Both Pfizer and Moderna have gone public with the news that they each have a 90%+ effective COVID-19 vaccine – fantastic news no matter how you slice it.
But there’s a catch.
Not until late Spring next year will either vaccine start to become readily available. That means we’re in for a long winter and certain stocks will continue to benefit from Americans continuing to quarantine.
Here are 3 of our top picks.
“Stuck at Home” Stock #3: Zoom Communications (ZOOM)
We’ve heard so much about Zoom Video Communications, Inc. (NASDAQ:ZM) in the past year. The cloud-based video communications platform software sets up audio and videoconferencing, along with tools to share content. It stormed corporate America at the start of the pandemic and hasn’t lifted its foot from the gas pedal.
Zoom anticipates revenue of $910 million for the 2021 fiscal year versus $622.7 million in 2020, showing a 46% increase. Its market capitalization sits at more than $110 billion well above many of the current S&P 500 stocks.
Credit Suisse analyst Brad Zelnick said, “Zoom has been able to capture mind share, expand the funnel and will likely benefit longer-term as organizations appreciate its product leadership and effectiveness in enabling remote collaboration during and post COVID-19.”
Zoom is a good candidate for longterm investors that appreciate the company’s performance, product and popularity.
“Stuck at Home” Stock #2: RingCentral (RNG)
Unsung hero RingCentral, Inc. (NYSE:RNG) is a software-as-a-service solution providor that enables businesses to automatically route inbound calls to communicate, collaborate, and connect via IP phones mobile devices, PCs, and in videoconferencing rooms.
The stock has risen nearly 62% for the year, most significantly it rose 42% at the beginning of October, not all atibuted to the pandemic.
Because in October RingCentral became the sole providor of cloud-based unified communications (UC) solutions to Avaya (NYSE:AVYA), that would include more than 141 million UC lines deployed with customers worldwide.
In 2019 RingCentral reported revenue of $903 million, up from $674 million in 2018, representing a 34% growth rate and revenue is projected to be $1.164 billion for 2020.
The Avaya partnership will set RingCentral apart from the rest of the SaaS companies. It sets itself up for short term gains from the pandemic and long-term stability with its new partner and its huge base.
“Stuck at Home” Stock #1: Citrix (CTXS)
Citrix Systems, Inc. (NASDAQ:CTXS) is a provider of virtual-desktop technology that allows employees secure access to corporate programs from any device anywhere. The tools that power modern productivity.
Citrix is in a transition right now moving away from perpetual licensed products to SaaS-only options, an industry trend.
As a result revenue growth has decelerated but in the future the increasing SaaS mix and growing accounts receivable ratio will put Citrix more in line with its peers and investor expectations.
Although the stock has lost around 30% since its high in July, it requires patience and investors can buy it now at a discounted price. Its pro forma EPS guidance for FY21 looks advantageously valued at greater than 20x.
And Citrix’s revenue grew 5% year over year to $767.9 million for the third quarter ending in September, outperforming Wall Street’s consensus expectations of $758.1 million.
Citrix’s subscription ARR crossed the $1 billion mark for the first time, as of the end of the third quarter, growing 53% year over year to $1.03 billion. With an ARR of $630 million, SaaS is the overwhelming majority of this ARR base.
Bottom Line: All three of these stocks are well positioned to perform beyond the end of the pandemic. The work from anywhere economy is most likely here to stay as companies realize the benefits of reduced overhead in office space and resources required to maintain them.
The BLI Staff