Three Stocks I’m buying now in September 2020
Despite the economic fall experienced due to the Pandemic outbreak, many businesses have had a low output; even the stock market isn’t left out. However, certain stocks have the potential of doubling your money in the nearest years.
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If you want to get into the stock investment game, watch my video ‘The beginners guide to stock investment 2020‘Please remember that everything I say here is my opinion and not law, so don’t be tied to it. Also, all figures noted here are accurate for the 2nd of September. If you wish to learn more, then read my post ‘How To Invest — The Top 6 Benefits of Investing in Stocks‘.
Here are the Stocks you should consider buying in September 2020.
Upwork (UPWK)
About Upwork
Upwork is a freelancing company or freelancing economy with thousands of writers all over the world. They currently sell around at $17 per share. When you need a particular project done, you can go to Upwork and post the work you want to get done. This will attract a host of writers to submit proposals to take up your job. It will help you know the best man to take up your job by finding out what they have done.
You would also know the skills they’ve got, their recently completed projects or work samples, monetary negotiations, deadlines for work submissions, etc. When the conditions are met, then you hire the best man for the job. If you need a freelancer work, Upwork is the place you can get engaged. At the stock market, they have a market cap of $1.7 billion.
With this market cap, it’s an indication that Upwork isn’t a big company in the stock market. Thinking about this company, it’s a long-term opportunity. When you think about the 2020 to 2030 opportunity, it is one of the companies that would have $10 billion or more in the nearest future with their vision to be the number one flexible talent solution in the world.
Upwork brings efficiencies to the labour market through faster hiring, greater talent access, and meaningful cost savings. It’s a massive opportunity for both small and big businesses to have unlimited access to real workers. It exposes you to different freelancers that would do your job in a better way than the ones you know in reality.
Upwork has a review of both the client’s data and the freelancer’s data before contracts are awarded. Work history, availability, project reviews, skills testing, and behavioural data are the information that can be reviewed on a freelancer’s profile. The client’s data include roles/skills, projects specification, and more.
Upwork Revenue
Looking at the revenue of Upwork, there’s an increase of 19% from 2018 to 2019, and it is holding steady, even in the recent quarters. They have a19% growth of Q2 2019 to Q2 2020.
Upwork is currently going after a market of $560 billion being the global remote work opportunity. According to McKinsey and Company, it is also estimated that by the year 2025, online talent platforms could add $2.7 trillion to global GDP. This shows massive opportunities.
Upwork products offering
When it comes to the products offered on Upwork, they are many. The basic takes 3% of the freelancer’s billings, often referred to as the client’s fee. There’s also a freelancer fee of 20% for the first $500 made, 10% of the next $10,000, and 5% of any amount over $10,000 made. Among other plans they have is a plus, business, and enterprise plan.
Near-Term Growth opportunities
There are three core growth opportunities in the short-term on Upwork. They include attracting bigger clients, enabling more spending per client, and making more high-quality matches. Upwork has a proven management team with many years of experience, including predecessor companies.
Upwork Balance Sheet/Valuation measures
Upwork has got a phenomenal balance sheet of $146 million of cash and cash equivalent and short-term investment and has no forward P/E. It is suggested that by 2021, Upwork would be a more profitable company, looking at the revenue and the growth rate as more workers keep joining each day.
Dropbox Inc. (DBX)
About Dropbox
Historically, Dropbox is known popularly as a cloud and workflow company. It is a company that helps in keeping your files and providing you with a specific storage capacity. They help in the cloud-keeping of your files, folders, voice records, pictures, and videos. With the continuous increase and expansion of its daily users, it makes it one of the top stocks to double your money.
Currently, this company is making moves to keep files in sync. Keeping files in sync will help to backup and link a shared folder while keeping teams connected. It will create a workspace that will manage companies’ content, the collaboration of apps, professional sharing, management of projects, and workflow documentation. This will enable companies of small or medium sizes to reduce their workspace. This is because it will make everyone work together, conveniently locating and using a single file through different devices.
Looking at Dropbox’s presentation in August 2020, there is more to find out about this company. This includes its potential to be the major stock you should buy. Dropbox has over 14.3 million registered users, over 3. 3 billion pieces of content uploaded to the cloud, increasing every day. It also has over 15 million paying users, while over 56 % of Dropbox subscribers use it for work.180 countries are using Dropbox
Dropbox is also building the world’s first smart workspace. This will unify the workspace that organizes your content, connects your SaaS tools, and brings teams together. It implies that a lot of big companies would go after it. Observe how Dropbox operates differently by simply designing its software for users. This makes it easy and simple to upload files, copy, and share links. When it comes to creating a simple interface for users, Dropbox is in the top tier.
Dropbox Growth Potentials
There is growth potential with Dropbox. As said earlier, with the current 15 million paying users, there are potentials to see this number rise to 25 million or over in the next couple of years. Also, there are over 350 million potential high-value targets that use the free version of Dropbox. Recently, they acquired a company known as Hellosign. It is a way to electronically sign documents. With Hellosign, you can sign, send, and receive documents without needing to leave Dropbox. It also enables you to manage a whole end-to-end workflow without leaving Dropbox.
Note Dropbox’s progress due to acquiring Hellosign. Take a look at the similar performance of another e-sign app; DocuSign has a $40 billion market cap. This is an indication that Hellosign would be a huge boost for Dropbox. This is because, in the next few years, every signing might be done through e-signature.
Competitors
Right now, there are two giant companies Dropbox are competing with. Google and Microsoft. Also, a small direct company called box. However, taking a look at what the two giant companies make as profit, would it be reasonable to say Dropbox could compete with them?
Financial highlights
In 2017, Dropbox went from $1.1 billion to $1.6 billion despite the major competition from Microsoft and Google. This shows it’s a company that is growing. On the income-wise, Dropbox had $60 million operating costs and over $200 million in the year 2019. Operating income from the quarter 2Q 2019 to 2Q 2020 shows $40 million to $96 million increase. The revenue for 2Q 2019 was $446 million and $455,000 in 2Q 2020.
Dropbox Target model
With about $400 million annual free cash flow last year, they target $1 billion within five years, making it a long-term target. Their revenue estimate currently has a 14% growth and is expected to have a double digits growth at 11% by 2021. This growth doesn’t seem to be stopping any moment from now. This is because they have the potential to gain more users with the recent company acquired, including potential ones.
Balance sheet
Dropbox sells at $19.75 per share with a market capitalization of about $8 billion and $1 billion cash equivalent.
Valuation
Taking a look at their forward P/E, they have 25%. With the potential growth they are likely to have in the next years to come; it’s an indication that the P/E is too low.
Footlocker (FL)
About footlocker
This is a retail store company that offers high quality and the latest sports footwear and apparel. The products offered are all of the brands making, and they span across several sports. The company is a thriving one since its industry is also thriving.
Footlockers financials
The company recently released their Q2 reports, and they shocked analysts and investors in how well they performed. Although they are currently trading just slightly above 30 dollars, many investors believe that a company with such great Q2 reports and earnings is undervalued in the stock market. Their Q2 earnings also prompted the company to resume talks on dividends.
And as at the 21st of August, the company planned to pay out a 15 cent per share dividend. Although the company saw a reasonable beat down in their sales due to the pandemic, things are starting to look again as shoppers are returning. Their Q2 earnings show that they made a profit of 71 cents per share. In comparison to last year’s report of 66 cents per share, this shows a lot of profitability and growth for the company. They also had impressive revenue growth of 17.1%.
My opinion of the company
My interest and love in this company are in how much they remain on the lower end of the stock value while still being a great stock. They also have shown investors what they can do by beating every forecast made on their earnings. Last year analysts forecasted that the company would lose money this year and earn at 57 cents per share, but they defeated that forecast and surpassed it greatly.
Another reason I like this company is its management team. They are efficient and effective, and that is enough courage to keep me locked in the company. According to a report made in the early hours of 21st of August, the company’s CEO explained how they scale through the pandemic and still produce great financial reports. Even though they were strict with their budgets, they were still able to provide services as the need required. This is for me an assurance that the company is in great hands and will do even better in the future.
Finally, with roughly around $33 per share, footlocker has a market cap of 3 billion and a PE ratio of 16.5%. If businesses return to normal profitability level in 2021, and the stock sells for $30, the PE ratio would move from a range of 6 to 7. They also have 2% as a dividend yield. Generally, the outlook of the company is great, and I expect to see greater growth in the next few years. This is, of course, going to be a company I will take more interest in and maybe even increase my position substantially.
Conclusion
With the recent performance Dropbox, Foot Locker and Upwork have had in the past months it is an indication they are both stocks with a convincing potential. Adding these stocks to one’s Portfolio could be the best decision to be made as they are stock that keeps expanding day by day.
I am planning to add a bit more from Walt Disney, Zoom, Abbie , AT & T , 3M as well.
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