have features to gin up demand, especially in light of the hefty $999 price tag.

AAPL Stock And The iPhone

AAPL has been working hard to expand its revenue base. The “Other Products” segment — which includes the Apple Watch, Apple TV and AirPods — posted an impressive 36% increase in revenues to $5.5 billion.

There was also strength in the services business — including the App store, Apple Pay and Apple Music — which saw revenues rise by 18% to $8.47 billion. So Apple is certainly having a lot of success monetizing its base of 1.3 billion phone users.

Yet the diversification efforts have not been without issues. Just look at the HomePod — Apple’s smart speaker. The company delayed its launch, which meant missing the all-important holiday season. The result was that rivals like Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc(NASDAQ:GOOGL) have been able to capitalize on this massive opportunity.

Now despite all the diversification efforts, the fact remains that more than two-thirds of revenues come from the iPhone. So the sluggishness with unit volumes is definitely worrisome.

For the most part, the anticipated “upgrade supercycle” just never materialized.

Bottom Line On Apple Stock

Already analysts are getting cautious on AAPL stock. For example, KeyBanc Capital Markets’ Andy Hargreaves has noted: “Soft iPhone sell-through suggests a saturated market and the lack of gross margin upside reduces our view of potential profit growth.” His price target on Apple stock is $178 and he has lowered his rating from overweight to sector weight.

Now it’s true that AAPL has a massive cash hoard, which will likely mean more share buybacks and dividends increases. There may even be some interesting acquisitions.

What’s more, AAPL stock is at a reasonable valuation. Consider that the forward price-to-earnings ratio is at 13X. By comparison, Facebook Inc (NASDAQ:FB) is at 22X and GOOGL trades at 23X.

But again, the iPhone is what matters for AAPL stock. And for the most part, it looks like there will not be much momentum — which means that the shares may wind up languishing for awhile.

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Source: Investor Place