Several readers have been asking recently about the “Power Portfolio 2021” pitch from Investorplace (previously known as Power Portfolio 2020), so I thought I’d dig into that for today’s edutainment episode. The service is a two-pundit “upsell” product, currently being sold at $2,499/yr (no refunds) and boasting regular picks that combine the “top down” trend picking from Matt McCall with quantitative “bottom up” stock selection from Louis Navellier… the idea being, naturally, that the combination of good numbers and hot trends should lead to good stock picks. They say their picks in this newsletter will be unique, ideas that they haven’t shared in their other services.
And, frankly, I’m a little exhausted after ending a lovely vacation and being back at work for a few days, so I’ll skip over some of the big picture silliness (I write every weekday, really? all day? But the couch is calling!).
Yes, McCall and Navellier have both made lots of good picks in the past, and probably had fantastic years in 2020, as you’d expect for growth investors (anyone who stuck with stocks with strong revenue growth and high or rising growth expectations should have made a lot of money last year). I’m sure they’ve picked lots of stinkers in the past, too, every growth investor has. They don’t have public track records in any meaningful way, but back when Navellier was being tracked by Mark Hulbert, before Hulbert Interactive fizzled away, I recall that the general tendency was for his quantitative services to outperform in bull markets and give back most of that outperformance in bear markets. Kind of what you’d expect — growth and momentum stocks go up faster than the market, by definition, and when the manure hits the air circulation device they go down faster, too.
Navellier used to manage a some publicly available mutual funds under his name and others, and still has a managed accounts business, and the mutual funds, at least, tended to be expensive disappointments from what I remember, and have mostly disappeared (as you’ve probably noticed by making your own investment decisions, consistently managing a portfolio is a lot tougher than picking a hot stock or two each month… partly because the impact of the losers doesn’t just disappear once you’ve sold them). You can also use his free portfolio grader service to see how particular stocks rank with his quantitative methodology, in case you’re curious.
So let’s just get to the few hints they toss our way, shall we? The general idea is that they’ve launched this service with a “Hypergrowth Portfolio” of ten stocks, and will be adding to it if and when they find more ideas that they can agree on. There are only two that are at all hinted at with any specifics in the ad, so we’ll focus on those.
And I should warn you, this will be a bit of a challenge for the Thinkolator, because they don’t drop a lot of clues… here’s the pitch for the first one:
“These stocks are stretched across various industries with a lot of growth potential in 2021.
“For obvious reasons I can’t just give you the names and ticker symbols of all of them, but here’s what I can say…
“There are two specifically I’m personally excited about.
“These companies are hands down the best at what they do.
“For the most part, they’re small and their revenue is growing at breakneck speeds.
“One of the companies is a truly innovative software company that will absolutely be a huge benefactor of the “work from home” trend.
“It’s the perfect picks-and-shovels play.
“They’re cutting out the middleman and helping companies scale their remote capabilities and voice messaging needs.
“And their current client list is really impressive.
“Google, Microsoft, Zoom, and RingCentral all depend on their software.”
Thinkolator sez this is very likely to be Bandwidth (BAND), a small company that I admit to not having heard of before. Here’s how they describe themselves:
“Bandwidth is a software company focused on communications for the enterprise. Companies like Google, Microsoft, Cisco, Zoom and Ring Central use Bandwidth’s APIs to easily embed voice, messaging and 911 access into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own nationwide IP voice network – one of the largest in the nation.”
Yes, we can add AAS to pretty much everything these days, right? I’m thinking I should start calling Stock Gumshoe a BaaS company (Blatheration as a Service). CPaaS is “Communications Platform as a Service” — basically, the voice and telephony network that software providers can build on to provide their own branded and managed video conferencing, VOIP telephone service, etc. They describe themselves pretty well on their website, if you’re curious to dig in a bit. They’ve been public for three years or so, recently made a substantial acquisition (Voxbone) to expand their network globally, and, no surprise, the stock roughly tripled in 2020 as revenue growth from their big customers (including Zoom) picked up.
All of the numbers will sound pretty familiar if you’re used to looking at subscription based businesses — they had revenue growth of 40% last quarter, most of it from CPaaS business, active customers grew at 25% (they now have 2,015), and they had “dollar-based net retention” of 131%. They also raised their forecast for the fourth quarter, which we’ll hear more about in six weeks or so when they next report.
There is not a lot of analyst coverage for Bandwidth, mostly because they’re small, but they are profitable on an adjusted basis, they’re probably lowballing their guidance for the fourth quarter because of uncertainty about the acquisition, and the average analyst expectation is that they will grow revenues by 38% next year, and that they’ll earn 35 cents in adjusted earnings per share, which would be lower than the likely 45 cents+ they’ll probably end up with in 2020. That means we’re looking at a PE of roughly 300, but, with their acquisition, also perhaps more growth potential as they expand more internationally.
And yes, they do rate an “A” grade in Navellier’s portfoliograder. The shares dropped a bit after they announced the Voxbone acquisition, and the insider selling that went along with it, but have otherwise held up pretty well. My quick thoughts on this one are that it’s relatively attractive as a growth speculation, particularly since it trades at only 12X sales, compared to the wilder valuations of Zoom or RingCentral (50x and 30X, respectively)… and it could help to enable those next generations of competitors to RNG and ZM and others, as well, so that’s interesting… but as a “picks and shovels” play that supplies the APIs for other tech companies, the concern would be what kind of pricing power they have, and how they can hold the line against other telecom network/CPaaS providers — nobody cares which network underlies their Zoom call, so BAND doesn’t have that kind of brand power or network effect with end-users, so I don’t know how defensible their business is.
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Probably it’s OK, given the retention and revenue growth this year, to some degree BAND seems like a smaller and cheaper Twilio (TWLO), which also sells itself as a CPaaS company (though doesn’t own its own networks, as far as I know)… but I don’t know enough about BAND and the state of its competitors to be particularly confident.
Other random thoughts on this one?
The founder, David Morken, controls most of the Class B shares and holds huge voting power, so he can do just about whatever he wants with the company — that risk is common to tech stocks, but worth noting.
And when it comes to the risk of losing a big account, like Zoom Vide or someone else, they said they had no single customer representing more than 10% of their revenue as of 2019. I don’t know if that continued to hold true with the huge ramp-up from some key customers, presumably including Zoom, in 2020 — companies generally only disclose that when they decide they have to, which in my experience is “once a year in the 10-K, or when a huge customer is lost” (like when Fastly (FSLY) lost a big part of their TikTok business a few months back, when TikTok accounted for more than 10% of their revenue, or GAN (GAN) was notified that FanDuel would drop some of their services).
My guess? If Zoom and RingCentral have another great year, BAND will, too. And 40% revenue growth, trading at 12X sales, sounds downright cheap compared to the hotter and sexier “work from home” stocks, but that’s about all I can tell you about this one.
What’s their second stock?
“Another company that made our list will be a big benefactor of the work-from-home economy
“They help over 2,000 companies better connect with their customers virtually.
“I know that might not sound exciting, but for any company that just got forced into remote work, their service is a godsend.
“This company has incredible earnings momentum heading into the new year, and just like the other company I mentioned, their client list is rapidly growing, which is great for investors.
“I’m talking about clients like Under Armour, DoorDash, Salesforce, and lululemon.
“Even one of Matt’s favorite stocks, Teledoc, relies on this company in order to provide their telehealth service.
“I better stop there before I give too much away.”
Too late, I dare hope — Thinkolator sez this is very likely to be Five9 (FIVN), which slots itself into the CCaaS business (Contact Center as a Service). Here’s a description I pulled from YCharts:
“CCaaS solutions support omnichannel communication and include automatic call distribution and interactive voice response. Five9’s intelligent routing solutions can direct customer inquiries to the call center agent best able to handle a customer’s inquiry and suggest the best course of action for an agent to resolve the question quickly and satisfyingly. Over 90% of Five9’s revenue is recurring, with two thirds attributed to subscriptions and one third related to usage (in minutes).”
Five9 believs that they’re in a huge addressable market, with “contact center software” representing a $24 billion opportunity, and their $400 million or so is but a fraction of even the portion of the call center that has already gone to the cloud (15%, they say, so about $3.5 billion). That’s an appealing ocean in which to be swimming, and obviously managing customer connections well is a huge key to any business, particularly for any consumer brand.
FIVN is profitable on an adjusted basis (like many tech stocks, the headline earnings look a lot better than the GAAP earnings, because they use stock-based compensation to reduce their cash costs for payroll), but analysts, interestingly enough, do not see a ton of growth in 2021 on that front — the current consensus estimate is for 88 cents in adjusted earnings in 2020, and 83 cents in 2021, with revenue growth of a little under 20% net year.
If that’s how it works out, then FIVN is absurdly overpriced for a company that’s not growing super fast (and 2022 isn’t dramatically stronger, with still sub-20% growth)… and FIVN is already right at the average analyst price target, so, as with all these high-growth SaaS stocks that enjoyed huge blowout success in 2020, a lot is riding on what this group starts to say about 2021 forecasts when they begin reporting. We’ll learn more on that in mid-February when a big wave of these companies report (FIVN is likely to report around February 19), but it’s quite likely that the whole group of “SaaS companies that trade at 20-30X sales” will trade in as a group when there are market-wide shifts in sentiment. Like today, for example, with most of those names down by ~4-5% or so.
And that’s all I’ve got for you today, dear friends — a couple pretty solid but not 100% certain answers to that “Hypergrowth” tease, how do those sound to you? Have other candidates to suggest who might fill out that top ten they’re teasing, beyond those two that they actually hint at? Think McCall and Navellier will be right about another stage of growth for these kinds of companies in 2021? Let us know with a comment below… thanks for reading!
Disclosure: Of the companies mentioned above, I own shares of Google parent Alphabet, Teladoc, Fastly and GAN. I will not trade in any covered stock for at least three days after publication, per Stock Gumshoe’s trading rules.
Travis, thank you for all you do!
You mentioned McCall above. Have you seen his Battery of the future or long lasting battery, tease? Can’t remember exactly how he presented it.
https://www.stockgumshoe.com/reviews/nexgen-investor/thinkolating-on-the-breakthrough-quantum-glass-battery/
Hi Travis, I didn’t understand why you said that BAND has better valuation than FIVN. I looked up on Bloomberg and saw that Est P/E for BAND is 319, and FIVN is 189. Est PEG for BAND is 32 and FIVN is 10.5. Of course I see that P/S for BAND is 11.8 and FIVN is 26 and P/B for BAND is 11.2 and FIVN is 42. So I am guessing that you are looking at the later two multiples and saying that BAND has better valuation than FIVN.
The price-to-sales ratio utilizes a company’s market capitalization and revenue to determine whether the stock is valued properly. A lower P/S is much better.
Matt McCall and Louis Navellier recommended like 10 hypergrowth stocks in their Power Portfolio 2021. Can anyone be kind enough to share the recommendations. Thanks.
Yes it would be nice if someone could share. Thank you!
AHCO-SLP-EXPI son 11
¡Gracias Jivesa! Estas acciones parecen muy prometedoras. ¿Te importaría compartir los otros 5?
Thanks as always to Travis for helpful insight. McCall released another teaser – a semiconductor – today. I’m going to paste the relevant excerpt here to see if you could help us identify it:
“We’re off to a really strong start again this year, and just about an hour ago we released our latest buy recommendation.
And yes… it’s a semiconductor company.
The company’s timing devices work like a sort of heartbeat for a variety of chips used in modern electronics systems, ensuring all the chips in a system work in sync with one another.
Its products are so small that you can’t even see them with the naked eye! And yet they quietly operate in the background of a huge number of advanced products – from smartphones, tablets, and earbuds to medical devices, factory machinery, and even earthquake detection systems.
Overall, this company has shipped more than two billion timing devices across 250 applications. And management says this is just the beginning. They expect the company’s chips could be used in 500… 1,000… or possibly even more applications going forward.
That leaves a lot of room for upside. Earnings are estimated to surge a stunning 285.7% over the next couple of years.
With its robust growth, superior fundamentals, and strong presence in a hypergrowth area, we view this company as a strong addition to our Power Portfolio 2021.”
I think it is SiTime #SITM
https://www.investors.com/news/technology/sitime-stock-rises-sales-growth-improving-profit-margins/
I’m also curious as to what it is. I think MRAAY is a possibility too.
SI es SITM
he added AMD in Investment Opportunities
semiconductor – mccall added AMD in Investment Opportunities
I Can just say i bought several of mc calls free pics and I am up on all of them
BAND is also a MF recommendation
Do you happen to have the link to the MF rec? or know which portfolio subscription it was in?
I picked it up for $151 about when they recommended it in september. It’s right about where it was back then so maybe it is a good time to add. I think the rationale for the pick was that it is a historicaly conservative company that is starting to take a more aggressive growth stance and also benefiting from the work from home boom.
If you have stock advisor you should be able to search for the recommendation.
I was too late for the party 🙁 and got in at 171. Currently down -7.5% but expecting (hoping for) a re-bound. It closed 158 yesterday and I think, it is an attractive play at the current price.
What beachwind said. Plus if you look it up on Yahoo Finance there is a free MF article listed there “My 3 best stocks to buy in January”
Waiting for a teaser on power riet pw stock I think it propAbly the next iipr
I have made a lot of money with Matt in last 6 months!! I subscribe to one of his services but lately he really irritates me with continued barrage of emails to join his new expensive service with Louis! Thanks for another great unravelling of Fivn and Band
A rising tide lifts all boats. We are in a cycle where a huge amount of money is being thrown at the markets. Beware the siren song of all the prognosticators that will come out of the woodwork proclaiming their genius. Check how they performed in a down market.
My opinion – stick with Stock Gumshoe.
Thais what they do, bomb you with a hundred of email when you sign for a cheaper service. They try to squeeze all your profit.
Travis, I am wondering when you are going to update the ticker on MNCLW in the real money portfolio. It is now ASLEW and trading close to 3.00 compared to your buy in at .50, so congrats on that. I was wondering what your thoughts were on when to sell. This is the first SPAC and though I didn’t pick it up when you first bought, it had still done quite well.
The portfolio will be updated tomorrow, and I’ll also share my updated thoughts on that and other positions in the Friday File.
Awesome! Thanks
What a great community and altruistic forum you’ve created here, Travis. Thank you for all your hard work and patience with us. So please keep the latter in mind 😉 when I ask – have we successfully identifying six of the 11 hypergrowth growth stocks? AHCO-SLP-EXPI-SITM-BAND-FIVN
PS Peter, loved “a rising tide lifts all boats”
I only know the ones I identified, sorry. Several interesting names in that longer list, though.
yes, he teased IKA-L a year ago, sold for 1133% gains, and MRAAY ist still on the buy list
Anyone had a look at his latest top 5G and AI stocks mailer. I think the driverless cars pick is Aptiv PLC – recently spun out from Delphi after Borg Warner takeover. Thoughts?
Anyone know what these are????from Matt Mccall
I am invested in Investor Place with Louis and Luke Lango’s picks in my portfolio. I like having the old hand and the young buck advising, I think it brings a good balance. So far I haven’t seen any growth, like most everybody else at this time, but I am in Long Options with Louis and I like the plays. Luke goes for the big potential stocks like STPK&RTP and other SPAC’s with EV/Battery/AI growth potential. I actually held many of the stocks they advised to be buys. I think Ilika (ILIKF), the British battery company, makes the best battery right now but no one in the USA will give them their due? Strange. It may take a few years for ILIKF to gain serious ground. I’m also wondering why no one is screaming about Ocado (OCDGF) which is huge in Europe and Asia and is called the Amazon of Grocery’s? Ocado has contract with KR to put in a facility on the East coast but the Virus put those plans behind. I would still recommend OCDGF. Louis and Luke like some Brand name stocks but their favorite’s are things like DM, STPK, SSPK, NIO, TSLA, STPK, CIIV, plug and a host of other EV related stocks/companies. I’m happy to give you the full list if you are interested. Blessings.
PS: I believe Luke’s pick of ACTC, which will be Proterra, is said to have the longest, strongest, best battery now. Who knows? Too many new innovations to keep track. Be safe and wise.
Paul – Would you mind sharing the top picks from Louis and Luke other than the ones you have already shared.
Thank you for sharing info. At Fidelity, ILIKF has a $50 settlement fee. Is there a way to buy it without this. As in a different ticker? or is that standard?
Thanks Paul for sharing about Ocado, I agree that long-term companies like Ocado will succeed, and from their website in the UK they have an impressive selection of food! Their growth into the US with Kroger is interesting, since grocery chains are talking about cutting out Instacart and starting their own delivery options. Wonder if Ocado offers them the backend…?
would like to see the list… !
Hi, anyone knows what stock Luke Lango was talking about as his: “My No. 1 Stock to Buy to Generate Life-Changing Wealth, On Tuesday, Feb. 23 2021” ?
regards JJ
OPEN
OPEN, ok thx, I just couldnt believe it was “just” that, Luke has been writing about that one before.. Ive bought a little in on OPEN, do you really think Luke´s right, that it will go like amazon..? Sounds crazy
I’m a fan of Luke and even subscribe to his 10x service. However, I think he’s wrong on Open. I just don’t think it’s going to be big.
You may want to consider the new rising Amazon of the most populist fastest growth Capitalist nation our patron lender China. JD aka JD.com or their etf KWEB
Thanks I do have some. JD. May add some more.
I agree, Im also in on JD.com, and Im adding more on the dips right now, over the next years JD could be huge, given politics, in china or US.., doesnt get in the way, lets hope not
Anyone know what smal cannabis stock Luke Lango er talking about in hist post 13/4 about CGC: “… Instead, my favorite cannabis stock to buy today is a smaller, less-well-know cannabis retailer with huge upside potential over the next decade. This tiny stock could be your next 10X winner. “
Matt McCall and Louis Navellier just had a big “RoadMap to Recovery” session and pitched their Power Portfolio: Reloaded. Supposedly 8 SuperGrowth stocks. Would love to hear thoughts on those. Only one was hinted/slightly described.
Anyone knows the stocka for the Louis Big Bet or 8 Hypergrowth Stocks for 2022?