What’s always fashionable on Wall Street? Growth. However, given the current macro environment, compelling growth stocks are even more difficult to spot. Despite the wild ride in 2020, some select names could still shine brightly and reward investors well, according to the pros off the road.
Not only do these tickers have any old growth prospects, they are some serious high-flyers. Coupled with a track record of upward moves since the beginning of 2020, their solid businesses could propel stock prices higher through 2020 and beyond.
With that in mind, we set out to find stocks that Wall Street marked as exciting growth games. Using TipRanks’ database, we’ve picked three analyst-backed names that have already made impressive profits and have strong growth narratives over the long term.
Wix.com Ltd (WIX)
Founded as an online web development platform, Wix enables its 72 million registered users to develop and create websites. For 107% since the start of the year, several members of the street believe this name still has a lot of fuel in the tank.
Five-star analyst Ronald Josey, who wrote for JMP Securities, was impressed, to say the least. Last quarter, the company added 9.3 million registered net users, most in one quarter, driven by increased marketing spending to capitalize on the digital shift sparked by the COVID-19 pandemic.
Additionally, Josey cites the fact that the number of new subscribers rose to over 200% in July, suggesting that the aforementioned trend is continuing to accelerate. However, he argues that the main growth indicator is the future cohort collections, which are up over 90%, as “this indicates an increased rate of growth in Wix additions in the second quarter and we believe this is a good sign that Q2 trends continue into the third quarter for 2021 and beyond (we find that the cohort collections in the second quarter were 66% year over year). ”
In addition to the good news, the number of customers using higher value products like business and ecommerce subscription packages tends to be higher. Payment traffic has almost doubled compared to the previous quarter, which, according to Josey, “speaks in favor of the introduction of Wix’s e-commerce products and at the same time highlights Wix’s longer-term payment options.”
Josey added, “Given the accelerating trends in the adoption of Wix’s core products such as Stores (which were recently updated), Ascend and Payments, and newer product offerings such as Editor X (not in the guide), we are increasingly confident that Wix can do it Navigate the current environment and the potential for better collection growth for the foreseeable future. ”
With all of these in mind, Josey maintains a Market Outperform rating and a price target of $ 363. That goal gives him confidence in WIX’s ability to grow 43% over the next year. (To see Josey’s track record, click here.)
Where are other analysts on Wix? 14 purchases and 1 hold were made in the last three months. Therefore, WIX has a strong buy consensus rating. Given the average target price of $ 333.93, stocks could rise 32% over the next year. (See Wix stock analysis on TipRanks)
Bilibili Inc. (BILI)
Next up, we have Bilibili, a Shanghai-based Chinese video sharing website that focuses on animation, comics and games (ACG). It has already grown 124% since the beginning of the year, and some analysts believe this growth story is far from over.
Five-star analyst Alex Yao at J.P. Morgan explains to clients that he is “incrementally positive” for BILI’s growth prospects. But what is behind his bullish thesis?
Yao noted, “Management’s comment that the maximum MAU hit a milestone of 200 million in August 2020 makes us more positive about BILI’s long-term user growth beyond Gen-Z. We expect further user growth in the fourth quarter of 2020, supported by the 10th season of the League of Legend (LoL) World Cup (in September / October 2020, BILI is one of the most important broadcasting platforms). “To this end, the analyst estimates that the MAU will exceed 400 million by 2023.
In addition, BILI recorded strong growth in advertising revenue in the second quarter, up 108% over the previous year. According to Yao, this result shows “its strong attraction to advertisers driven by its rich content and growing user base”. The analyst expects its solid execution in both user expansion and revenue diversification to expand its long-term addressable market.
Going forward, the company will most likely continue to invest in branding and channel marketing to support user growth during heavy seasonality. Commenting on the impact, Yao said, “While such investments could widen short-term financial losses, we believe they could help BILI accelerate user expansion and support monetization growth in the long term as all of BILI’s revenue drivers (gaming, ads, subscriptions, etc.) are directly related to user growth. ”
As a result, the analyst sees further user growth as an important potential catalyst. The introduction of new mobile games as well as the acceleration of the advertising platform for content providers Huahuo, which helps content providers to connect with brand advertisers, could also lead to a significant upward trend, according to Yao.
In line with his optimistic approach, Yao stayed with the cops. Along with being overweight, he has a price target of $ 55 on the stock. Investors could pocket a 32% gain if that goal is met in the next twelve months. (To see Yao’s track record, click here.)
If we turn to the rest of the street, the cops represent the majority. With 4 buys and 2 holds in the past three months, the word is on the street that BILI is a moderate buy. At USD 53.43, the average target price implies an upside potential of 28%. (See Bilibili stock analysis on TipRanks)
Last but not least, we have MercadoLibre, one of the largest e-commerce companies in Latin America. With market share soaring, Wall Street believes the name could climb even more in addition to its 89% year-to-date increase.
After meeting members of the MELI management team, Credit Suisse’s Stephen Ju is even more confident about his long-term growth prospects.
It should be noted that in the second quarter of 2020, MELI expanded its category take rates to Chile and Mexico, with Brazil and Argentina set to 2H20 or early 2021. Ju points out that the resulting take-rate rationalization could lead sellers to list more of their inventory and lower prices. With this increased offer, he argues: “MELI should recognize the cascading advantages of an improved shopping experience and increasing conversion rates.”
In addition, shipping costs per item decreased sequentially by 23% in the previous quarter. The mix of Flex and MELI Logistics, which is integrated into microcarriers via a software layer, has also improved.
Ju added, “Efforts to accelerate the process of building its own logistics network to reduce reliance on Correios in Brazil are producing these tangible results and prompting the company to potentially draw a larger amount of subsidies for free shipping as the.” Unit costs for deliveries continue to fall … All of this together means greater reliability, faster shipping times and greater cost savings – which can be passed on to the consumer. ”
In the future, MELI is expected to invest in the consumer electronics and CPG categories in order to close selection gaps and improve price competitiveness. According to Ju, with its expanded logistics presence, the company could seize this opportunity and then move into the grocery market.
If that wasn’t enough despite the COVID-induced headwind, MELI has sold around 1 million mobile point-of-sale (mPOS) devices, up from 900,000 in Q1 2020, which were mostly powered by smaller retailers and SMEs. As the economy continues to open, Ju believes the TPV per device should also increase.
The analyst added: “Even with ~ 20 million payers who are not yet active buyers in the marketplace, there is a cross-sell / upsell option that can be used via existing fintech products such as QR codes, credit / MELI branded debit cards and consumer credit and asset management / Fundo. ”
Additionally, Ju believes that increasing consumer awareness through branding, especially in Brazil and Mexico, could add momentum.
Everything MELI has done convinced Ju to repeat its outperform rating. Along with the call, he set a target price of $ 1,484, indicating upside potential of 37%. (To see Ju’s track record, click here.)
In general, other analysts agree with Ju. 9 buys and 2 holds results in a strong buy consensus rating. With an average target price of USD 1,322.73, the upside potential is 23%. (See MercadoLibre stock analysis on TipRanks)
Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important that you do your own analysis before making any investment.