The US economy is expected to recover in 2021. Companies that are operating in emerging technology or e-commerce have experienced stellar growth this year. These companies are playing key roles in the ongoing digital transformation that is changing the way people live and work.
The SPDR Portfolio S&P 500 Growth ETF (SPYG), which is an indicator of the performance of growth stocks, has gained 26% so far this year compared to the S&P 500’s gain of 10.9%. Investors are preferring to bet on high growth stocks that have strong long-term potential.
Companies like Salesforce.com, Inc. (CRM), JD.com, Inc. (JD), and Chewy, Inc. (CHWY) have a history of strong performance and they are expected to perform well going into 2021 based on their revenue and earnings growth potential. These companies are market leaders in their respective niches and are constantly evolving their business offerings. Recent weakness could be a buying opportunity.
Salesforce.com, Inc. (CRM)
CRM provides cloud computing solutions for businesses. The company primarily focuses on customer relationship management but also provides solutions for sales force automation, customer service and support, marketing automation, analytics, community management, and more. CRM’s stock has gained 53.4% so far this year.
The company has recently launched Revenue Cloud with a range of features such as multi-cloud billing that will help businesses manage their revenue and provide better service to their customers. The company has also added a feature for real-time sales and service data to their Salesforce Anywhere offering.
For the quarter ended July 2020, the company reported a rise in revenue of 29% compared to the same period last year. The company’s revenue from professional services and other revenue sources saw an increase of 23% year-over-year.
CRM’s trailing-twelve-month revenue grew at a CAGR of 27.2% over the last three years. The company’s five-year average EBITDA year-over-year growth rate is 68.4%. CRM is expected to witness revenue growth of 13.8% for the current quarter and 21.6% in 2021. The company’s EPS is estimated to grow 25.4% in 2021 and at a rate of 16.7% per annum over the next five years.
How does CRM stack up for the POWR Ratings?
A for Trade Grade
B for Buy & Hold Grade
B for Peer Grade
B for Industry Rank
B for Overall POWR Rating
The stock is also ranked #11 out of 48 stocks in the Software – Business industry.
JD.com, Inc. (JD)
JD is an online sales platform that operates in China. The company’s platform offers electronics and home appliances along with other products. JD’s stock has gained 161.4% so far this year.
The company is working on expanding its operations and plans to open five million physical stores over the next three years. The company is bolstering its logistics to provide the same products at the same price to consumers in smaller cities as available for those in tier-1 cities. This move could position JD.com as a leader not just in e-commerce but overall in retail.
For the quarter ended September 2020, the company saw an increase in revenue of 29.2% compared to the same period last year. The company’s annual active customer accounts also increased by 32.1% year-over-year.
JD’s trailing-twelve-month revenue grew at a CAGR of 28.1% over the last three years. The company’s year-over-year EBITDA growth rate is 106.9% compared to the sector average of 9.9%. JD is expected to witness revenue growth of 33.9% for the current quarter and 21.8% in 2021. The company’s EPS is estimated to grow 43.6% in 2021 and at a rate of 6.3% per annum over the next five years.
It’s no surprise that JD is rated a “Strong Buy” in our POWR Ratings system, with a grade of “A” in Trade Grade, Buy and Hold Grade, and Peer Grade. In the 115-stock China industry, it is ranked #16.
Chewy, Inc. (CHWY)
CHWY operates an online platform that sells pet food and other pet-related products. The company offers products from more than 2000 brands and has over 6.1 million sq. ft. of fulfillment space. CHWY’s stock has gained 117.2% so far this year.
The company has recently launched a new service called “connect with a vet” that allows pet owners to get pet healthcare directly through the platform. This move has the potential to make CHWY the leading destination for all things related to pet care. The company has also upgraded its pharmaceutical offerings to include compounded medications that are tailored to the needs of specific pets.
For the quarter ended July 2020, the company saw an increase in net sales of 47% compared to the same period last year. CHWY’s adjusted EBITDA grew 153% year-over-year.
CHWY’s trailing-twelve-month revenue grew at a CAGR of 39.7% year-over-year. The company’s year-over-year operating cash flow growth rate is 950% compared to the sector average of 12.6%. CHWY is expected to witness revenue growth of 32.2% for the current quarter and 41.1% in 2021. The company’s EPS is estimated to grow 31.7% in 2021 and at a rate of 132.1% per annum over the next five years.
CHWY’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” in Trade Grade and Industry Rank. It is ranked #5 out of 34 stocks in the Consumer Goods industry.
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CRM shares were trading at $249.50 per share on Monday afternoon, down $0.01 (0.00%). Year-to-date, CRM has gained 53.41%, versus a 13.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaryaman Aashind
Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…
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