With stocks at all-time highs, 3 stocks to buy without hesitation

0

The market has flirted with all-time highs for the past week. While exciting to investors, it can deter many from buying or raising great stocks. Facing this dilemma, we asked three Motley Fool employees to highlight a company they would have no hesitation in buying regardless of market highs.

They came with Upstart stocks (NASDAQ: UPST), Qualcomm (NASDAQ: QCOM), and Atlassian (NASDAQ: TEAM).

Image source: Getty Images.

Upstart Holdings: Disruptive Loan Approvals Using AI

Danny Vena (Upstart Holdings): Consumer credit has long been ripe for failure. Those without bad credit are at the mercy of lenders and exposed to ridiculously high interest rates – if they could get credit at all. Worse still, some consumers have low credit scores through no fault of their own, the result of broken relationships, medical problems, or simply no credit history. This is where Upstart Holdings comes in.

The fintech company offers an alternative to the rule-based lending systems of many banks and financial institutions. Rather than just looking at a few variables, Upstart uses a novel approach that leverages the power of artificial intelligence (AI) to consider more than 1,000 variables to predict the likelihood of a loan being paid back. The company’s sophisticated algorithms turn traditional lending on its head, bringing many more potential borrowers into play while offering lower interest rates than many of those borrowers could get elsewhere.

Upstart’s state-of-the-art platform encompasses a variety of credit default prediction factors including income fraud, credit stacking, fee optimization, identity fraud, acquisition target, prepayment prediction, and time-limited default prediction indicators, among others. Upstart’s system gets smarter with every loan made, and its predictive power continues to grow with a rapidly growing data set spanning more than 10.5 million paybacks to be considered.

Consumers are much more likely to get credit with Upstart’s financial modeling, with 27% more borrowers getting credit from banks using the system than those using traditional lending methods. In addition, they generally get better interest rates, with an average of 16% lower annual percentage rate (APR) on approved loans.

None of this would matter if the loans weren’t paid back, but financial institutions using Upstart’s platform have reduced their loss rates by 75% with the same number of loan approvals. This shows that the AI-based system is working and that banks are increasingly getting involved.

Upstart’s revenue rose to $ 194 million for the second quarter, up 1,018% year over year. The company went from a loss to a profit with net income of $ 37.3 million compared to a loss of $ 6.2 million for the year-ago quarter. Perhaps equally important, Upstart has made a profit every quarter since the company went public late last year.

Robust customer actions helped increase Upstart’s financial results. Bankers using Upstart’s system have extended $ 2.8 billion out of 286,864 loans, an increase of 1,605% year over year, while conversion improved to 24% from the previous level of 9%.

Upstart chases a massive total addressable market of $ 92 billion in unsecured credit, but it doesn’t end there. The company is expanding its tools to target the auto loan, credit card, and mortgage loan markets, expanding its capabilities to $ 4.3 trillion. To put that in context, Upstart is targeting $ 750 million in revenue this year, which helps illustrate the scale of the opportunity.

Individual on public transport with a mobile device.

Image source: Getty Images.

Qualcomm: An upgrade cycle is overturning this dominant 5G chipset company

Will Healy (Qualcomm): Qualcomm’s portfolio of wireless patents has made it an industry powerhouse. It makes chips for a variety of wireless products and could build a new operating system for cars.

However, many investors associate it with its chipsets for smartphones, a market that has become increasingly important in the wake of a 5G upgrade. Although companies like Apple tried to compete because now every 5G device depends on a Qualcomm chip to provide this service. This bodes well for Qualcomm as Grand View Research predicts that this chipset market will grow at an average annual growth rate of 69% through 2028.

In addition, the company continues to face challenges. Qualcomm relies heavily on chips from Arm Holdings, a company Nvidia is in sales talks. However, with regulators raising antitrust concerns about such a takeover, it seems increasingly likely for Qualcomm to avoid becoming dependent on Nvidia.

Qualcomm’s strength is well demonstrated in its newly published results for fiscal year 2021. During that period, GAAP revenue increased 43% compared to fiscal year 2020. Revenue growth remained slightly above the increase in operating expenses, and Qualcomm benefited from additional investment income and lower interest costs. This resulted in GAAP net income of $ 9 billion for the fiscal year, up 74% year over year.

Also, slowing growth may not affect Qualcomm as much as it appears. GAAP revenue increases slowed to 12% in the fourth quarter, but revenue rose 43% when compared to Huawei’s 1.8 billion% year-over-year increase, leaving Qualcomm likely to slow down for a while of the increase will be faced.

However, while the stock is trading at roughly the same level as it was a year ago, it is up about 20% since its short-term low in mid-October. In addition, with a P / E ratio of only 17, it remains significantly cheaper than comparable companies like Apple with a profit multiplier of 27 or NXP semiconductors with a P / E ratio of 59. As Qualcomm dodges another competitive threat, it could become increasingly attractive given its integral role in the 5G upgrade cycle and low earnings multiple.

Individually at home in a video conference with others.

Image source: Getty Images.

Atlassian: Team collaboration will never go out of style

Brian Withers (Atlassian): Nowadays projects are not carried out without good cooperation between team members. With remote working and a growing trend towards people with specialized skills, teams today face the challenge of keeping everyone in the know as they conduct critical projects. Software tools are becoming a must in today’s business world to coordinate teams that can work from almost anywhere. This is where Atlassian shines. His mission is to help teams around the world reach their potential. With its focused mission, exceptional business metrics, and a world of opportunity, this company is a solid bet no matter what the market is doing.

First, let’s dive into the company’s latest results. Customers flock to Altassian’s broad platform of software tools. The company hit a record 216,500 customers in the quarter, a 30% year-over-year increase. Revenue is also at a record high of $ 614 million last quarter, a sequential increase of 10% and an improvement of 33% year over year. After all, it’s exciting for investors to see the growth of its cloud offerings accelerate as the company migrates customers to its cloud-based tools.

Metric

Q1 2021

4th quarter 2021

Q1 2022

Change (QOQ)

Change (yy)

Customers

166.180

204.754

216,500

6%

30%

revenue

$ 460 million

$ 560 million

$ 614 million

10%

33%

Growth in cloud products (YOY)

37%

47%

53%

5%

16%

Data source: Company earnings release. QOQ = quarter over quarter. YOY = year after year.

These results are great, but investors always look forward to what comes next. Atlassian is well positioned to grow in three key areas. The first is agile development, which builds on the enterprise foundation of collaboration tools for software development teams. With the boom in software development, this area will continue to be a rich source of growth in the years to come.

The second area of ​​growth is helping IT teams support the software they publish. As working from anywhere becomes the norm, users demand access to critical software tools anytime, anywhere. With Atlassian’s Jira Service Management and Halp, IT teams have all the tools they need to meet increased user demands. Work management tools are the third source of growth for the company. These products help teams in all functions to juggle tasks and work together to achieve their team’s goals.

Atlassian’s stock has done a tremendous run, more than doubling in the past 12 months. But investors didn’t miss the boat. This mission-focused, founder-led team collaboration software specialist is a stock I would have no hesitation in buying in any market.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.


Source link

Share.

Leave A Reply