3 High-Growth Software Stocks Worth Buying As Sector Selloff Continues
Investing.com | Sep 11, 2019 04:35
After rallying sharply this year, many high-growth software stocks have experienced a sudden drop. This week alone, names like Shopify (NYSE:SHOP), Twilio (NYSE:TWLO) and Paycom (NYSE:PAYC) have already fallen by double digits, on no news whatsoever. Considering the industry’s robust growth outlook, the bloodbath doesn’t seem justified.
While the full-year fiscal 2020 guidance came in on the soft side, it projected better-than-expected billings and revenue growth through 2022. Taking all this into consideration, Palo Alto is in a prime position to be a leading name in the cybersecurity space in the years ahead.
Trade Desk: Rapidly Expanding Digital Ad-Buying Specialist/h2
Trade Desk (NASDAQ:TTD) shares have fallen 38% since reaching an all-time high of $289.51 on Aug. 8. It closed at $210.06 last night, giving it a market cap of $9.45 billion. Despite the pullback, the stock has generated staggering returns so far this year, soaring 81%.
From a technical standpoint, shares are approaching key support near their 200DMA, which has acted as a level at which they have rebounded in the past.
The Ventura, California-based online advertising marketplace easily beat estimates on both the top and bottom lines when it released earnings for its fiscal second quarter on Aug. 8. Earnings per share totaled $0.95 in the period ended Jun. 30, blowing past expectations for EPS of $0.68 and up 58% from $0.60 in the same period a year earlier. Revenue surged 42% YoY to $159.9 million, above forecasts of $155.1 million.
The strong quarterly results were boosted by growing demand for its self-service software platform, where customers can buy and manage data-driven digital advertising campaigns.
As it continues to benefit from a burgeoning wave in digital ad-buying, the software-as-a-service (SaaS) company said it expects third-quarter revenue of $163 million, which would represent a YoY sales growth rate of 37%.
Okta: Fast-Growth Identity Managment Firm /h2
Shares of Okta (NASDAQ:OKTA), one of the fastest-growing names in the cloud-based identity management software sector, have slumped 22% since Aug. 22. The stock ended at a three-month low of $107.22 yesterday, giving it a valuation of $12.5 billion. Despite the recent selloff, Okta’s stock is still up 68% since the start of the year.
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From a technical perspective, the stock needs to stay above its key 200DMA close to the $96.99-level in the near-term to show that selling pressure has been exhausted.
The San Francisco-based cybersecurity firm posted better than expected results for its fiscal second quarter on Aug. 28, thanks to strong demand from large enterprises for its cloud-based identity and access management software. Customers with annual contracts valued at above $100,000 jumped 46% YoY to 1,222 in the three-month period ended Jul. 31.
Sales rose 49% from the same quarter a year earlier to $140.48 million, easily topping forecasts for revenue of $131.18 million. It lost $0.05 per share, better than expectations for a loss of $0.10 per share and narrowing losses from $0.15 per share in the year-ago period.
Okta's explosive growth is far from over: the cloud identity management provider is forecasting third-quarter revenue of $143 million to $144 million, representing YoY revenue growth of 35% to 36%. It also raised its full-year revenue guidance to $563 million, representing an annual growth rate of 41%.
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