Major US indices have had a strong start up to 2019. The best performance in January reached a 7.8% in three decades, while the markets returned successfully from a bad end to 2018. The NASDAQ has since the 11th year, 5% won.
Market names such as Facebook (NASDAQ 🙂 (NASDAQ: FB), Amazon (NASDAQ 🙂 (NASDAQ: AMZN), Netflix (NASDAQ 🙂 (NASDAQ: NFLX) and Google parent alphabet (NASDAQ 🙂 (NASDAQ: GOOGL ), called the FAANGs – all had strong profits during the period, with Facebook and Netflix respectively around 30% and 33% for the period. That is impressive until you dig a little deeper into the performance of shares in the technology sector.
There appears to be a lesser-known group of technical shares that drove even higher: the Software & Services Industry Group (NYSE: XSW), which is currently just below a historical record. It has added roughly 18% since the beginning of 2019 and is performing considerably better than the NASDAQ.
XSW versus NASDAQ
Joint names such as Microsoft (NASDAQ 🙂 (NASDAQ: MSFT) (+ 5.5% this year), Adobe (NASDAQ 🙂 (NASDAQ: ADBE) (+ 12.6%) and Salesforce (+ 16%) are all associated with the sector, but they are some of the smaller, less well-known names in the group that have had a dazzling activity, but have remained relatively unnoticed
Of the 164 shares in the group, we have smeared three of them that we regard as hidden gems. In fact, they can offer investors a strong long-term growth potential. Each is worth considering, in anticipation of their quarterly earnings reports later this month.
1. Twilio: provider of cloud communication platforms
The shares of Twilio (NYSE: TWLO), specialist in cloud communication platforms, have increased by 27.5% since 1 January. Even better, the shares have gained about 90% since they were marked as an important software sector in June.
Twilio shares have almost doubled in less than five weeks since the most recent low of $ 73.15 on 24 December. It is currently trading at a highest point ever of $ 113.89 from the final day of last night.
TWLO 300 minutes Graph
Twilio then reports the profit after the US market closed on Tuesday, February 12. Consensus calls for a profit per share of $ 0.04 from $ 184.43 million for the fourth quarter. The company announced a loss of $ 0.03 per share in the same period a year earlier with sales of $ 115.24.
More importantly, investors will keep an eye on Twilio's update on their active customer accounts to see if the software vendor can maintain its decayed pace of growth by dividing its customer base other than Uber, which is 25% of his turnover was. The company announced in its quarterly report of 3 revenues that it had 61,150 customers.
Twilio has been busy in the field of innovation. In 2018, the company launched the general availability of Twilio Flex Roadmap, the company's fully programmable application platform contact center, and pushed Twilio Pay, which allows companies to easily and securely accept payments over the phone
The company also made strategic acquisitions of Ytica, an analytics-driven software company for optimization of staff, and SendGrid, the world's largest cloud-based email delivery platform, with which Twilio is positioned to deliver leading name in the cloud communications space in the future year.
Shares have risen 212% since the IPO in July 2016.
2. Commercial desk: Digital advertising buying platform
The shares of the Trade Desk (NASDAQ: TTD) have suffered a rupture so far this year, with an increase of nearly 34%, with investors becoming bullies with the specialist in digital advertising. The company, which operates a self-service software platform where customers can purchase and manage data-driven digital advertising campaigns with their own teams, has benefited from a growing wave of digital advertising.
The stock has reached 45% since it reached a low of $ 102.35 on December 24. It currently trades at $ 155.16 from the end of yesterday, just below the record level of $ 161.50 reached at the end of September.
TTD Daily chart
The Trade Desk is expected to announce the results for the fourth quarter on Thursday 21 February after the closing. Consensus calls for a profit per share of $ 0.80 on $ 147.79 million. The company reported earnings of $ 0.54 per share in the same period last year and $ 102.65 in revenue.
Investors will want to know if the company intends to retake its guidelines, something it has done in each of the last three quarters.
According to International Data Corporation, global digital advertising spending is expected to grow from $ 229 billion in 2017 to $ 360 billion in 2021, accounting for nearly half of the total advertising market. It is therefore no surprise that the Trade Desk has seen a stunning 415% rise from the September 2016 IPO price of $ 29.12. The company is in an excellent position to benefit from this trend in the coming years.
3. Workday: Enterprise Software Solutions
Workday (NASDAQ: WDAY) provides enterprise-level software solutions for financial management and human resources, such as salary tools. It was founded by David Duffield, founder and former CEO of PeopleSoft, and former PeopleSoft chief strategist Aneel Bhusri after the hostile takeover of PeopleSoft in 2009 by Oracle (NYSE 🙂 (NYSE: ORCL).
The stock, which currently trades at a high of $ 189.29, has gained approximately 18.5% this year so far. It has risen 290% since it was made public in November 2012 for a price of $ 49.10.
WDAY 300 Minute Chart
Workday is expected to publish the results for the fourth quarter after the markets close on Thursday 28 February. Consensus calls for a profit per share of $ 0.32 on $ 776.52 million. The company reported earnings per share of $ 0.28 and revenue of $ 582.48 million in the same period a year earlier.
Perhaps more importantly, Wall Street will keep a close watch on subscriptions' revenue, which increased 34.7% year-on-year to $ 624.4 million in the third quarter.
William Blair analyst Justin Furby wrote in a study letter on 31 January that the human resources software maker has won a major contract with Accenture (NYSE 🙂 (NYSE: ACN), a leading company in the field of information technology. "With nearly 500,000 employees worldwide, Accenture is one of the world's largest employers and is likely to be a top-five Workday customer, measured by the number of headlines," Furby said in the report
"A deal of this size can easily be more than $ 20 million in subscription revenue per year (when fully used up) and more than $ 100 million or more in backlog."
Taking all this into consideration, Workday seems to move quickly to the company name in HR management.
