Dogecoin (CRYPTO: DOGE) has been everywhere in the information in 2021, and for good motive. By early Could 2021, this meme-inspired cryptocurrency had gained over 12,000% because the begin of 2021. And even now, when Dogecoin is greater than 40% beneath its all-time excessive of $0.74, it’s nonetheless 6,880% up thus far this yr (as of this writing).
However Dogecoin is extraordinarily unstable, and isn’t backed by any asset. Its rally has been primarily fueled by Reddit hype and superstar endorsements. Dogecoin has no important aggressive benefit over different cryptocurrencies — be it transaction charges or fee speeds. Retail traders ought to avoid such speculative investments to safeguard their portfolios from excessive ups and downs.
As an alternative, I’ve three firms in thoughts which might be driving large secular tailwinds and might develop dramatically within the coming months — all with out considerably growing your portfolio threat. Let’s examine why PayPal Holdings (NASDAQ: PYPL), Lemonade (NYSE: LMND), and Novocure (NASDAQ: NVCR) match the invoice.
Picture supply: Getty Photos.
A pioneer in digital funds, PayPal has benefited dramatically from the accelerated adoption of e-commerce and digital transactions, a pattern that can probably proceed after the pandemic ends.
On the finish of the primary quarter (ended March 31), PayPal had 392 million energetic buyer accounts and 31 million service provider accounts on its platform. As an increasing number of customers be part of PayPal, the fee facilitator turns into much more unavoidable for companies, which then attracts much more prospects. This community impact is tough to disrupt and is a strong entry barrier for competitors.
To draw much more prospects, PayPal has centered on introducing a variety of progressive services equivalent to cashless payment options for in-store purchases together with fee playing cards, QR codes, and tap-and-pay and purchase now, pay later functionality for its PayPal and Venmo wallets. For purchasers utilizing purchase now, pay later, PayPal has famous a 15% enhance in complete fee quantity and 16% decline in price per transaction (since debit funds are cheaper).
Within the first quarter, PayPal income, adjusted earnings per share (EPS), and free money move soared yr over yr by 31%, 84%, and 27%, respectively. The corporate expects its complete energetic accounts to extend by 52 million to 55 million in fiscal 2021 and TPV to leap yr over yr by 30%. PayPal is now anticipating its fiscal 2021 income and adjusted EPS to be up yr over yr by 20% and 21%, respectively, in fiscal 2021.
Buying and selling at 13.6 occasions trailing-12-month (TTM) gross sales, PayPal will not be the most cost effective inventory in the marketplace. Nonetheless, in a world quickly going cashless, this digital funds large might be a sexy funding for retail traders even at these elevated ranges.
Insurance know-how firm Lemonade’s inventory is over 47% beneath its all-time excessive of $190 from January as of this writing. Buyers are disenchanted by the corporate’s first-quarter (ended March 31) loss ratio (proportion of claims incurred to premiums collected) of 121%, which is dramatically greater than the 71% for fiscal 2020. The property harm brought on by Winter Storm Uri in Texas resulted within the firm processing “a yr’s price of claims in only a few days.” Such pure catastrophes are principally unpredictable, though some quantity of draw back might be protected by reinsurance.
Regardless of these challenges, Lemonade has proven progress the place it actually issues. Within the first quarter, the corporate’s complete prospects rose 50% yr over yr to 1.1 million, in-force premium (mixture annualized premium) was up 89% to $252 million, and premium per buyer rose 25% to $229. These numbers spotlight the energy of Lemonade’s tech-enabled disruptive customer support mannequin, which permits customers to buy insurance policies and course of claims in a matter of minutes. The corporate’s foray into pet insurance coverage, life insurance coverage, and now automobile insurance coverage has additionally opened a number of cross-selling alternatives.
Lemonade now expects its fiscal 2021 income to rise by 24% to twenty-eight% yr over yr, up from the earlier steerage of 21% to 24%. The corporate additionally maintained its earlier EBITDA loss steerage of $163 million to $173 million, regardless of increased losses incurred within the first quarter. Lastly, the corporate is sitting on a $1.03 billion unrestricted cash pile, which is adequate to cowl most of its losses at the very least for the following few years.
Lemonade is buying and selling at a wealthy price-to-sales (P/S) a number of of about 59. Nonetheless, contemplating that the corporate collects over 100 times more data from its prospects than conventional insurers, Lemonade can leverage its synthetic intelligence (AI) capabilities to develop a a lot stronger buyer expertise and threat administration system. The corporate makes use of AI-based bots and information capabilities for buyer acquisition and claims processing, which helps it scale back its payroll bills. This technology-focused method has enabled the corporate to supply cheaper policies for comparable protection. Therefore, younger customers (with increased lifetime worth) are more and more choosing Lemonade over conventional insurers. Towards this backdrop, the corporate presents a sexy risk-reward proposition to long-term traders, even at increased valuation ranges.
Medical machine firm Novocure has provide you with a novel know-how to battle aggressive cancers. The corporate’s flagship product is a wearable and moveable machine referred to as Optune, which works by creating tumor-treating fields (TTFs). These are electrical fields that assist management most cancers cell division with out affecting wholesome cells.
The U.S. Meals and Drug Administration (FDA) has already accredited the usage of Optune for treating mesothelioma (a uncommon most cancers triggered as a consequence of asbestos publicity) and for 2 varieties of glioblastoma multiforme (GBM), which is aggressive mind most cancers. Within the first quarter, the corporate’s energetic sufferers rose 12% yr over yr to three,454. Whereas GBM is the corporate’s most important income driver, there’s nonetheless a lot room to develop contemplating that penetration on this indication within the U.S.; Europe, the Center East, and Africa (EMEA); and Japan is barely 37%, 34%, and 31%, respectively.
Novocure’s TTF therapy can also be being evaluated in different aggressive cancers equivalent to non-small cell lung most cancers (NSCLC), pancreatic most cancers, ovarian most cancers, and gastric most cancers. Investor hopes are excessive for these pipeline applications, particularly after the FDA allowed the corporate to scale back the enrollment requirement for the management arm within the section 3 pivotal Lunar trial evaluating the efficacy of TTFs in superior NSCLC. This resolution is predicated on an interim evaluation of the trial by an impartial information monitoring committee. Based on the committee, “it’s probably pointless and presumably unethical for sufferers randomized to the management arm to proceed accrual to 534 sufferers with 18 months follow-up.” Whereas the medical trial information is blinded for Novocure, it’s utterly unblinded for for the info monitoring committee. With the committee contemplating it unethical to refuse TTF therapy to sufferers within the management arm, it appears apparent that Novocure’s product is demonstrating important medical advantages.
Within the first quarter, the corporate’s income was up yr over yr by 32% to $134.7 million, whereas adjusted EBITDA rose 40% yr over yr to $21 million. The corporate had $864 million of money on its steadiness sheet at finish of the primary quarter. In contrast to many medical know-how firms with progressive merchandise, Novocure is already worthwhile. In fiscal 2020, the corporate reported a internet revenue of $20 million. Towards this backdrop, regardless of buying and selling at a P/S a number of of over 40, the inventory can show to be a sexy funding for retail traders.
10 shares we like higher than PayPal Holdings
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Manali Bhade has no place in any of the shares talked about. The Motley Idiot owns shares of and recommends Lemonade, Inc., Novocure, and PayPal Holdings. The Motley Idiot recommends the next choices: lengthy January 2022 $75 calls on PayPal Holdings. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.