The Christmas bottom of 2018 will long live in my memory, because it provided a perfect prelude to the market’s sizzling advance in January 2019.
With all the weak hands bailing out of the market on fears of trade wars and a squabbling U.S. Congress, the bulls were free to take control of the market, and so they have.
And what excites me right now are the growth stocks hitting new highs! These are the market leaders, and thus these are the stocks with the greatest potential to bring you profits in the months ahead.
So let’s run down five of the most exciting.
Five Stocks Hitting New Highs
Stock Hitting New Highs #1: Chegg (CHGG)
This California company was founded in 2005 as a textbook-rental company but over the past two years, it has transitioned to a purely digital company, and now provides study guides and textbooks (through a partnership with Ingram) to more than 2.2 million high school and college students.
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Today, Chegg is not only the best non-required homework help service, it’s also the largest, with 18 million expert-answered Q&As and 7 million step-by-step textbook solution sets.
In the third quarter of 2018, revenues grew 19% to $74 million, while earnings jumped 600% to $0.07 per share. For 2019, the company is projecting total revenues near $388 million, up roughly 30% from 2018, while analysts are expecting earnings growth of 26%.
The stock broke out to new highs in mid-January and has yet to look back.
Stock Hitting New Highs #2: Cronos (CRON)
Cronos is the Canadian cannabis company that Altria (MO) selected for a $1.8 billion investment last December—which gets the tobacco giant about 45% of the company. Obviously, the maker of Marlboro cigarettes knows a few things about selling recreational drugs to people.
At present, Cronos is still a small company; its latest quarterly report revealed revenues of just $3.8 million. But that was up 186% from the year before, and it was for the quarter ended September 30, which was before legal adult-use sales of marijuana began in Canada. So there’s no doubt that there’s a lot more fast growth ahead, whether it’s in smoked marijuana or ingested cannabidiol (CBD) or any other form of cannabis that Altria can sell to the masses.
As for the stock, it’s performed superbly in recent months, blasting off from a low of 10 in late December, breaking out above its old high of 14 in mid-January and climbing to nearly 20 earlier this week. Its average trading volume even exceeds that of industry leader Canopy Growth (CGC).
Somewhere ahead, there’s going to be a substantial correction, but it’s hard to know when. (Readers of my Cabot Marijuana Investor advisory have profits of over 500% in this marijuana stock, and last week I recommended partial profit-taking to reduce risk and increase diversification.) But long term, the future is very bright for this leading player in the fastest-growing industry in America, and if I didn’t own it, I’d be looking to buy at the next lower-risk entry point.
Stock Hitting New Highs #3: Exact Sciences (EXAS)
Everyone who hates colonoscopies should love Exact Sciences because it’s got a better way—named Cologuard. Basically, the firm uses molecular diagnostics to detect colorectal cancer and pre-cancer in colon cells that have been exfoliated by stool samples that customers mail in.
The company is not yet profitable, but business is booming. In fact, in 2018, 934,000 patients were screened for cancer, and nearly 15,000 healthcare providers ordered Cologuard screening for the first time.
In the third quarter of 2018, revenues were $118 million, up 63%, and for the full year of 2018, management expects to report revenue growth of 71%.
As for the stock, it’s been a big mover, in both directions, so it’s not for the faint-hearted, but the long-term trend is clearly up. And the fact that EXAS was able to break out to all-time highs in mid-January—and keep rising day after day since—is a big positive.
Stock Hitting New Highs #4: Okta (OKTA)
Okta is the kind of company that is likely to be bought by a larger one, once its threat to the bigger one’s existence becomes harder to ignore. But that doesn’t mean it’s easy to describe Okta’s offerings.
In brief, the company’s “Identity Cloud” is the foundation for secure connections between people and technology, so that when you do anything online, with any of your devices, both you and the party you are working with—whether it’s your broker or your doctor or your employer—are able to trust that the other party is legitimate and not an imposter.
Once companies sign on to use Okta’s services, they tend to stay, so recurring income from licenses is very high. And growth is rapid too. In the latest quarter, revenues were $106 million, up 58% from the year before.
There are no profits yet, because the company is still in grow-fast mode, but eventually, all the recurring income will turn this business into a real profit machine.
As for the stock, it’s been a big mover, shedding 45% of its value last fall as the market swooned, and bouncing back even faster, breaking out to new highs in mid-January and hitting higher highs since then.
Stock Hitting New Highs #5: Twilio (TWLO)
Twilio has a universal, customizable and easy-to-program communications platform that any company can use to automate and simplify communications to customers, clients or coworkers. In fact, just as Salesforce became the standard in marketing software, Twilio is becoming the standard in communications software.
Coca-Cola Enterprises, for instance, uses Twilio to rapidly dispatch service technicians. Airbnb uses it to automatically text rental hosts information of potential guests, including dates and the price of a stay. The Red Cross of Chicago automatically sends texts to volunteers in an area with pertinent info about a disaster. Trulia uses Twilio to power its click-to-call app so potential buyers can hook up with an agent quickly. EMC uses the platform to quickly send texts to employees when an IT service goes down. Lyft uses Twilio to provide real-time driver updates with text messages, while allowing passengers and drivers to call one another without sharing their personal phone numbers. Yelp is using the platform to allow restaurants to automatically text users that booked a reservation through its website, and for users to respond. Nordstrom connects shoppers and salespeople via a mobile app so customers can privately text their salespeople when they need assistance.
The fundamentals are great; sales growth has accelerated over the past few quarters, (up 68% in the latest quarter to $169 million) and earnings have pushed into the black.
And most impressive of all is the action of the stock; after breaking out to new highs in mid-January and then marking time just above 100 for a couple of weeks, the stock absolutely soared late last week, easily jumping above 110!
Now, those are simply five growth stocks hitting new highs. If you want more stock ideas—whether they’re hitting new highs or not—I suggest you take out a subscription to my Cabot Stock of the Week investment advisory. Every week (no matter what—even during the depths of the fourth-quarter market correction!) I give you one fresh stock pick recommended by one of our eight expert investment analysts. My Cabot Stock of the Week portfolio currently boasts of an average gain of 83.8% among its 16 stock recommendations!
If those sound like the type of returns you’re looking for, click here.
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