Adding to your winners, even only $500, can help to juice your returns over the long-term. Companies that benefit from stock appreciation can often stay on that momentum for many years, or maybe even decades.
We asked two investing experts to pick one company that they would add money to today without a second though. They picked Qualcomm and Twilio.
Apple’s upcoming release of fresh iPhones should bring interest back to the smartphone world and, by extension, to Qualcomm. For all its work to create its own chip, Apple and other smartphone companies are dependent on Qualcomm and its huge portfolio of wireless patents to create their premium devices.
Qualcomm has raked it in from a huge 5G upgrade cycle. Grand View Research predicts a compound annual growth for the sector of 69% through the year 2028, taking the industry’s value to more than $66 billion by then.
The company earned revenue of $24.2 billion for the starting nine months of fiscal 2021. This is a boost of 60% compared with the same time frame in 2020. Earnings increased 179% during the timeframe to $6.2 billion as its overall costs grew at a slower rate.
For the fourth quarter, the company predicts between $8.4 billion and $9.2 billion for revenue, which is a 5% increase from the year-ago levels. However, the 2020 numbers point to a front-loading of the company’s revenue growth since the company benefited from Apple’s first 5G iPhone along with higher chip sales during the pandemic. This helps the likelihood that revenue will increase and go back to double-digit levels as the pandemic affects the economy less.
Twilio is probably best known as being a messaging service that Uber created using its platform. The capability for drivers and riders to easily privately message each other was important to making a great experience for Uber customers. The company has done a lot more since then. Although messaging is still its core, Twilio has created a new suite of products. It is likely that the market might be underestimating the long-term possibility of this winner.
The company’s organic growth is coming in at a great 55% y/y for its most recent quarter. On top of the solid growth, investors love that the company has landed customers at a quick pace, and gets them to consistently increase their spending over time.
But the company is not done growing. It has been expanding its total addressable market and increasing its optionality. In 2017, it estimated its market was $45 billion. Today, with more capability and demand increasing for its technology, its 2023 TAM is around $110 billion. The company splits into seven subgroups. The three biggest groups representing $23 billion to $25 billion markets each: email and marketing, APIs, and its data platform. These big addressable markets give Twilio lots of room to expand for many years into the future.
Author: Scott Dowdy