These fast-rising tech stars stand out for their innovation and market-beating growth potential.
Two technology names have surprised everybody with mouth-watering gains of late.
Online reviewing site Yelp (YELP) (up ~18% in last five days) delivered healthy second quarter earnings, and raised its 2016 guidance. And Calif.-based digital processor maker Acacia Communications (ACIA) is also rising fast, up over 260%in a mere three months. This little company, which serves customers like ZTE(ZTCOY) , has had an amazing run after its May 2016 IPO and the recent robust- earnings scorecard has pushed it further upwards. Yelp and Acacia are smart growth investments in a risky market.
A year ago, concerns with a slowdown in Yelp's traffic growth, sales targets downgrades for consecutive quarters, and fake reviews rubbed the sheen off this stock.
After zooming more than 265% in 2013, Yelp shares lost more than 20% in 2014. The next year (2015) saw losses widen as the stock lost another 47.38%, bringing it below its IPO price.
Wall Street analysts doubted the local ad dollar opportunity targeted by Yelp since the company was lining up against Facebook (FB) and the Alphabet's (GOOGL) Google. And don't forget Angie's List (ANGI) and some platforms owned byInterActive Corp (IAC) .
Profits at Yelp were hard to come by. Despite growing annual sales from $26 million in 2009 to $550 million 2015, there has been almost zero net income in a majority of these years.
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But Yelp has turned itself around, making it a compelling buy in an overbought broader market.
Yelp's first quarter local revenue growth clocked a 40% run-rate. Transactions revenue also showed an uptick, thanks to Eat24. Ahead of second quarter results, downgrades from Citi and Wells Fargo strengthened the bear case for the stock.
However, Yelp proved the naysayers wrong. The company posted 41% local revenue growth and 37% rise in transactions revenue. A rebound in sales productivity pushed momentum in revenue growth. Additionally, increased marketing investments and partnerships like the one with restaurant wait-time tracker Nowait should play out things smartly.
Yelp has found its mojo. Trading at price-to-sales valuation of 4.6-times, Yelp is undervalued compared to the industry average of 6.3-times price-to-sales.
Acacia Moves at the Speed of Light
Acacia is developing high-speed coherent optical interconnect products, with an expertise in photonic circuits. The stock makes wild moves, as evident from the nearly 40% rise after a blow-out first quarter as a public company.
Second quarter revenues grew more than 100% year-over-year at $116.2 million and earnings-per-share (EPS) quadrupled to $0.77. The guidance for the third quarter looks good, too. Run by CEO Raj Shanmugaraj, Acacia projects revenues of $120 million-to-$128 million and diluted EPS of $0.64-to-$0.76. Product demand is also pretty healthy right now.
Acacia's technology aids the transformation of cloud, content and communications networks. Acacia has also attracted scores of investors since it offers pure-play exposure to 100G+ next-gen optical technology.
The company's revenue comes in from metro telecom and data center interconnect markets, among the fastest growth segments in the $12-billion optical space.
Competitors include Oclaro, Ciena and Infinera. With Acacia projected to deliver46.03% annual EPS growth for the next five years, it undoubtedly is the fastest-growth potential stock in its sub-space with peers boasting of earnings outlook in the range of 15%-to-18%.
Source : https://www.thestreet.com/story/13676473/1/here-are-2-red-hot-tech-stocks-to-buy-now.html
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