The Robinhood app has become the go to investment platform for the millennials. Best known for offering commission-free trades, Robinhood has caused quite a stir in the market with many investors on the platform favoring short-term trends While popularity of a stock definitely affects its price movement over a short-term, tricky market conditions call for a long-term approach for maximizing gains…
The current scenario could result in another correction this month owing to a number of factors. The election results, rapidly rising COVID-19 cases, and the uncertainty over the next fiscal stimulus are just a few of them. Therefore, it is critical to choose a stock based on its ability to withstand a temporary downturn and emerge strong based on fundamentals. The late October sell-off is a reminder that things are still risky and investors need to tread cautiously. At this stage, they should pick stocks that not only are popular, but also possess a business model to withstand or capitalize on the current health crisis.
Zoom Video Communications, Inc. (ZM), Berkshire Hathaway Inc. New (BRK.B), and Shopify Inc. (SHOP) are three such stocks that have innovative and almost recession-proof business models. The offerings of these companies will continue to be in demand in the “new normal.” While ZM and SHOP have flourished during the pandemic, BRK.B is great as a long-term ‘Buy’ due to its diversified line of businesses.
Zoom Video Communications, Inc. (ZM)
ZM is a technology company that offers video and online chat services enabled by a cloud-based peer-to-peer software platform. It is also used for telecommuting, distance education, social chats, and webinars. The pandemic-induced lockdown did wonders for the company as people across the globe flocked to ZM to replace in-person meetings with video calls. The company also plans to expand to online event hosting. More than 900 customers contribute over $100,000 to the company’s trailing 12-month revenue.
Recently, the company announced the launch of a feature which allowed end-to-end encryptions for free meetings to offer equally security features to paid as well as free accounts. In May, ZM also acquired Keybase to leverage its encryption technology. However, the encrypted call users wouldn’t be able to access Zoom’s cloud recording or live transcription.
During the second quarter that ended June 2020, ZM’s total revenue surged 355% year-over-year to $663.5 million. EPS for the quarter tripled to $0.63 from $0.02 posted in the same period a year ago. At the end of the second quarter, the company had nearly 370,200 customers, up 458% year-over year.
Analysts estimate its third-quarter revenue to be $639.35 million, indicating a 316.2% rise year-over-year. Meanwhile, EPS for the quarter is likely to surge 744.4% to $0.76. ZM expects its revenue for the quarter that ended September 2020 to be between $685.0 million and $690.0 million.
On a year-to-date basis, ZM has rallied 563.6% to close yesterday’s session at $ 483.70. During the past six months, ZM has soared 225.9%. As the social distancing norm is likely to continue due to the emergence of a second wave of COVID-19, videoconferencing will remain dominant, favoring ZM.
How does ZM stack up for the POWR Ratings?
B for Trade Grade
B for Peer Grade
B for Overall POWR Rating
The stock is also ranked #5 out of 54 stocks in the Technology – Services industry.
Berkshire Hathaway Inc. New (BRK.B)
BRK.B is a multinational holding company for multiple businesses and is managed by the legendary investor, Warren Buffet. Most of its subsidiaries are into insurance, however, BRK.B’s business is diversified including GEICO, Northern Santa Fe, Dairy Queen, Pampered Chef, Burlington, Fruit of the Loom, and NetJets. The company also has positions in various larger technology corporations. Bufett’s strategy of investing or acquiring businesses with a competitive edge has surely worked in BRK.B’s favor.
In October, Mitsui CEO Tatsuo Yasunaga revealed that they are likely to partner with BRK.B on new business and other areas leveraging their global network.
BRK.B’s total revenue during the second quarter that…
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