Stay Bullish—and Flexible
Current Market Outlook
Last Thursday’s massive selloff was a shot across the market’s bow, and today saw the broad market take another punch to the gut. That said, the evidence remains mostly bullish at this point—the trends of the major indexes are up, nearly all institutional-quality leading growth stocks are still acting fine and many secondary indicators (such as the number of stocks hitting new lows, which remains microscopic) are also pointing higher. Of course, 2020 has been all about staying flexible, and right now isn’t a time for complacency; it’s always possible the 11-week advance is going to lead to a sharper correction or consolidation. Thus, you should be open to any possibility, but right now, the evidence remains bullish, so we advise remaining heavily invested.
This week’s list has a bunch of growth-oriented titles that are showing attractive setups. Our Top Pick is Lululemon (LULU), which could pull in further after earnings, but our guess is that this dip will give way to higher prices in the weeks ahead.
| Stock Name | Price | ||
|---|---|---|---|
| Argenx SE (ARGX) | 222.54 | ||
| Bandwidth Inc. (BAND) | 129.19 | ||
| Coupa Software (COUP) | 262.20 | ||
| CrowdStrike (CRWD) | 105.02 | ||
| DraftKings Inc. (DKNG) | 38.26 | ||
| Fiverr (FVRR) | 71.41 | ||
| Lululemon Athletica (LULU) | 304.69 | ||
| Novavax, Inc. (NVAX) | 65.95 | ||
| Peloton (PTON) | 53.03 | ||
| Redfin (RDFN) | 40.40 |
Argenx SE (ARGX)
Why the Strength
You probably don’t associate zoo animals with medical treatment, but Argenx views them as a potential cancer cure. The late-stage biotech outfit (based in Netherlands) develops antibody-based medicines for treating rare autoimmune diseases and cancers using the blood of llamas and alpacas (seriously). Its pipeline includes eight potential new drugs, including treatments for leukemia and airway inflammation, but its main focus involves harnessing the llama’s powerful immune system to pioneer fundamental breakthroughs in cancer biology. Most recently, it announced positive top-line data from a pivotal study of an intravenous version of its lead pipeline candidate efgartigimod in patients with myasthenia gravis (MG), which is a rare neuromuscular disease that causes “communication breakdowns” between nerves and muscles. The company is seeking approval for the MG indication later this year. Argenx has several other candidates in the pipeline, including one via a collaboration with Johnson & Johnson that attacks acute myeloid leukemia; another (called ARGX-115) via a partnership with AbbVie that’s in Phase I studies for various cancers; and five total Phase III trials this year for other drugs. At the end of Q1, the firm had a cash balance of $1.5 billion, which it will need to support late-stage trials and commercial launch preparations of efgartigimod. Earnings are a ways down the road, but revenues should begin to pick up meaningfully (from $58 million in the past 12 months to $132 million in 2021) and Argenx’ pipeline and solid financial position bode well for investor perception.
Technical Analysis
After hitting a panic low of 104 in March, ARGX snapped back initially and ended up rounding out a nice base through early May; at that point, the stock had made no net progress since July of last year, which surely wore out most weak investors. But the efgartigimod announcement changed everything, causing a huge-volume breakout. A share offering and last week’s market’s weakness pulled ARGX back in, but the trend remains intact. It’s speculative, you can buy on dips toward the top of the recent gap.
| Market Cap | $9.99B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -2.28 |
| Current P/E | N/A | FY 2019 | -4.73 |
| Annual Revenue | $58M | FY 2020e | -9.01 |
| Profit Margin | N/A | FY 2021e | -10.79 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 21.1 | -48% | -2.06 | N/A |
| One qtr ago | 19.6 | 1003% | -2.70 | N/A |
| Two qtrs ago | 9.5 | 307% | -0.72 | N/A |
| Three qtrs ago | 8.1 | -44% | -1.56 | N/A |
ARGX Weekly Chart
ARGX Daily Chart
Bandwidth Inc. (BAND)
Why the Strength
Bandwidth is probably the strongest growth stock out there that few investors know about. The company is the platform provider that many of the most well known mobile communication-type firms use; whether it’s quality voice, messaging or even 911 services, companies like Zoom (for their voice services), RingCentral, Microsoft, Google, Skype and GoDaddy all build off of Bandwidth’s platform. Part of the reason for Bandwidth’s attractiveness is that it’s the only platform provider in this field that also owns a Tier 1 network, giving clients more control over their offerings, while Bandwidth can more quickly increase capacity when needed. And because the company charges mostly on a use basis (more usage = greater revenue), it grows as its customers do. Obviously, the shut-in has helped business, but (a) the impact in Q1 wasn’t massive (just a 4% boost to business), and (b) the real enchilada here is the long-term boom in so-called Unified Communications, which is just a few percent of the possible market but is far better suited to the mobile workforce. Growth has been steady for a while, but Q1 saw a nice acceleration, and while analysts see things returning to normal as the year wears on (to 15% to 20%-ish growth), we’re not so sure—management made a point of saying their guidance assumes no virus-related benefit in the second half of the year, which seems unlikely. All in all, it’s a good story with accelerating growth, and the stock appears to be relatively early in a new uptrend.
Technical Analysis
BAND is a bit thinner and thus is choppier on a day-to-day basis, but the weekly chart looks great. Shares built a big eight-month base from last August through mid April of this year, when it broke out on the upside (part of nine weeks in a row on the upside, which is a positive clue). Since then, BAND consolidated in a reasonable range between 102 and 122 for five weeks, and today it stretched to new highs with many growth stocks. That said, we still favor aiming to buy on minor weakness.
| Market Cap | $2.75B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | 0.43 |
| Current P/E | N/A | FY 2019 | -0.23 |
| Annual Revenue | $248M | FY 2020e | 0.02 |
| Profit Margin | 1.6% | FY 2021e | 0.20 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 68.5 | 29% | 0.04 | N/A |
| One qtr ago | 62 | 18% | -0.02 | N/A |
| Two qtrs ago | 60.5 | 20% | -0.06 | N/A |
| Three qtrs ago | 56.8 | 18% | -0.04 | N/A |
BAND Weekly Chart
BAND Daily Chart
Coupa Software (COUP)
Why the Strength
Cloud software stocks have been hit or miss, but it’s pretty clear that Coupa is the top dog and should be among the best performers in the sector if/when the market has its next leg up. The company’s business spend management platform combines both stay-at-home elements (better to manage all the invoices, payments and expenses online than via paper) and cyclical elements (as things open up, more customers will go ahead with implementation plans), which is a plus. But beyond the next few months, Coupa has all the makings of a key platform that tons of big and medium-sized businesses will rely on, similar to a Salesforce.com; just within its current customer base of 1,400-plus clients, Coupa believes it can more than double subscription revenue, and thanks to network effects (more users = more suppliers = more intelligence and know-how, etc.), it has plenty of competitive advantages to help it grab a larger chunk of what is likely a $50 billion-plus opportunity. Growth has both rapid and reliable, with Q1 bringing a 47% revenue hike (subscription revenue up 45%) and earnings miles above last year’s tally, while deferred revenue was up 39% and free cash flow came in at a whopping 18% of revenues. (Long-term, the company believes that margin can get north of 30%.) If you’re looking for flaws, the Q2 guidance wasn’t amazing (revenues up mid 20% range, partially due to COVID headwinds) and Coupa also just priced a big convertible bond offering ($1.2 billion worth), which is dilutive and often pressures stocks in the near-term. But there’s no question business is good and going to be a lot better over time.
Technical Analysis
COUP took the second half of 2019 off and crashed in March with the market, but there’s plenty to like in the action of the past few months, including the two huge-volume support weeks at the bottom and the persistent advance since mid April. The stock has gyrated a bit during the past couple of weeks, but shares have so far found support near their 25-day line, and today popped back toward its highs. If you want in, we suggest aiming for dips with a stop around 200.
| Market Cap | $15.0B | EPS $ Annual (Jan) | |
| Forward P/E | 590 | FY 2019 | 0.18 |
| Current P/E | 321 | FY 2020 | 0.52 |
| Annual Revenue | $428M | FY 2021e | 0.38 |
| Profit Margin | 12.1% | FY 2022e | 0.63 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 119 | 47% | 0.20 | 567% |
| One qtr ago | 112 | 49% | 0.21 | 320% |
| Two qtrs ago | 102 | 51% | 0.20 | 150% |
| Three qtrs ago | 95.1 | 54% | 0.07 | 40% |
COUP Weekly Chart
COUP Daily Chart
CrowdStrike (CRWD)
Why the Strength
Many investors wonder if the work-from-home trend has peaked now that business is returning to “normal,” worrying that firms that benefited from the shut-in will now see the opposite effect. But the CEO of CrowdStrike—a leading new-age cybersecurity outfit whose platform facilitates endpoint detection and protection on or off networks and on major platforms like Google Cloud and Microsoft Azure—doesn’t see reopening slowing business. He views digital transformation as a sustainable trend that’s here to stay (bolstered by an internal survey that found its customers quickly implemented long-range digitalization goals during the shutdown). Its software also allowed some of its largest corporate users to quickly consolidate multiple security programs into a single one, saving time and money. Analysts agree with the sanguine outlook and see full-year EPS rising 92%, while revenue is expected to increase 61%. In fiscal Q1, the firm exceeded its own estimates by posting $178 in total revenue (+85%) and free cash flow of $87 million, up from a cash burn of $16 million a year ago. All of the sub-metrics were pleasing, too, with the firm adding 830 new customers in the quarter (+105%), bringing the total to 6,261. Most bullish is what those customers do—they stick around (98% retention rate) and usually spend more over time (24% same-customer revenue growth rate). Those numbers were great, but the big idea here is that the move to a mobile- and cloud-first security paradigm is underway and gaining steam, shut-in or not, and CrowdStrike remains a leader in that trend.
Technical Analysis
CRWD’s powerful off-the-bottom move in March (even before the market bottom) was a clue that the stock had some juice, and indeed, shares trended up along their 25-day line into late May. The aforementioned quarterly report (and a giddy stock market) launched the stock to the century mark, where it found some resistance. But while the buying has dried up a bit, the sellers are still nowhere to be found, and the stock is still perched near its highs. We’re more interested in looking for dips as the 25-day line catches up.
| Market Cap | $20.1B | EPS $ Annual (Jan) | |
| Forward P/E | N/A | FY 2019 | -0.60 |
| Current P/E | N/A | FY 2020 | -0.32 |
| Annual Revenue | $563M | FY 2021e | 0.04 |
| Profit Margin | 2.5% | FY 2022e | 0.18 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 178 | 85% | 0.02 | N/A |
| One qtr ago | 152 | 89% | -0.02 | N/A |
| Two qtrs ago | 125 | 88% | -0.07 | N/A |
| Three qtrs ago | 108 | 94% | -0.12 | N/A |
CRWD Weekly Chart
CRWD Daily Chart
DraftKings Inc. (DKNG)
Why the Strength
The shutdown may have temporarily halted sports, but it didn’t stop DraftKings from doing good business. The company created numerous alternative betting lines on everything from TV shows and political races to Korean baseball, which helped it through the sports hiatus. Video game-based “e-sports” have also generated revenue for the company in recent months, as have simulated Madden video games with free-to-play fantasy competitions, and management thinks the trend can continue. Now that many sports leagues have restarted (including NASCAR, PGA and UFC), the firm is poised to do very well as management believes pent-up demand for betting will be unleashed as things return to normal. And longer-term, the future of sports betting and online gambling in general is extremely bright as legal restrictions are eased and states look for more revenue; as of mid May, 14 states are actively considering sports betting legislation, including four that have actually passed such bills and three (Iowa, Pennsylvania and Colorado) where DraftKings opened for business (either online sports betting, online gambling or both) in Q1. All in all, the firm’s mobile app is currently available in seven states, and it just announced a new market access deal with Bay Mills Resort & Casino that will bring its mobile sportsbook to fans in Michigan. Last month, DraftKings reported first quarter revenue of $89 million (+30%), but that’s not really material as it includes old businesses prior to the recent business combination. Instead, big investors are paying up for the future, as DraftKings aims to be the dominant national gaming operator. This remains a big idea.
Technical Analysis
We first wrote up DKNG in late April and the stock went bananas after that, advancing all the way to 45 in a persistent, powerful trend. The stock’s eight-day pullback after that was relatively tame, and today brought a big rebound on good volume (and a bunch of bullish options activity). We’ll set a wide buy range, as we’re not opposed to nibbling here but tend to think DKNG could need more time to correct/consolidate given its huge run. Just be sure to use a loose loss limit given the stock’s wild moves.
| Market Cap | $26.0B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | N/M |
| Current P/E | N/A | FY 2019 | N/M |
| Annual Revenue | N/M | FY 2020e | N/A |
| Profit Margin | N/A | FY 2021e | N/A |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | N/M | N/M | 0.02 | N/M |
| One qtr ago | N/M | N/M | -0.01 | N/M |
| Two qtrs ago | N/M | N/M | 0.04 | N/M |
| Three qtrs ago | N/A | N/M | 0.02 | N/M |
DKNG Weekly Chart
DKNG Daily Chart
Fiverr (FVRR)
Why the Strength
Here’s a unique story. The rise of the post-2008 “gig” economy gave birth to Fiverr, which allowed workers to earn a minimum of $5 for doing almost any task. Its current platform connects businesses of all sizes with skilled freelancers offering digital services in more than 300 categories across eight verticals, including graphic design, video and writing. Fiverr lists short-term gigs (much like eBay lists goods for sale) in a catalog that buyers can search and purchase from, with prices ranging anywhere from $5 to over $10,000. Most of Fiverr’s customers are smaller firms with few employees that need a hand with something, but recent efforts have seen it expand to companies with up to 200 customers. It has 2.5 million active buyers as of Q1 (+17% from a year ago), with a spend per buyer of $177—an 18% increase. Revenue is rapidly expanding, including a 42% increase in 2019, and featuring a 44% top line improvement in the latest quarter, with profitability expected by 2022. The pandemic-proof company guided for Q2 revenue in the $36 million range (+37%), and for 37% higher full-year sales—in line with analyst projections. But the real attraction here is the long-term potential: The total U.S. market for digital freelance workers is estimated to be north of $750 billion a year, and Fiverr is currently focused on services that amount to around 17% of this total ($125 billion annually). Given its innovative matching algorithms, international expansion and customer experience improvements, there’s every reason to expect years of rapid growth going forward.
Technical Analysis
FVRR came public last June and immediately slumped before picking up with the market later in the year. Interestingly, the stock hit a higher low during the March crash (20 vs 17 last September) and then went on a massive run, rising eight weeks in a row and pushing as high as 73 before finally pulling in. Like most stocks, the current retreat could easily get deeper, but the weakness so far has been normal—you can enter here or on further dips if you want in.
| Market Cap | $2.06B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -0.65 |
| Current P/E | N/A | FY 2019 | -0.50 |
| Annual Revenue | $117M | FY 2020e | -0.78 |
| Profit Margin | N/A | FY 2021e | -0.43 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 34.1 | 44% | -0.08 | N/A |
| One qtr ago | 29.5 | 43% | -0.08 | N/A |
| Two qtrs ago | 27.9 | 42% | -0.12 | N/A |
| Three qtrs ago | 25.9 | 41% | -0.16 | N/A |
FVRR Weekly Chart
FVRR Daily Chart
Lululemon Athletica (LULU)
Why the Strength
Before the COVID-19 pandemic hit, Lululemon was firing on all cylinders and management was forecasting a doubling of both men’s and digital revenues by 2023, and a quadrupling of international sales. Obviously, the near-term has taken a hit, but the stock is strong today because, after last week’s quarterly report and update, some analysts think those goals are still attainable. The company had seen its sales grow at double-digit levels for more than two years, but coronavirus put a stop to that, as operating income declined by 75% in its latest quarter. But unlike many retailers, Lululemon was still profitable (22 cents per share), and it was able to cash in on the online spending surge, as the company’s digital sales channel saw sales increase 70%. To be fair, inventory did rise 41%, so that will likely dampen results in the current quarter, but Lululemon continues to open more stores (489 in total) and the future looks bright, as Lululemon has reopened about half of its locations already, with the rest likely to be open this month. Of course, the pandemic’s effect on the first half of the year will crimp 2020 results as a whole (revenues likely to be up just 2% on the year, with earnings down), but Wall Street always looks ahead, and big investors are betting that most of the softness is already in the past. Importantly, analysts see 2021 earnings up 48% from this year’s estimate and 27% from last year’s figure, and even that could prove conservative. This is a solid long-term story that’s now back on track as the pandemic eases.
Technical Analysis
LULU was decimated during the crash but the action since then tells us that big investors still view this as one of the best retail stories around. The recovery was solid for the first few weeks, but after a bit of hesitation, really accelerated higher in May, easily pushing to new highs on a steady increase in weekly volume. The downmove since earnings looks like a normal “knockout” move—we’re fine buying here or (preferably) on further dips.
| Market Cap | $36.8B | EPS $ Annual (Jan) | |
| Forward P/E | 68 | FY 2019 | 3.84 |
| Current P/E | 70 | FY 2020 | 4.93 |
| Annual Revenue | $3.85B | FY 2021e | 4.23 |
| Profit Margin | 4.4% | FY 2022e | 6.26 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 652 | -17% | 0.22 | -70% |
| One qtr ago | 1398 | 20% | 2.28 | 23% |
| Two qtrs ago | 916 | 23% | 0.96 | 28% |
| Three qtrs ago | 883 | 22% | 0.96 | 35% |
LULU Weekly Chart
LULU Daily Chart
Novavax, Inc. (NVAX)
Why the Strength
The spread of the virus has slowed in most locations, but the drive for treatments and vaccines is still proceeding at warp speed. There are some 160 COVID-19 vaccines in the works, globally, and Novavax is in the race. While it didn’t get on the White House’s list of five COVID-19 vaccine candidates to support, most experts think it should have, saying that the firm’s candidate (dubbed NVX-CoV2373) is in better shape than at least two of the companies included on the list. In addition to the $384 million the company recently received from the Coalition for Epidemic Preparedness Innovations (CEPI), Novavax was awarded $60 million from the U.S. Department of Defense to help with its vaccine. In the latter part of May, NVX-CoV2373 became the third experimental COVID-19 vaccine in clinical testing; results are expected in July, with phase II testing following immediately after. Looking ahead, the company just bought Czech Republic-based Praha Vaccines for $167 million, giving it a 150,000 square foot manufacturing facility to ramp production if data is positive—Novavax believes that, starting next year, it can produce more than one billion doses annually! However, this story isn’t just about a potential vaccine—the company’s NanoFlu vaccine is right on track, on an accelerated approval path, and if all works out, could be a huge winner for the company and drive earnings in the near-term. Analysts see earnings booming in 2021.
Technical Analysis
NVAX gapped up in January, was able to hold those gains into the March crash, and the stock has done excellently since then. The biggest event was the early-May catapult that lifted the stock above 60 for a while before profit-taking finally set in. What’s interesting is the action since then; instead of a prolonged pullback, shares have actually tightened up on the weekly chart and NVAX bounced off its 25-day line today. Volatility will be huge, but we’re OK taking a swing at it around here.
| Market Cap | $2.64B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -9.99 |
| Current P/E | N/A | FY 2019 | -5.88 |
| Annual Revenue | $18M | FY 2020e | -1.26 |
| Profit Margin | N/A | FY 2021e | 6.67 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 3.4 | -15% | -0.58 | N/A |
| One qtr ago | 8.8 | 44% | -1.13 | N/A |
| Two qtrs ago | 2.5 | -68% | -1.11 | N/A |
| Three qtrs ago | 3.4 | -69% | -1.69 | N/A |
NVAX Weekly Chart
NVAX Daily Chart
Peloton (PTON)
Why the Strength
On the surface, Peloton is just a maker of fancy exercise bikes (and, now, treadmills), but we think it’s much more than that—it’s really the leader in the connected fitness movement, where instead of marching to the local gym 10 or 20 minutes away, you’re able to get a high-quality workout from top-notch instructors from your own home (which, let’s face it, makes it more likely you’ll actually use the thing). Growth has been solid for a while (connected fitness members, who pay $39 per month, nearly doubled last year), and the shut-in has kept growth in high gear, with paying members expanding from 712,000 at year-end to one million as of May 11. And it’s also seeing great demand for its standalone app ($13 per month), which is popular for those who don’t want to shell out $2,000-plus for the bike (176,000 app members at the end of March). Better than just the new sign-ups, though, is the fact that 90%-plus of members stick around and, on average, actually work out more and more over time. Long story short, Peloton has a one-of-a-kind offering, and the top-notch execution and shut-in tailwinds have likely pulled profitability forward by two to three years (the firm is probably going to be EBITDA positive this year). Granted, some of those tailwinds could ease if the economy continues to reopen, but with just 3% of its target market, Peloton’s connected fitness idea should produce excellent growth for many years to come.
Technical Analysis
PTON hit a lifetime low in March, but immediately began to bounce and soared back to its high in mid April, which was a great clue. After a two-week pullback, shares exploded to new highs on earnings and nearly tagged 50 before sellers put up a fight. PTON did take some lumps after that (22% drop from high to low), but net-net, shares have consolidated normally for the past four weeks with no signs of big-volume selling, and tested new high ground today. We’re OK grabbing some here or (preferably) on dips if you don’t own any.
| Market Cap | $13.3B | EPS $ Annual (Jun) | |
| Forward P/E | N/A | FY 2018 | -0.17 |
| Current P/E | N/A | FY 2019e | -0.69 |
| Annual Revenue | $1.44B | FY 2020e | -0.57 |
| Profit Margin | N/A | FY 2021e | -0.44 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 525 | 66% | -0.20 | N/A |
| One qtr ago | 466 | 77% | -0.20 | N/A |
| Two qtrs ago | 228 | 103% | -0.18 | N/A |
| Three qtrs ago | 223 | 109% | -0.17 | N/A |
PTON Weekly Chart
PTON Daily Chart
Redfin (RDFN)
Why the Strength
Home buyers are starting to emerge from their cocoons. Last week, home buying was 25% higher than its pre-pandemic levels in January and February, and there are now eight consecutive weeks of positive numbers. Mortgage applications were also up last week, by 13%. Moreover, low inventory is still an issue, as May’s listings were 15% fewer than last year’s, which is part of the reason prices remain in an uptrend. Of course, some of these figures are helped by seasonality, but all in all, the sector is recovering faster than most expected. The improving dynamics are helping technology-driven Redfin, which is on its way to becoming a huge, nationwide real estate agency. Redfin is one of the fully digital real estate firms that are changing how homes are bought and sold. The company can process the entire real estate transaction online (which, granted, is not that much different than what most real estate companies offer), but it charges sellers far lower commissions (1% if you sell and buy with Redfin within 12 months; 1.5% otherwise), and its agents have a history of selling homes quicker and getting better prices than the competition. Redfin is also moving into ancillary services such as mortgages. The company has been steadily taking share of the real estate market for years, and with the industry getting back on its feet, the future is bright.
Technical Analysis
RDFN looked great in February, but it fell apart during the crash as investors feared a plunge in the housing market. The rally from the bottom has been extremely impressive, including the persistency of the move from the start of May. It did get a bit out of trend two weeks ago, and the current pullback could easily go further. But we also think the odds favor this first retreat giving way to higher prices eventually—dips toward the 25-day line would be tempting.
| Market Cap | $3.23B | EPS $ Annual (Dec) | |
| Forward P/E | N/A | FY 2018 | -0.49 |
| Current P/E | N/A | FY 2019 | -0.88 |
| Annual Revenue | $861M | FY 2020e | -1.00 |
| Profit Margin | N/A | FY 2021e | -0.72 |
| Qtrly Rev | Qtrly Rev Growth | Qtrly EPS | Qtrly EPS Growth | |
| ($M) | (vs. yr-ago-qtr) | ($) | (vs.yr-ago-qtr) | |
| Latest qtr | 191 | 73% | -0.64 | N/A |
| One qtr ago | 233 | 88% | -0.08 | N/A |
| Two qtrs ago | 239 | 70% | 0.07 | 75% |
| Three qtrs ago | 198 | 39% | -0.14 | N/A |
RDFN Weekly Chart
RDFN Daily Chart
Previously Recommended Stocks
Below you’ll find Cabot Top Ten Trader recommended stocks. Those rated HOLD are stocks that traded within our suggested buy range within two weeks of appearing in the Top Ten and still look good; hold if you own them. Stocks rated WAIT have yet to dip into our suggested buy range … but can be bought if they do so within the next week.
Those stocks rated SELL should be sold if you own them; they will no longer be listed here. Finally, Stocks in the DROPPED category are those that failed to trade within our buy range within two weeks of our recommendation; that’s not a bad thing, we just never got the price we wanted. Please use this list to keep up with our latest thinking, and don’t hesitate to call or email us with any questions you may have. New recommendations each week are in green.
| HOLD | |||||
| 6/1/20 | Adaptive Bio | ADPT | 37.5-39.5 | 44 | |
| 5/26/20 | Allogene Thereapeutics | ALLO | 46-48.5 | 42 | |
| 3/16/20 | Apple | AAPL | 238-248 | 343 | |
| 4/20/20 | ASML Holdings | ASML | 285-295 | 350 | |
| 6/1/20 | Arconic | ARNC | 14-15 | 16 | |
| 5/11/20 | Atlas Air Worldwide | AAWW | 36.5-38.5 | 41 | |
| 6/8/20 | Autodesk | ADSK | ? | 220-230 | 229 |
| 5/18/20 | Avalara | AVLR | 97-100 | 113 | |
| 5/4/20 | Bandwidth | BAND | ? | 90-94 | 122 |
| 5/18/20 | Beyond Meat | BYND | 122-128 | 154 | |
| 6/1/20 | Bill.com | BILL | 69-73 | 78 | |
| 5/26/20 | BJ’s Wholesale | BJ | 34-36.5 | 34 | |
| 6/8/20 | Carrier Global | CARR | 21.5-23 | 22 | |
| 5/11/20 | Chegg | CHGG | ? | 58-62 | 59 |
| 3/23/20 | Chewy | CHWY | ? | 29-32 | 47 |
| 4/13/20 | Ciena | CIEN | 42.5-44 | 54 | |
| 3/23/20 | Cloudflare | NET | 19-21 | 31 | |
| 3/23/20 | Coupa Software | COUP | 124-132 | 238 | |
| 4/20/20 | CrowdStrike | CRWD | 65-67.5 | 99 | |
| 6/8/20 | Datadog | DDOG | 72.5-77 | 82 | |
| 11/11/19 | Dexcom | DXCM | 196-205 | 399 | |
| 9/9/19 | DocuSign | DOCU | ? | 55-58 | 163 |
| 5/4/20 | DraftKings | DKNG | 19.5-21.5 | 42 | |
| 6/1/20 | Dynatrace | DT | 35-37 | 39 | |
| 6/8/20 | Elastic | ESTC | 78.5-82.5 | 86 | |
| 5/18/20 | Fastly | FSLY | 36-39 | 52 | |
| 4/6/20 | Five9 | FIVN | 74.5-78 | 104 | |
| 5/4/20 | Halozyme | HALO | 22.5-24 | 23 | |
| 5/26/20 | Horizon Therapeutics | HZNP | 45.5-48 | 47 | |
| 6/1/20 | II-VI | IIVI | 45.5-48 | 48 | |
| 4/20/20 | Immunomedics | IMMU | 20.5-22 | 31 | |
| 3/16/20 | Inphi | IPHI | ? | 62.5-66 | 116 |
| 6/8/20 | Marvell Tech | MRVL | 32.5-34 | 34 | |
| 5/11/20 | MercadoLibre | MELI | 750-790 | 924 | |
| 5/26/20 | Neurocrine Bio | NBIX | 114-119 | 115 | |
| 3/30/20 | Nvidia | NVDA | 250-270 | 367 | |
| 3/30/20 | Okta | OKTA | ? | 118-126 | 187 |
| 6/1/120 | Pan American Silver | PAAS | 27-29 | 27 | |
| 4/27/20 | PayPal | PYPL | ? | 117-122 | 158 |
| 4/6/20 | Pelaton | PTON | 27-29 | 50 | |
| 4/27/20 | Pinduoduo | PDD | ? | 48-51.5 | 78 |
| 5/11/20 | Schrodinger | SDGR | 53-56 | 67 | |
| 3/2/20 | Seattle Genetics | SGEN | ? | 107-111 | 156 |
| 4/20/20 | Shopify | SHOP | 575-615 | 805 | |
| 5/26/20 | Spotify | SPOT | ? | 184-191 | 188 |
| 6/8/20 | Square | SQ | 85-89 | 91 | |
| 10/28/19 | Teladoc | TDOC | 69-72 | 188 | |
| 11/11/19 | Tesla | TSLA | 320-335 | 991 | |
| 5/11/20 | TG Therapeutics | TGTX | 17.5-19 | 18 | |
| 6/8/20 | Thor Industries | THO | 101-106 | 114 | |
| 6/1/20 | Tractor Suppy | TSCO | 115-119 | 121 | |
| 6/8/20 | Trade Desk | TTD | 338-358 | 371 | |
| 6/8/20 | Trex | TREX | 117-122 | 117 | |
| 5/11/20 | Twilio | TWLO | 175-187 | 203 | |
| 10/28/19 | Vertex Pharm. | VRTX | ? | 191-196 | 268 |
| 5/26/20 | Wayfair | W | 152-162 | 193 | |
| 5/11/20 | Wingstop | WING | 116-122 | 120 | |
| 5/26/20 | Wix.com | WIX | 195-205 | 221 | |
| 2/24/20 | Zoom Video | ZM | ? | 96-104 | 239 |
| 4/6/20 | Zscaler | ZS | 61-64 | 105 | |
| WAIT | |||||
| None this week | |||||
| SELL RECOMMENDATIONS | |||||
| 5/18/20 | Fortinet | FTNT | 137-143 | 136 | |
| 5/26/20 | Guardant Health | GH | 87.5-91.5 | 81 | |
| 6/1/20 | LiveRamp | RAMP | 48-50 | 44 | |
| 5/18/20 | MyoKardia | MYOK | 106-110 | 96 | |
| 5/26/20 | 1Life Healthcare | ONEM | 32.5-35 | 32 | |
| 4/20/20 | Tradeweb Markets | TW | 50-52 | 63 | |
| 4/13/20 | Wheaton Precious Metals | WPM | 31-32.5 | 40 | |
| DROPPED | |||||
| None this week | |||||
The next Cabot Top Ten Trader issue will be published on June 22, 2020.