There’s a lot for Wall Street to be happy about these days. The stock market is trading at all-time highs, earnings are improving, coronavirus cases are diminishing and the Federal Reserve remains accommodative. In addition, the stock market is following a typical presidential election pattern and steadily rising as candidates “suck up” to voters. (I’ll talk more in-depth about these positive developments in tomorrow’s Growth Investor September Monthly Issue.)
There’s also a massive economic rebound underway.
In fact, the Atlanta Federal Reserve is now forecasting that third-quarter GDP growth could come in at a 25.6% annual pace!
But the most promising sign that the U.S. is starting to stand on firmer ground was the latest productivity data. Believe it or not, U.S. productivity soared at an annual rate of 7.3% in the second quarter, despite the economic shutdowns and the worst quarter for the coronavirus. This represents the biggest rise in productivity since 2009.
Apparently, Americans have figured out how to be more productive working from home, and several big-name tech companies are fine making remote work the “new normal.” Facebook (FB) expects 50% of its workforce to be remote by 2030, and Twitter (TWTR), Square (SQ) and Shopify (SHOP) will make the remote move permanent for some employees.
But the reality is these changes wouldn’t be possible without the innovative tech and cloud computing companies.
Case in point: Zoom Video Communications, Inc. (ZM). The company has made it easy for co-workers to interact face-to-face with each other, whether it be one-on-one or at a big company meeting. If you’ve had a Brady Bunch-esque video chat with family, friends and/or co-workers in the past few months, then you’ve likely used the ZM platform.
Given the coronavirus pandemic and subsequent stay-at-home orders, millions of people around the world have been using Zoom’s online platform daily. Video chats and virtual meeting spaces have been vital to maintain businesses day-to-day operations and communications with employees.
As a result, I’m expecting a blowout second-quarter earnings report next Monday, August 31. For the second quarter, earnings per share are expected to surge 462.5% year-over-year to $0.45, up from $0.08 per share in the same quarter a year ago. Analysts have also upped earnings forecasts by a whopping 309% in the past three months. Typically, positive analyst revisions precede future earnings surprises.
I should add that Zoom has posted an average 284% earnings surprise in the past four quarters. So, another stunning earnings surprise is likely on Monday afternoon. The company is also expected to report second-quarter revenue of $500.45 million, up 243.2% from the $145.8 million achieved in the second quarter of 2019.
I look for the stock to surge following its earnings report, which is why I’m naming it one of my Top 5 Stocks for this Friday’s Growth Investor September Monthly Issue. I added ZM to the Growth Investor Buy List in June 2020, and it’s already up about 15% on the Buy List after hitting a new 52-week high of $302 yesterday. A strong earnings report will only add more fuel to the stock’s fire.
Signatures Go Electronic
But ZM isn’t the only tech company revolutionizing the ability to work from home. There’s also DocuSign, Inc. (DOCU). Through DocuSign’s cloud-based platform, companies can develop, upload and send agreements to all stakeholders for electronic signatures. The agreements can be approved on practically all devices and from nearly anywhere in the world. In fact, DocuSign has more than 500,000 customers and millions of users in more than 180 countries.
Consider this: 18 of the top 20 global pharmaceutical companies, 10 of the top 15 global financial services companies and seven of the top 10 global tech companies all utilize DocuSign’s technology. In addition, 800 federal, state and local government agencies utilize the company’s platform.
DOCU has been such a strong performer that it took United Airlines’ (UAL) spot in the NASDAQ 100 back in June!
While the stock has pulled back a bit on profit-taking after hitting a new 52-week higher in the beginning of August, I expect DOCU to surge to new heights following its second-quarter report next Thursday, September 3.
The consensus estimate calls for earnings of $0.08 per share, which represents 688% annual earnings growth. Second-quarter revenue is forecast to jump 35.2% year-over-year to $318.57 million, up from $235.6 million in the same quarter a year ago.
Analysts’ earnings estimates have remained relatively steady over the past three months, but DocuSign has posted an average 142% earnings surprise in the past three quarters. So, I wouldn’t be surprised if DocuSign tops analysts’ estimates again.
DOCU is another one of my Growth Investor recommendations, and it’s up about 58% in the three months since my initial recommendation in May 2020. Given its strong institutional buying pressure and triple-digit forecasted earnings growth, I am also listing it as a Top 5 Stock in the Growth Investor September Monthly Issue.
To learn more about DOCU, as well as my full Top 5 Stocks list, I encourage you to join Growth Investor today. In tomorrow’s September Monthly Issue, I will also be releasing six new buys – five High-Growth companies and one dividend stock. Each stock is a screaming buy right now and perfectly positioned for big profits in the current and post-pandemic world. If you want to get in early, click here now .
Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
DocuSign, Inc. (DOCU), Facebook, Inc. (FB), Shopify, Inc. (SHOP), Zoom Video Communications, Inc. (ZM)