This tech stock beat analysts’ earnings estimates by $0.04 last quarter, and the company is expected to grow at a 33.2% annual rate over the next five years. Coverage of the shares were just initiated at Needham with a ‘Buy’ rating.
Twilio Inc. (TWLO)
From Cabot Growth Investor
Twilio Inc. (TWLO) has been a great performer so far this year, and really, we think it’s one of
the flag-bearers of this bull phase for growth stocks—the company’s communications platform is both pervasive, meaning every firm is a potential customer (even we use it!), and makes life easier for everyone. One of the most stunning statistics we’ve seen is the firm’s same-customer revenue growth—in Q1, it was up 46% from a year ago!
As for the stock, it hasn’t been the smoothest performer, with numerous pullbacks (including two poor post-earnings reactions), but it’s found support near its 50-day line on multiple occasions and nosed out to new highs after the market got going in early June, confirming that big investors are still picking up shares (even after a good-sized share offering in May).
Bigger picture, we think TWLO has farther to run—like we wrote above, we think one of the flag-bearers of the bull move, and given the unique fundamental story, it has the rapid and reliable growth that is catnip to institutional investors.
Near-term, though, there’s a bit higher risk given that the stock hasn’t had a “real” correction all year while kiting higher by about 50 points. We took partial profits (selling one-third of our position) a few weeks ago, but are aiming to give our remaining shares plenty of leeway to correct if need be so we can capture a potential larger longer-term move.
Michael Cintolo, Cabot Growth Investor, www.cabotwealth.com, 978-745-5532, June 24, 2019